• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 695 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 701 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 709 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Do You Know Where Your Gold Is?

Owning Gold as wealth insurance is so widely accepted now as to make it a mainstream investment. A portfolio without Gold is like owning a home without insurance in a region where hurricanes are a normal weather event. The only remaining question facing an investor is what form of Gold to own and where to store it. The latter issue may be one not given sufficient consideration by investors. The question: Do you really know where your Gold is?

This researcher's preferences are for coins, despite the premiums, and exchange traded Gold ETFs. If one has little or no expectations of selling the Gold and desires to take possession of the Gold, then some portion of one's wealth insurance should be in physical coins. Beyond that basic amount of Gold, ETFs serve the investor well. An ETF has the advantages of an investment tool that is a combination of Gold exposure with liquidity. ETFs can be sold with the click of a mouse.

When one moves beyond physical possession of your Gold, some additional steps should be taken. We are talking about the situation where one chooses to have a depository or custodian hold the Gold investment. These basic steps apply to all forms of depository, from ETFs to businesses specializing in the sale and storage of Gold. These steps are forms of preventive medicine as we know of no Gold depository that is a concern.

When reviewing your custodian look for two things. First, many will present a report on their inventories provided by a firm specializing in verification of inventories. This inventory count is not, repeat not, an audit of the custodian.

In the inventory verification process a list of bars, for example, is provided by management to the inventory verification firm. They then determine if the bars in the vault match the inventory list provided to them by management. That process does not determine if the bar list is correct. It does not verify that bar list is the amount of metals that should be in the vault. To see an example, this link will take you to GLD's inventory verification report: GLD Inventory

Second item to look for is an auditors' opinion letter. We have included at the end of this discussion one from GLD as a sample. One of the purposes of the audit is to review the financial controls of the firm. After the audit, the auditors express an opinion on those financial controls.

In the auditors' letter you are looking for non positive comments from the auditors. Rarely, if ever, do they say anything bad, but may hint at issues. We are looking for an "unqualified opinion". A "qualified opinion" is reason to immediately head for the exit. For investment vehicles such as ETFs, these letters can be found in the annual filing with regulatory agencies normally linked on the fund's website.

The auditors' opinion letter is actually the more important of the two. Whenever we read the annual report on a company, we start with this letter first thing, before reading the CEO's letter. If it says anything negative, in the trash it goes. Saves a lot of time reading worthless reports.

Having these reports does not guarantee the safety of your metals, but they are better than listening simply to those bold claims made at a seminar. If your Gold depository does not provide both of these documents, then some serious questions need to be asked. Independent third part verification of both the financial controls of the firm, the auditor's letter, and the inventory verification are two tools to use when selecting your Gold depository.

 

US$GOLD & US$SILVER VALUATION
Source: www.valueviewgoldreport.com
  US$
GOLD
US$
GOLD %
US$ /
CHINESE YUAN
CHINESE
YUAN %
US$
SILVER
US$
SILVER %
Sell Target $1,945 12%     $35.50 8%
Current $1,743   $0.1600   $32.90  
Long-Term Target $1,889 8% $0.3330 108% $33.00 0%
Fair Value $889 -49%     $15.60 -53%
ACTION Hold Gold   BUY Chinese Yuan   Swap into Chenese Yuan  

 

 


GOLD THOUGHTS comes from Ned W. Schmidt,CFA as part of a mission to save investors from the regular financial crises created by Keynesianism, and the high priests of that misguided ideology. He is publisher of The Value View Gold Report, monthly, and Trading Thoughts. To receive these reports, go to: www.valueviewgoldreport.com

 

Back to homepage

Leave a comment

Leave a comment