Owning GLD Can Be Hazardous To Your Wealth

Posted below is a copy of a report I published in February 2008 which outlines all the problems with using GLD as an investment in gold and why, ultimately, GLD has the potential to implode in the same manner as the many Wall Street Ponzi schemes before it - especially dating back to Greenspan's efforts at reinflating the system after the technologly/internet stock collapse and the vaporization of Enron.

For the record, I would like to state that based on the large number of financial advisors I meet with who believe that investing in GLD is the best way to invest in gold, it is apparent that the majority of so-called "experts" have no clue what they are doing with respect to the precious metals markets (most other areas as well).  This being the case, the people who place trust in their advisor are not only going to miss out on what is turning into a bull market of historic size and significance, but they actually suffer unnecessary losses in this sector from financial advisor incompetence.

Judging from some of the comments on my post from yesterday, I'm sure there will be plenty of people who read this and throw out pejorative descriptions like "tin-foil hat conspiracy theory" or "goldbug nutjob."  I don't have any problems with people speaking their minds.  However, my research piece is in no way original or unique and several well-regarded gold market analysts, starting with the esteemed James Turk, have published similar well-researched and analytic disembowelments of GLD.

To be sure, I have no qualms with anyone using GLD to index the price movement of gold for purposes of short term trading or hedging.  But the majority of GLD investors have been suckered into GLD thinking that is it the same as investing in gold bullion.  It most unequivocally is not.  And to all who want to place faith that the architects of GLD's prospectus and the operators and custodians of the trust have nothing but the best intentions in mind, keep in mind that plenty of people exist who still are convinced that O.J. is innocent.



GLD -

And one more point:  in my view it is completely up to the Trustee and Sponser of GLD to put all controversy to rest by acknowledging all the legal holes in the Prospectus and engaging an independent auditor and assayer to verify that EVERYTHING the Trustee reports as being held in the trust is actually being held in the trust.  Short of going through that exercise, their continued silence only strengthens the case against GLD.