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Holdings Of Gold Bullion By ETFs Drop

February 11, 2010 – While reports circulate of outflows causing drops in the holdings of gold bullion in exchange-traded funds, a growing number of analysts and industry specialists are beginning to question the truth of actual holdings by these large funds. A story recently published by the Reuters new agency stated, “Analysts fear sustained outflows from gold ETFs if investors' attitude towards bullion sours, which could be a drag on prices.” Some industry insiders are claiming that such reports are produced by people who don’t understand the precious metals sector or are looking to artificially deflate gold prices.

There is a growing belief that ETFs don’t actually possess their own holdings of gold or silver, (since it is all privately held by members) and that counting “holdings” from ETFs in the world inventory is double claiming the totals and diluting the silver and gold bullion markets. While these claims tend to be generally unsubstantiated as one theorist stated, “While I have been unable to locate any charts or data which indicate whether (or not) the gold bullion-ETFs are also added to global inventories, I must assume…” the premise can’t be totally ignored by investors who care about their financial security and their investments.

Whether such a claim is ever verified, there is a simple solution for investors; they should take possession of the gold bullion they are buying or work with a respectable exchange that offers a verifiable 3rd-party depository. Working with an exchange can be helpful because it offers the same convenience as ETFs and other sellers but also allows a high level of accountability. Companies like this should be listed with the Better Business Bureau and have a spotless record of the way they do business. They should either delivery the gold that is purchased or be able to provide proof of ownership so that buyers know that they own exactly what they have purchased.

The strength of owning gold bullion is in the possession of the physical metal. While these conspiracy theorists make compelling arguments about ETFs, wise investors can avoid the problem altogether by purchasing from a gold exchange and taking delivery of their gold. 

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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