A Run On Gold And Silver Is Starting

The run has started early in Germany: “Gold and silver in the form of coins and bars are experiencing an enormous surge in demand at German precious metals dealers” (link). This is to be expected but the Germans, more-so than any other EU country (Switzerland is not a formal member of the EU), understand the wealth preservation/currency devaluation attributes of gold and silver.

But don’t mistake buying GLD and SLV for buying and self-safekeeping physical gold and silver. The integrity of GLD and SLV is highly questionable.   I wrote this in a 2009 research report on GLD:

“A close reading and analysis of the GLD Prospectus, however, reveals that investing in GLD is drastically different from owning gold…Ultimately, the value of the GLD Trust the potential to experience a substantial loss in value. Under certain circumstances GLD could be worthless. As an investment advisor, I do not recommend that anyone use GLD instead of buying physical gold because it is not an investment in gold and the legal structure of GLD is such that unsuspecting investors could end up losing all of their money.”

In this week’s episode, Chris (Arcadia Economics) and I discuss why the prices of gold and silver are imminently heading much higher and why you should avoid paper investments in GLD and invest in physical gold and silver that you safe-keep yourself.

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Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

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