Stacy writes in the comments section …
I thought it was interesting that Greenlight Financial took physical delivery on all of it’s gold holdings. Gold is also the largest portion of their portfolio at this time. As I understand it, this is a pretty odd move for this major hedge fund. I also read about an insurance company that is doing the same. I can’t remember what company though.
I am curious of what this is saying to you. Are they concerned that GLD does not have the gold to back up the paper? Are they afraid that one day in the near future it will become very hard if not impossible to get physical gold? Your thoughts?
One side question related to the equities. Are you expecting a major pull back with a possible retest of March lows? Seems like everyone is screaming we are back in a bull market. I find that very hard to believe. But this market has shocked me so far. Your input is appreciated.
My reply: I don’t think Greenlight Financial is the only one to shift its gold holdings from the SPDR Gold Trust (GLD: 108.52 -1.82 -1.65%) to physical gold. I think more and more people are doing this. It’s a worrisome but understandable trend.
Why are people doing this?
1) They are still worried about a financial meltdown that could take down our economic system.
2) They think Wall Street is run by and for a bunch of crooks (no argument from me there)
3) If you are a long-term holder of gold, the GLD can be more expensive than actually storing physical gold yourself. As I’ve said many times, the GLD is a trading vehicle.
4) Some investors are worried that the GLD does not have the physical gold to back up its paper value. Still others worry there is other hanky-panky with the GLD. It looks pretty solid to me — I haven’t seen or counted its gold bars myself – but if that kind of thing worries you, there’s nothing wrong with physical gold.
And in case I haven’t been clear in the past, A) I think everyone would be smart to own some physical gold and silver and B) owning physical gold is THE safest way to own gold.
As for equities — I don’t have a crystal ball. So far, though, both equities and gold have floated higher on a flood of government liquidity being injected into the market, and the U.S. dollar has gone in the other direction. These are the dominant trends, but we can have corrections to the big trends, and trends can always change. If you’re a subscriber to one of my premium services, stay tuned, and I’ll let you know when and if I see a change.
Thanks for your question, Stacy
best,
Sean
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