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« Randgold Resources Limited Options Trade Up 100% | Main | The US Dollar is Approaching a Major Support Level »
Monday
Nov302009

Gold Bullion ETF in Switzerland: SGOL

Canadian Gold Coin 01 Dec 09.JPG


With the overwhelming popularity of GLD as a physical gold bullion exchange traded fund, another fund has set up which provides a similar function, albeit with one key difference.

Back in September, ETF Securities launched SGOL, a physical gold ETF like GLD except the gold is stored in vaults in Switzerland, unlike GLD where the gold is in the USA.

During the 1930's President Roosevelt issued an executive order banning American's from owning gold and making it illegal to own gold in the USA. Although a repeat of such an order is unlikely to happen again, it still remains a possibility and therefore a threat to anyone with gold holdings in the US.

Therefore it would be prudent to hold gold outside of US borders, such as in Switzerland, just in case such an scenario should arise again.

However despite a “safe” reputation, Switzerland still has a government and any government cannot be fully trusted. Therefore rather than place all your eggs in one basket, a better idea would be to hold a portion of GLD and a portion of SGOL, so to split your risk. Both trade on American exchanges, and although GLD is more liquid and has a much larger market cap, SGOL still has good enough volume for the retail investor.

We are simply putting SGOL up as an alternative, or even more a complement to GLD. Physical gold ETF's still poise risks and would not work as well in an armageddon scenario as bullion under your bed so to speak!


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Reader Comments (3)

Here is a video that outlines some disturbing terms in the GLD Prospectus. Among other things it says:
- that investors have no right to audit GLD's holdings of gold
-that the gold being held may not meet Good Delivery standards (so it could be lead bars painted gold or tungsten bars plated with gold)
- that if the gold is stolen or lost or if the gold is lost to fraud investors rights are severly limited.

http://www.runtogold.com/2009/02/another-problem-with-the-gld-etf/

Why not invest in a fund whose prospectus suggests that the management is trying to shield itself from the discovery or consequences of fraud.

December 1, 2009 | Unregistered CommenterBermark

CEF (the Canadian Gold Trust) is another good choice for a fund that holds physical reserves.

December 1, 2009 | Unregistered CommenterDaniel

Analyst Report coming on VHGI Gold (OTCBB VHGI)

December 19, 2009 | Unregistered CommenterJC2811

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