Do you trust the gold ETF GLD?
What if all hell breaks loose. Do you trust unallocated metals or pooled accounts? Do you think GLD could be confiscated by the gov't? Basically do YOU feel safe not actually holding metal knowing full well that the ETF WILL be settled in cash?
Answers
951 points
Grudun answered one year ago …
I trust the ETF. I think it has its place in a portfolio as a short term or low volume gold investment. Longer term the fees will eat into your investment but for physical gold over the short term the commisions and transportation costs are higher. I doubt it would be confiscated by the government or if it was we would have bigger problems than loosing a small portion of our investment portfolio. As to holding the physical gold, I think that is a personal decision where you have to weigh the emotional comfort of having it against the security risks and the likelyhood that if society collapsed that no one would trade food for just a decorative metal.
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2775 points
Oldman answered one year ago …
GLD is a grantor trust, not a collection of company stocks. As such, it shouldn't be held in a tax-sheltered account, because any unrelated business taxable income it may generate in excess of $1000.00 will disqualify the tax shelter (Item 20 V on a K-1).
This year, the GLD holdings exceeded the holdings of central banks of many countries, and for a time (until the IMF sold off 300 tons), it had to "borrow" and trade gold with other sources...so there is a possibility that as more purchases of GLD shares occur, the actual, physical holdings (now in excess of 700 tons) may again run short.
When the "shares' are redeemed (each one is 1/10th oz troy wt equivalent of Au), the profit will be taxed at 28%, not 15%, becuse it's considered, just like bullion or coins, a "collectable". Any losses are of course deductible, as any other capital losses are.
Other gold hedges are available from the Perth Mint, and from EverBank, which has gold C.D.'s.
