Gold & Silver ETFs Vs. Physical Bullion

Contact Us: 504-858-GOLD (4653)

Gold & Silver ETFs Vs. Physical Bullion

Contact Us: 504.858.GOLD (4653)

Over the past couple of decades, a new investment vehicle has arrived in the market, the ETF (Electronically Traded Fund). ETFs are designed to track the performance of the underlying assets they represent. The logic behind ETFs is quite simple: investors are allowed to buy an allocated basket of stocks, real estate, currencies, or commodities without having to purchase each individual asset. For normal investors this concept has been revolutionary since individual investors are now able to allocate their funds across a broad basket of assets without having to buy them individually. This has been particularly transformative for the commodity market. Prior to ETFs if someone wanted to invest in commodities, they were forced to do so by buying the actual commodity itself, or through futures contracts. Not only did the invention of ETFs allow investors the ability to trade commodities, such as precious metals, without physically owning the commodity itself or a future promise for delivery of the commodity, it allowed for the quick purchase or sale of any commodity with the simple stroke of a computer key. For most investors this option sounds amazing, however many do not realize the cost of trading ETFs and how truly risky they are—especially for gold, silver, platinum, and palladium precious metal investors! Because most precious metals ETFs are physically backed by the precious metals themselves, many investors believe that they own physical precious metals. This is far from reality and simply not the truth. Our market experts will illustrate how owning ETFs are inferior and substantially riskier than owning physical gold and silver bullion. Furthermore, we will also show how precious metal ETFs do not protect investors from fiat money collapse, financial system failures, or sovereign default.

GLD & SLV ETFs

GLD and SLV were first introduced to the market in the early and mid 2000’s and are by far the most popular precious metals ETF’s. Any person with a brokerage account can buy one or more shares of these ETF’s on the NYSE. To establish a brokerage account individuals must provide a copy of their Driver’s License, their social security number, physical address, telephone number, and email address.

Physical Bullion

Physical Gold & Silver Bullion can be defined as any quantity, as small as a single grain (400 grains = 1ozt), of investment grade (< 99.9% purity) precious metals bars, ingots, or coins. Physical bullion is portable and remains in the possession of each individual owner. Bullion can be purchased from New Orleans Silver and Gold, any coin shop, pawn shop, jeweler, or individual who desires to sell it.

Transaction Cost & Annual Fees

ETFs (Electronically Traded Funds) Physical Gold & Silver Bullion
  • Inexpensive brokerage fee typically < 1% of cost of each share at time of purchase or sale.
  • Dealer premium over international spot price typically > 1% at time of purchase. Transaction fee of 1 -2% at time of sale.
  • .40% annual management and maintenance fee.
  • 0% annual fee.

Physical Delivery & Possession

ETFs (Electronically Traded Funds) Physical Gold & Silver Bullion
  • GLD physical delivery restricted to owners of 100,000 + shares or 10,000 ounces of physical gold in 400 OZT gold delivery bars.
  • Immediate delivery & possession with cash payment if item is stock.
  • SLV physical delivery is restricted to authorized participants in amounts of 50,000 + shares or 46,450 ounces of physical silver in 1,000 OZT good delivery bars.
  • Immediate delivery & possession after check or bank wire clears if item is in stock.  Average 1-2 week delivery & possession during normal market conditions if item is out of stock.
  • GLD stores its gold in 400 OZT bars with HSBC bank in London England.
  • Physical gold & silver bullion may be purchased and individually possessed in quantities as small as 1 grain.
  • SLV stores its silver in 1,000 OZT bars in London, New York, or other authorized locations around the world.
  • Bullion may be stored on your person, or in your home/apartment with 0% annual fees.
  • GLD & SLV prospectus clause gives the ETF’s the option to settle shares in cash instead of physical gold or silver bullion!
  • Physical bullion that you hold is your portable personal property until you decide how and when to sell it.

Counterparty Risk

ETF’s (Electronically Traded Funds) Physical Gold & Silver Bullion
  • High counterpart risk.
  • No counterparty risk unless you decide to store your bullion with a third-party company.
  • Multiple third-party participants  involved such as: major banking institutions, market makers, authorized participants, electronic exchanges, financial brokers, and international vault operators.
  • No third-party risk since transactions occur directly between you and your dealer.

Privacy

ETF’s (Electronically Traded Funds) Physical Silver & Gold Bullion
  • Zero privacy.
  • Full autonomy.
  • Fully SEC and FINRA reporting requirements.
  • Basically, no information needed to purchase physical bullion in person.
  • Drivers license, social security, phone number, email, and other private information required before opening a trading account.
  • Limited to no reporting requirements when selling physical bullion in person.

Liquidity

ETF’s (Electronically Traded Funds) Physical Gold & Silver Bullion
  • Easy to liquidate during normal market conditions but questionable during abnormal market conditions.
  • Most liquid asset in the world under normal and abnormal market conditions.
  • 1-3 week typical delay before receiving settled funds from a stock broker in your personal bank account.
  • Immediate cash for sale of bullion to individuals, dealers, pawn shops, or jewelers anywhere in the world.

Hopefully this comparison between Precious Metals ETFs and Physical Bullion will help you make an educated and informed decision before investing in gold or silver. While it is important to recognize that buying GLD or SLV ETFs do have some advantages, it is equally important to recognize that owning these ETFs does not mean you own physical gold or silver. In reality, you own paper gold and silver. If you are worried about currency collapse, sovereign default, or financial system meltdowns, don’t be a fool and think that buying precious metals ETFs protects you. Contact one of our brokers at New Orleans Silver and Gold today to set up an appointment to purchase real physical gold, silver, platinum, or palladium bullion coins, bars, or ingots so you truly protect your wealth by holding it in your hand today! We can be reached by phone at 504-858-4653 or email at neworleanssilverandgold@gmail.com  

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