Is Your Gold Real? Understanding ETFs vs. Physical Ownership

Jeffrey Christian: Silver are the ultimate tangible asset in our world. They may not be the most liquid, but they’re the most secure, as an asset. So, you have a tremendous amount of money that trades every day in equities, and bonds, and currencies, and in cryptocurrencies, but they’re not as secure as gold and silver. It’s funny, because there’s a percept, there’s perceived security and there’s real security. Depending on how you’re holding and storing your physical gold and silver, you can have very high real security.

Sean Brazney: Physical metal versus ETFs. You did a great piece for us several years ago now. It was called, Ownership versus Promises, and we still have it today. We still distribute it today. People want to call in and get that report. It hasn’t lost value. It’s still just as timely today. I love it! It’s one of my favorite pieces we’ve ever done with you guys. One of the questions that kind of comes up a lot with ETFs and investing in the ETF silver gold, ETFs compared to buying physical, is when people really want their hands on that physical, is being able to take delivery of physical metal off of the ETF. Is that even really possible?

Jeffrey Christian: There are a couple ETFs where you can say, “I want to close out my position and I want metal,” but most ETFs don’t allow that. So, you have two transactions. You sell the shares in the ETF and then you buy physical metal in a separate transaction, usually with a separate company, because the ETFs are equities, they’re shares. A lot of equity brokers do not deal with physical metal. I think, that the value for some investors with ETFs is, oh, I have a brokerage account. I can go online and I can buy ETFs and I can buy my exposure to rising gold or silver prices immediately, but if I want physical metal, I have to have an account with a company like Monex, and a lot of people, unfortunately, don’t do that. It’s very bizarre that they don’t, but that’s the way it is. So, they’ll say, we’ll have people who are relatively sophisticated investors, maybe, who will say,” I’m not comfortable having ETFs. All I’m buying with an ETF… I’m buying a share that has exposure to the price. I want direct ownership of the physical metal. How do I do that?“>/p>

Sean Brazney: Another issue that comes up is liquidity. Back in the day, you think about off balance sheet asset, tangible physical metal that is really liquid anywhere you go in the world. Great story for physical gold and silver. Now, you’ve got this digital age that’s come along and they look at liquidity based on being digital as an area where a lot of money is attracted to right now. Is gold and silver still that ultimate liquid asset in our current digital world?

Jeffrey Christian: Gold and silver are the ultimate tangible asset in our world. They may not be the most liquid, but they’re the most secure as an asset. So, you have a tremendous amount of money that trades every day in equities, and bonds, and currencies, and in cryptocurrencies, but they’re not as secure as gold and silver. It’s funny, because there’s a precept, there’s perceived security and there’s real security. Depending on how you’re holding and storing your physical gold and silver, you can have very high real security. There are a lot of companies that we don’t do business with, and we tell people you should never do business with them, or they’ll come to us and they say, “I want to use CPM for business advisor. I have my metal at the XYZ place,” and we say, “Okay, the first thing we do is we get your metal out of there, because you don’t have real security there.” So, there are people then, consequently, who feel that there’s a low perceived security in gold and silver, but there’s a high real security, and the flip side is with the ultimate is cryptocurrencies. There’s absolutely no security on a real basis with cryptocurrencies and the volatility from day to day and month to month is 50 to 100 percent. Now, in the Bitcoins, Bitcoin’s monthly volatility is 50 to 100 percent. One month you might double your thing and the next month you might lose it all. That’s the most liquid one. You go into these other things and it’s just onion skin after onion skin and you don’t have any real security. They may be very liquid, but there’s no tangibility and there’s no security on a real basis.

Sean Brazney: Remind people, you know, just look up third party risk. You know, nothing wrong with holding that metal on your person with where you’re at. We’ll deliver it to your door. You keep it where you want to. It’s nobody else’s problem, but yours, right?