Gold and Silver Exchange Traded Funds

“A security that tracks an index, a commodity, or a basket of assets like an index fund, but trades like a stock on an exchange.” Investopedia

Exchange Traded Funds (ETFs) aim to track or trade the underlying commodity. They are securities and may or may not have actual physical metal in storage backing them. They often trade both above and below their respective Net Asset Values (NAV).

An advantage of owning an ETF is that Funds and Institutions that cannot own commodities can own ETF shares. This exposes ETFs to potentially vast sums of money. A disadvantage is that they are taxed at a 28% collectible rate, not 15% capital gains rate no matter how long owned.

The issue, as I see it, is to make sure yours has the goods.

According to Jeff Nielson:

“Bullion-ETF's claim they can purchase gold and silver with no premium, and in infinite amounts - and then store these vast hoards of gold and silver at zero cost. How can this be possible?”

“With only a few, rare exceptions, no "bullion-ETF's" hold any gold or silver. Instead, all they hold are "paper promises" to deliver gold.”

Make sure yours is audited regularly.

Authors John Rubino, Dave Morgan, and James Turk all urge caution.

These are some of the largest and most well known precious metal Exchange Traded Funds. As always, these are selected but not necessarily recommended Funds. Do your own thorough research. The Stock Exchange the fund trades on and its trading symbol follow the equity name. The year in which it began trading follows that.

Central Fund of Canada (AMEX:CEF) (1961) Holds 100% Gold and Silver bullion. It’s a closed-end fund that’s made up of 59% gold and 34% silver. Audited twice yearly. Almost always trades at a premium to spot (market) price of metal (NAV). The premium to NAV has been as high as 30%.

Central Gold Trust (AMEX:GTU) (2006) Gold Bullion

Claymore Silver Bullion Trust (TORONTO:SVR.UN)

Elements MLCX Gold Index ETN (AMEX:GOE)

ETFS Silver Trust (NYSEArca: SIVR) (2009)

ETFS Physical Swiss Gold Shares (NYSEArca:SGOL) (2009)

E-TRACS UBS Bloomberg CMCI Gold ETN (NYSE:UBG) (2008)

E-TRACS UBS Bloomberg CMCI Silver ETN (NYSE:USV) (2008)

Global X Silver Mines ETF (NYSEArca:SIL) (2010)

Horizons BetaPro COMEX Gold ETF (TORONTO:HUG) (2009)

iSHARES COMEX Gold Trust (NYSE:IAU) (2005) Gold Bullion. Trades at a premium.

iShares Silver Trust (NYSE:SLV) (2006) Silver Bullion. No independent audits. Can lease its silver. Doesn’t segregate or allocate silver.

Market Vectors Gold Miners ETF (NYSE:GDX) (2006)

PowerShares DB Gold (NYSE:DGL) (2007) Gold Bullion.

PowerShares DB Precious Metals (NYSE:DBP) (2007) Precious Metals. 80% Gold. 20% Silver.

PowerShares DB Silver (NYSE:DBS) (2007) Silver Bullion.

streetTRACKS SPDR Gold Shares (NYSE:GLD) (2004) Gold. No independent audits. Can lease its gold. Doesn’t segregate or allocate gold. Tracks 1/10 ounce per share.

This material may only be copied or reproduced with permission of the author.

About the author:

Jerry Western is author of the newly available work,

Got Gold? Get Gold.

A Book on How to Protect your Wealth with the 21^st Century Gold Rush and

a Layman’s Guide to Riding the Golden Bull and the Silver Stallion.

Ordering instructions are available by e-mailing westernoutlook@gmail.com

Jerry also teaches 5 classes about the silver and gold markets.

Silver and Gold: Constitutional Money

Riding the Golden Bull

Silver and Gold Fundamentals

Buying and Selling Silver and Gold