So I wrote this piece a few days ago as soon as I read that Einhorn swapped his GLD for physical bullion, anticipating that it would bring out more cries about how the GLD is a scam. Not but a few hours later, SeekingAlpha published an article from J.S. Kim where he explained his skepticism about the GLD and SLV products. There are a plethora of comments, some explaining why he’s incorrect, and some thanking him for illuminating the problems. SeekingAlpha publishes my posts too, and my GLD post generated some discussion/debate in the comments section.

I realized there is no reason for me to waste any more time arguing about the validity of the products, as I can sum it up simply. Some people prefer GLD, some people think you need to own physical gold. I left the following comment on both my own post, and Kim’s:

” When you buy physical gold, you can get ripped off – right? whatever chance there is – someone could send me a brass bar plated in 24k gold – I’d have no friggin’ clue. do you have a machine at home that verifies the gold you’re buying is real gold?

Bottom line for ME, is that I think the chance of being ripped off by the GLD is much lower than the chance of being ripped off buying physical gold bars (not to mention GLD is much easier to trade.).

if the GLD trust gets sold to FlyByNight Securities, and they moved the gold to a warehouse in Secaucus, then the story/risk would change.”

’nuff said.


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