21 August 2012

Who really owns your Gold?

Many investors may think that by holding physical gold in their portfolios they are to a certain extent hedged against the loss of purchasing power that is experienced by all major currencies. But make no mistake, only physical gold that you hold in a vault that is controlled by you or in some other safe place is really gold that you can count on when the proverbial s**t hits the fan. Unallocated gold or pieces of paper that represent a claim on gold ('Structured' products, derivatives or ETF's) are nothing else but some bank's or fund manager's obligation and as such only as good as the standing of that institution. If they are insolvent you are left with nothing else than a piece of paper and have to join the queue of creditors.