Gold or Gold Proxy – A Life Saving Decision

gold proxy Imagine the boat is headed underwater…do you reach for your life jacket? Or life jacket certificate? The answer is clear, and the logic is parallel with gold investing. As the hedge or safety-net to your portfolio, make sure it’s real and tangible.
The best way to invest in gold – indeed, the only legitimate way to invest in gold – is by buying the physical commodity itself. Many think they’re doing so if they invest in an exchange-traded fund (an ETF), mining stock, or gold index fund. But these simply represent proxy gold investments — paper assets which, at best, mimic the rise and fall of the commodity itself. You don’t truly own gold unless you own the physical metal.
Investors in Xetra-Gold, an exchange-traded commodity fund on the Deutsche Börse commodities market, recently found this out the hard way. To claim Deutsche Börse clients were led to believe they were holding a piece of paper – a mere prospectus — entitling them to gold on demand would be a tremendous understatement.
When one client went to redeem his Xetra-Gold bearer bond for physical gold at Deutsche Bank, he was told the service was no longer available for “reasons of business policy.”
This is a disturbing turn of events. According to the World Gold Council, Germany has the second largest largest gold reserves, at 3381 metric to tons. Ostensibly, physical gold, according to the terms of the prospectus, was to be held in custody for the issuer in Frankfurt vaults of Clearstream Banking AG, a wholly-owned subsidiary of Deutsche Börse. Yet, clients are now being turned away.
It remains to be seen whether the failure to deliver represents a responsibility of Xetra-Gold, Deutsche Börse, or Deutsche Bank. But, clearly, the failure is a significant one.
If you desire to invest in gold, then, can there be any better reason why it’s vital to own the tangible asset itself? If principals of an ETF, or a mining company or a precious metals index fund, guarantee that you’ve invested in the physical metal when you invest with them, ask yourself this question. When the world’s central banks buy gold, in what form do they buy it? Do they buy ETFs, gold stocks, or index funds, or do they buy the physical metal itself?
When you buy physical gold, you’re holding a hard asset that effectively hedges your paper assets. A stock you hold has the potential to decline to zero, but when you hold physical gold, you hold a commodity you can redeem, if necessary, at the market rate.
If you’re concerned about protecting your nest egg, there’s no better way to do so than by owning physical gold. The yellow metal will outlast, and ultimately out-perform not only the U.S. dollar, but any dollar-denominated assets you hold as well.
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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