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The thing to remember is, the paper market has far more contracts issued than there is physical metal to back them up, it's a house of cards right now.
If you are talking about the silver futures market, I agree 100%. However, in the market, there is paper and then there is paper. Not all paper is equal. Because of the JPM connection, I would not touch SLV or GLD with a stick. That said, there ARE ETFs that are 100% backed by the metal they represent and they are independently audited on a routine basis for compliance with that standard. So, yes, they have the metal that their shares represent. Whether you can get to it, have it sent to you, or can even log in to their web site during the initial obvious SHTF stage, who knows? Maybe and maybe not. SHTF could take any of several well-discussed forms or it could be something completely different that no one expects. Difficult to see...always in motion the future is...
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But for an IRA its even more costly to hold physical because it has to be stored by a 3rd party.
In most cases, this is true. It is, however, possible to form an LLC in your state, set up a self-directed IRA at a local bank that actually understands what this means, transfer your IRA to the local bank, and invest the money in the LLC (which you own and can direct how it invests). At that point, you can buy PMs via the LLC and store them where you wish. If you are ever audited, which is not impossible, you would need to show that these metals investments exist and you didn't just spend the money. Other than that, it should work well. I looked into this and in my state an LLC can be formed for a $200 state registration fee. The local bank would also want some fees to set up the IRA. The Silver Doctors web site has some articles on this that are interesting.
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Well thats how it is supposed to work but they could never ever fill all the orders if everyone cashed out.
This is true but the vast majority of people who invest in silver and gold futures never want to redeem their shares for metal. They want cash. All they are doing is investing in something that tracks the metals prices. They have no interest in a truck pulling up to the curb at their home or office and unloading a ton or two of silver bars. Most on here think that they would be better off it they did but that's not how they see it.
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If the internet went down there would be no proof of your investments.
Perhaps not on their end but a lot of investors print out their monthly statements and save them as either hard copies or as graphics files. Yes, these can be fiddled with but such fiddling IS visible and detectable by computer graphics experts.
This is a HUGE concern to me in regards going to an all digital currency. They say that they have multiple backups and all that but... anything that can screw up will do so and at the worst possible time. See: Law, Murphy's. In addition to an accidental loss of wealth there is also the possibility of outright theft. If it was easy to rip off the MF Global customers, just think how much easier it would be to do if there was no currency or gold / silver bars involved. Just tap a few computer keys and ZAP! billions of dollars stolen in a flash.
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"iv often found that 95% of the population is wrong"
At one time, 95% of the population of Europe believed that the Earth was flat. Their belief did not make it so.
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Unless they are lying in the prospectus GLD and SLV both own almost 100 percent of the outstanding shares in physical PM in vaults.
What? GLD and SLV, owned by JP Morgan Chase? Lie? Oh,the very thought!
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I've even seen a video of the gold bars held by GLD because CNBC sent a reporter into the vault with cameras rolling.
Yes, I saw that as well. Unfortunately for Mr. Pisani, the bar that he held up was allocated to a different owner and not to GLD at all. There was quite a flap on the Internet about this some time ago. You can probably find this info via a search for "Pisani gold bar".
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Posted 08/19/2012 4:21 pm
