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To: AdamBomb

Yes indeed, but most ETFs don’t have a 1 to 1 correspondence between physical bullion held and shares of gold issued. Your shares are also backed with cash and ‘other instruments’.

ETFs are something like a fiduciary issue of gold backed currency. If they are leveraged they could be caught out by a shift in the gold price and the destruction of their cash assets - and then they could go bankrupt rather than get you your money back.

More likely - your ETF share value would simply fail to faithfully track the gold price as it spiked upwards.

This doesn’t make ETFs a bad investment (still much better than cash!) but it does make them inferior to Gold and Gold mines.


32 posted on 09/30/2010 8:25:21 AM PDT by agere_contra (...what if we won't eat the dog food?)
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To: agere_contra

what about the tocqueville gold fund. This seems to be a good way for someone to get their feet wet without as much risk since they have gold but they also invest in mining companies. Thoughts?


36 posted on 09/30/2010 8:41:16 AM PDT by AdamBomb
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