Paper vs Physical?

Unless you are day-trading for price exposure to the silver and gold price, I suggest you steer clear of paper silver and paper gold vehicles.

Paper Gold / Paper Silver – (n) a derivative imitation of silver / gold made by human beings.

  • Exchange Traded Funds (ETFs) aka Exchange Traded Products (ETPs). Popular examples of ETFs include GLD, IAU, SLV.
  • Close Ended ETFs which may indeed have 100% bullion backing but are still beholden to exchange, premium, and liquidity risks. Examples include PSLV, CFC.
  • Unallocated Bullion Programs (Perth Mint, Unallocated Bullion Bank Accounts, etc.)
  • Mining Shares which are inherently risky, exposed to exchange and fiat currency risks, not for safe haven savings.
  • Leverage Accounts are a realm at worst full of outright brazen thieves or at best professional game riggers and insiders who sheer and slaughter greed driven novices.
  • Futures Options which trade on leverage are a game for hedge funds, professional traders, and price rigging commercial banks. One look into the leverage on the COMEX for instance and you will find very little reserves of bullion underlying the trillions in trading volumes. Here is a billionaire hedge fund manager talking about what a casino the COMEX is and why for a long term buy bullion and hold strategy, futures options are a silly, expensive, and risky choice.

What I am trying to impart to you is that all paper gold and paper silver vehicles can go “poof” and one’s capital can be transferred away in the blink of an eye. The people who run these paper vehicles know this and they almost always set up their “terms and agreements” in sophisticated legal clauses to cover themselves if their sophisticated casino implodes.

My sincere suggestion is that you stay off their betting tables. Not only do they rig the games, they also see to it that they are not legally culpable if the casino catches on fire, or implodes on your head.

Don’t believe me? Just look up the story of Jon Corzine & MF Global. Investors buying futures and options in 2011 via an imploding MF Global, they are still out millions and Mr. Corzine has walked virtually scot-free to this very day.

The next article in our Beginners’ Guide to Buying Physical Bullion will discuss why you would want to invest in physical gold and silver.

» So Why Physical Silver and Gold Bullion Right Now?

All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.