07/03 Gold Podcast: Response to a subscriber; What’s the best way to gain exposure to gold and precious metals?

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Hello, Chris.

Great to hear you back doing regular shows again. How are you and yours these days?

I had a question you might want to include in a future podcast, or answer directly:

– For those buying gold, what is the best way to know the gold is authentic? I don’t usually read Zerohedge, but I accidentally stumbled onto an article of his (that neo-Soviet Bulgarian intelligence operative known as Tyler Durden) where he shows a 10-ounce PAMP Suisse gold bar broken, revealing a hollow base of junk metal. The gold I bought recently has a PAMP “VeriScan” certificate attached to it. Is this enough to trust it’s authenticity?

Timothy

-The whole precious metals industry complex is full of inherent conflicts of interest, and its recommendations are not based on determining the most profitable outcome for you.
-I am a huge long-term fan of gold ownership.
-Own physical gold for the right reasons. 1) The price follows monetary inflation over the long run, since it is the one true monetary metal. 2) It outperforms ALL other forms of gold investments. 3) It will be an asset outside the system. 4) Very little of it is devoted to industrial offtake, so it is much less susceptible to underlying economic circumstances
-Own the right types of gold. There are a number of types of physical gold that are much more susceptible to counterfeiting and adulterating.
-I only recommend one form of long-term gold ownership.
-Physical gold really has a 0% cost to own, if held discreetly. I do not recommend storing it long-term in any safety deposit boxes.
-GLD was the first gold ETF and began trading in 2004. The fund has an expense ratio of 0.4%. While this is not outrageous by any stretch, there are other gold ETFs with lower expense ratios. For example, the iShares Gold Trust has an expense ratio of 0.25%.
-Look at the chart below and ask yourself if longer-term exposure to gold miners is the best choice for gold investment. (GLD green/red, GDX magenta, GDXJ sky blue)

Since the inception of GDX (May 2006), GLD has gained 132%, while GDX has lost 25%. GDXJ has lost at least 60% since its inception. Dividends not included.

-The shareholders and managers of the miners are subscribers to ZeroHedge, GATA, KWN, and Goldseek, and they actually believe the disingenuous shilling and dollar collapse talk.
-The miners tend to overextend at the wrong time, while contracting at the most opportune times. Their stock price performances clearly reflect these poor choices.
-The gold shill sites promote anything that supports the price of gold. These people are not our friends, and the miners are big supporters of these outlets. Money managers will never recommend owning physical gold as that means less potential money for them to manage. In other words, do not try to get affirmation from others regarding your physical holdings; you won’t get it.
-Most dealers usually steer prospective new buyers into numismatics as they have high markups.

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