David Ranson of Wainwright Economics met with Nick Barisheff. Their discussion turned to methods of investing in physical bullion, and the concerns regarding exchange-traded funds. Wainwright felt the points covered represented important information for their subscribers, and published the discussion in a Q&A format. The questions: Explain the major differences between ETFs and open-end mutual funds; what is the concern about the precious metals ETFs specifically; what specific disclosures should precious metals ETF investors be concerned about; few investors or brokers read the fine print of a prospectus but, legally, are these points included so that the investor is ultimately responsible; how is this different from an open-end fund; apart from the disclaimers in the GLD prospectus, what specific reasons cause you to doubt that it holds unencumbered physical bullion; what do you think might go wrong in the future with the precious metals ETFs. There is now over $30 billion held in ETFs like GLD and SLV, and many investors and advisors have made erroneous assumptions without actually reading the documents. For those who have invested in exchange-traded funds and believe they are holding physical bullion, this is a must-read article.
