A gold ETF is an exchange traded fund (ETF) exclusively trading gold as a commodity. This means this is paper or digital data stating that you have a claim on a legal entity which value is based on the actual marketprice of gold. This claim is not secured or collaterlized with physical gold, actually you are dealing with a balance sheet of an entity which is wrecked in case of default or insolvency of this particular entity. During the banking crisis, ETF companies turned out to be instable and unpredictable.
Some ETF prospectuses point to possible risks, such as that redemptions may be suspended temporarily or indefinitely at the discretion of the management company, and that custodians may be free to appoint sub-custodians, whose performance cannot be guaranteed.
Some ETFs do not own all physical metal directly, but gain their exposure to gold and silver prices in whole or part through futures, options, swaps, leases or other derivatives, which have some combination of exchange, issuer and counterparty risk. These risks can be difficult to quantify, in particular in the event of a financial crisis.
As an example, in September 2011, the ETF company London Gold Exchange closed shop by simply turning off their website, leaving all LGE ETF holders behind with empty hands.
Goldflorin only offers products based on 100% certified gold which is always literally physically present without any counterparty risk. Dealing with Goldflorin means that you have guaranteed and direct cover by physical gold instead of having a claim on our legal entity. Goldflorin delivers your gold at you desired address after which you can Webstore it yourself, with the Vault and GFLX our foundation Goldflorin Global Custoday, holds the gold positions for our clients, which means in case of default all Goldflorin clients can be sure that they receive the gold or the countervalue in fiat currency.
| Physical Gold | Gold ETFs |
|---|---|
| Control over your wealth | No real control |
| Full ownership of physical gold | You never own any physical gold |
| Personal security and peace of mind | Trust in a third party is required |
| Secure investment | Speculative investment |