Gyroscopic Investing

Here we go again, students... Are we all taking notes and listening to what Uncle Goodasgold has to say?

How confident can we be that the physical gold we store in a depository will actually be there if and when we show up and demand it? Dr. Bill Bernstein, in his classic (and largely favorable) critique of the PP, asked this question, and his response was "not much." (IIRC)

For convenience when rebalancing and due to the complexities of IRA legislation, I have to admit I hold some of my yellow stuff in ETFs and GTU. But I still don't entirely trust these depositories, and beginning in 2016, along with converting my TLT holdings into treasury bonds, I will begin to redeem some of my "paper gold" and convert it into the real stuff, to be kept in an *insured* safe deposit box.

In recent news, here are the grim details on a gold depository whose deposits turned out to be a scam, to the tune of 30 million spendolas:

http://www.armstrongeconomics.com/archives/36926

I think the Perth Mint is trustworthy, due to its ownership by the state of Western Australia, which insures the gold deposited there, but other depositories, in my opinion, are suspect. Even GTU and other Canadian firms are questionable, in my opinion. Canadian firms, in general, are reputed to have rather high ethical standards, but Canadian gold industries are in a different league, with reports of thieving, scams, exaggerated or fictitious gold strikes, "mine salting" and a general Wild West atmosphere, so caveat emptor.

Argh, that is just terrible. Here is a link to an article with more details:

http://www.mystatesman.com/news/news/lo ... up-/nnYS2/

I've tax loss harvested my paper gold a few times recently and found that the paper gold is much more suited for this than the physical kind.

Scary!  Yes we are listening, Uncle Good!

I agree with Reub about the convenience of gold ETFs, but one of the original ideas behind the gold allocation was to keep a substantial portion of your wealth away from prying eyes, safe and in your own possession.  Gold ETFs or depositories do not accomplish that.

I remember a similar story with a commodities brokerage run by none other than Jon Corzine, former NJ governor & US senator.  He fleeced a lot of farmers and a lot of it was not covered by SIPC insurance.  And I don't believe there was any investigation or actions taken by law enforcement - predictable unfortunately, due to the political power of the perpretrator.

If this is the same Martin Armstrong, he may just have his hands on some of that gold himself.

This one spent 7 years in prison for securities fraud (technically it was for contempt of court for not turning over evidence but it began with an investigation for fraud).....

https://en.wikipedia.org/wiki/Martin_A._Armstrong

I sure hope IAU is audited on a regular basis. Most of mine is there because it's in my IRA. Shifting it around to taxable would require selling stock and paying a lot of tax so I'm kind of stuck with it for now.

I have bought a lot of gold from bullion direct over the years.  Sure am glad I didn't trust them to hold onto it for me!

Tom wrote: I have bought a lot of gold from bullion direct over the years.  Sure am glad I didn't trust them to hold onto it for me!

Harry Browne explicitly warned against leaving gold with a gold dealer.

Libertarian666 wrote:

Tom wrote: I have bought a lot of gold from bullion direct over the years.  Sure am glad I didn't trust them to hold onto it for me!

Harry Browne explicitly warned against leaving gold with a gold dealer.

Yep, which is part of why I didn't.