Thinking of precious metal ETF's?

Thinking of precious metal ETF's?
Then you better think again...
Can't you see the yellow caution light that is flashing...

I would like to explain the difference between investing in the actual metal
versus precious metal ETFs. One should completely realize when buying a
precious metal ETF, it is simply a representation of the price in gold or
silver. Investing in precious metals entails buying the real metal directly
or through a program that offers the right to receive physical metal in
deliverable form upon liquidation with no conditions.

What is overlooked by most professionals?

One of the items that I read in the prospectus of the gold and silver ETFs
that concerns me relates to the reported expenses of the fund. I am a
professional expert in the storage and security of gold and silver. I run a
fully segregated and insured storage program that is independent of the
financial system. I also run a very unique physical gold and silver bullion
fund that takes delivery of all physical metal, as well as, stores and insures the metal outside the financial system in fully segregated and armored vaults. I am very knowledgeable with the cost of insuring and securing physical metal.


The expense ratios for many of the ETFs and other funds are very telling.
Many products want to have the lowest fee to attract today's cost conscious
investor. However, there is an old saying, "You get what you pay for". I
will take the SPDR Gold Shares "GLD" for example. They claim the custodian
charges .10 % or 10 basis point to properly safeguard the gold. A qualified
custodian must properly store the physical metal through the use of very
specific security controls such as cameras, sensors, armed guards, etc.
However just as important is the insurance which would protect the facility
and owner of the metal in the event of a breakdown in the security controls
of the vault.

What is fascinating is the unbelievably low cost the SPDR Gold Shares pays
for this security and insurance. Lets forget about the cost of simply
providing a secure facility to store the gold.

At these level of assets, there is only one company in the world that
insures physical precious metals in armored vaults. I have been told there
is no way this insurance company would charge a meager 10 basis points
annually for an "all risk" policy. That is equivalent to insuring a car
worth $10,000 and its driver for ten dollars a year. No insurance company
could ever make enough money to cover the risk of loss on that policy except
maybe AIG. Even some of the largest custodians for valuable assets pay a
minimum of 15 to 25 basis points just for an "all risk" insurance policy.

Personally, I question any program that stores their metal at a financial
institution. In many cases, the financial institution is internally insuring
much of the gold it stores. The problem with that is, if the institution
runs into financial trouble the owner of the metal has no protection against
the loss or damage to the items being stored. And isn't the idea of owning
gold and silver a hedge against a failure in the financial system?

That is why our programs store everything outside the financial system in
independently insured vaults.

Bob Coleman
www.goldsilvervault.com