In the second part of this article, we looked at the differences between what it is like to buy gold bars from ITM Trading and buying gold shares from an ETF (Exchange Traded Fund), and in this next piece, we will continue to look at why gold coins and gold bars held physically in a location you can always access is a much more secure way to invest in gold instead of by holding gold shares inside of an ETF.

At ITM Trading there is an amazing collection of bright minds. These people spend time every day scouring the world for information that they can share with their clients, and prospective clients, that will be just the right piece of key information to help answer the question “Why invest in gold?” and therefore be the catalyst to cause someone to buy gold bars, or gold coins, or rare gold coins. Sometimes, believe it or not, that little piece of key information comes from television. I remember watching a few minutes of CNBC’s “Mad Money” with Jim Cramer one afternoon when I was filling up the water bottle that I kept on my desk with cold water from the water-cooler, which is just to the right of the flat screen television that is busy broadcasting financial news to the trading floor from morning until night at ITM, when Jim started talking about a particular ETF. One thing about Jim, love him or hate him, is that he doesn’t hold back on what he thinks. This afternoon in particular, he was discussing why he no longer would recommend this particular gold ETF. However, before I can share what Jim said with you, and have it make sense, I need to make sure you understand enough about gold ETF’s to be able to put the importance of his statement into the right context.

A Little About Gold ETF’s
Gold ETF’s are a relative newcomer to the financial product realm, and when compared to the the 6000 year history of gold bars and gold coins as money and true wealth, gold ETF’s are but a crying infant. Gold ETF’s do however, allow a person an alternative way to invest in gold, or so it would seem. Gold ETF’s do hold gold bars and gold coins and other gold bullion products in their vaults, and they can offer the gold ETF investor a way to capture profits or losses as the gold market moves. Gold ETF’s can do this because they do own gold coins and gold bars, and lots of them. When gold goes up their vaults are worth more, and if the investors decide to sell their shares, the ETF can sell a little of it’s gold at a profit and pay the investor out. If the investor has to sell his or her gold at a loss, the ETF may or may not sell gold to cover the investor’s payout, they may decide to pay out the investor from the cash profits the ETF makes, and if they do this, they now have full claim to the gold that the investor paid for, and they will “sell” this gold to the next investor, but we all know from the last part of this article that no investor will ever have any gold bars or gold coins mailed to them. That part is clearly stated in the rules.

What Jim Said
Jim’s statement was quick, he did not spend a whole part of his show ranting about what I about to share with you, but he said it, and I will never forget it. Jim shared with his viewers that he had noticed that a certain gold ETF was certain to share the losses with the owners of it’s gold shares when the price of gold went down, but he also noticed that when gold made very quick and large moves to the upside, the gold shares of the ETF did not capture the upward gains. In other words, If you owned shares of that ETF and needed to sell when gold was down, you paid all of the losses, however if you chose to sell when gold was streaking upwards in value, you did not get 100% of gold’s gains, because the ETF company was keeping a part for itself. The whole point of investing in a gold ETF is to make money, and if the ETF company is keeping your profits, just because they “can”, what is the point? So if you are asking yourself, “Why invest in gold?”, perhaps another question to ponder is “Why invest in a gold ETF?”

Call us at 1.888.OWN.GOLD. ITM Trading makes owning gold easy.