“What’s hotter than the price of gold? Gold conspiracy theories. Conspiracies theorists say that the price is being manipulated, by central banks and big dealers, and that when the truth comes out, the price of an ounce could go haywire–say, to $3,000 or $5,000. All this talk of dark plots and secretive central banks plays into the hands of gold bullion vendors. These dealers in coins and bars compete with the exchange traded gold funds like SPDR Gold Shares (NYSE:GLD), which sell paper claims on trusts that hold gold in bank vaults. Of course, if you trust no one’s paper you take possession of the metal and put it under your bed, next to a shotgun. The problem with this approach lies in the transaction costs. Banks can trade gold bars back and forth with some efficiency because they have not just assaying equipment, but paper trails detailing ownership of a bar from the moment it was cast by a member of the London Bullion Market Association. You don’t have that when you waltz into a dealer looking to sell a 400-ounce brick. Coins can’t be trusted, either; fake gold of various sorts can be found on Ebay,” Reports William Baldwin From Forbes.

Baldwin goes on to say, “Buy gold coins from a dealer and you’ll pay a premium of 5% or more over the metal value, says William Rhind, who runs the U.S. marketing arm for ETF Securities, which offers a SPDR Gold competitor called ETFS Physical Swiss Gold Shares (NYSE:SGOL). You’ll also suffer a discount of 5% or more when you go to sell coins, he says. And of course you have to worry about whether the dealer slipped you a gilt-edged hunk of tungsten. Long-time gold bugs William J. Murphy, 64, and Chris Powell, 60 don’t like shares of any of the big ETFs. (The category, led in size by the SPDR product, also includes iShare’s gold fund, ticker (NYSE:IAU)). What’s not to like? Two things. One is that shares in these entities, which are organized as business trusts, entail only an indirect claim on a pile of gold. Unless you are a big brokerage firm, you don’t have the right to take your shares to a teller window and get the metal in exchange.”

“The other thing about the ETFs is that they use custodians like HSBC and JP Morgan Chase that are players in the wholesale gold market. Therein lies a potential conflict of interest with duty, says the  Gold Antitrust Action Committee(a.k.a. Gata). The Gatans prefer services like Bullionvault, an online venture that assigns you your own chunk of gold, stored in New York, Toronto or Zurich. Rhind, for his part, pooh-poohs most of the Gata theory about collusive pricing in the gold market. He is selling into a different set of fears. You’ll love his firm’s product if you are uneasy about some of the newer and smaller players in the gold hoarding business. ETF Securities, founded in 2003 by investment banker Graham Tuckwell, is one of the largest operators of commodity ETFs, with $21 billion of assets. Its gold is in the custody of UBS and under the watchful eye of auditors who occasionally drill into the bars to prevent any funny business. The metal is in Zurich, far from the reach of any future U.S. decision to outlaw the private ownership of gold. Banks in London and Toronto are less safe, Rhind says, because their host governments can’t be trusted not to go along with a confiscation order like the one that came upon U.S. savers in 1933,”  Baldwin Writes.

See more to Baldwins article on gold’s conspiracy theory: HERE

Take a look at our ETF categories on each ETF for more detailed articles below:

SPDR Gold Shares (NYSE:GLD) – Visit Our (GLD) Category: HERE

ETFS Physical Swiss Gold Shares (NYSE:SGOL)  - Visit Our (SGOL) Category: HERE

iShares COMEX Gold Trust (NYSE:IAU)  - Visit Our (IAU) Category: HERE

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