{"id":1153,"date":"2018-06-27T08:37:14","date_gmt":"2018-06-27T08:37:14","guid":{"rendered":"http:\/\/14.136.43.216\/goldprice\/?page_id=1153"},"modified":"2022-11-14T15:02:39","modified_gmt":"2022-11-14T15:02:39","slug":"why-buy-gold","status":"publish","type":"page","link":"https:\/\/hongkong-gold.com\/goldprice\/index.php\/why-buy-gold\/","title":{"rendered":"Why Buy Gold"},"content":{"rendered":"

10 Reasons to Buy Physical Gold<\/h3>\t\t\t
<\/div>\n\t\t<\/div><\/div><\/div>
\n\t
1<\/div>
Gold is money<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0is one of the best forms of long-term wealth protection. It is ideal for your heirs since it will outlast any currency they may use in the future.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
3<\/div>
Gold\u00a0has no counterparty risk\u00a0\n<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0cannot go bankrupt or broke.\u00a0Gold\u00a0bullion will never default on promises or obligations.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
5<\/div>
Gold\u00a0is liquid and portable<\/div>\n\t
\n\t\tGold\u00a0is easily convertible to cash, and can go with you anywhere.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
7<\/div>
Gold\u00a0requires no specialized knowledge\u00a0<\/div>\n\t
\n\t\tNo special skills or expertise is needed to\u00a0buy\u00a0physical\u00a0gold.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
9<\/div>
Gold\u00a0hedges the stock market\u00a0<\/div>\n\t
\n\t\tIf you want an asset that will rise when most other assets fall,\u00a0gold\u00a0is likely to do that more often than not. The more common stocks you own, the more\u00a0gold\u00a0you need.\u00a0\n\t<\/div>\n<\/div><\/div><\/div><\/div><\/div>
\n\t
2<\/div>
Gold\u00a0is a tangible asset\u00a0<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0is not subject to the risks that come with paper assets. It can\u2019t be hacked or erased.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
4<\/div>
Gold\u00a0can be private and confidential<\/div>\n\t
\nIf you want a private or confidential form of wealth,\u00a0gold\u00a0is one of the few assets that can offer anonymity.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
6<\/div>
Easy to store, low carrying costs\u00a0\u00a0<\/div>\n\t
\n\t\tGold\u00a0storage is low maintenance, low cost, and requires little space.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
8<\/div>
Gold\u00a0can protect against government intrusion\u00a0\u00a0<\/div>\n\t
\n\t\tInternational\u00a0gold\u00a0storage is simple to implement and can provide both financial flexibility and investment options outside your home country.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
10<\/div>
Gold\u00a0protects against crisis\u00a0\u00a0<\/div>\n\t
\n\t\tIn a world of elevated risks on multiple fronts,\u00a0gold\u00a0offers lower risk, greater safety, and bigger upside than any other investment.\u00a0\n\t<\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div>
\n\t
1<\/div>
Gold is money<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0is one of the best forms of long-term wealth protection. It is ideal for your heirs since it will outlast any currency they may use in the future.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
2<\/div>
Gold\u00a0is a tangible asset\u00a0<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0is not subject to the risks that come with paper assets. It can\u2019t be hacked or erased.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
3<\/div>
Gold\u00a0has no counterparty risk\u00a0\n<\/div>\n\t
\n\t\tPhysical\u00a0gold\u00a0cannot go bankrupt or broke.\u00a0Gold\u00a0bullion will never default on promises or obligations.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
4<\/div>
Gold\u00a0can be private and confidential<\/div>\n\t
\nIf you want a private or confidential form of wealth,\u00a0gold\u00a0is one of the few assets that can offer anonymity.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
5<\/div>
Gold\u00a0is liquid and portable<\/div>\n\t
\n\t\tGold\u00a0is easily convertible to cash, and can go with you anywhere.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
6<\/div>
Easy to store, low carrying costs\u00a0\u00a0<\/div>\n\t
\n\t\tGold\u00a0storage is low maintenance, low cost, and requires little space.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
7<\/div>
Gold\u00a0requires no specialized knowledge\u00a0<\/div>\n\t
\n\t\tNo special skills or expertise is needed to\u00a0buy\u00a0physical\u00a0gold.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
8<\/div>
Gold\u00a0can protect against government intrusion\u00a0\u00a0<\/div>\n\t
\n\t\tInternational\u00a0gold\u00a0storage is simple to implement and can provide both financial flexibility and investment options outside your home country.\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
9<\/div>
Gold\u00a0hedges the stock market\u00a0<\/div>\n\t
\n\t\tIf you want an asset that will rise when most other assets fall,\u00a0gold\u00a0is likely to do that more often than not. The more common stocks you own, the more\u00a0gold\u00a0you need.\u00a0\n\t<\/div>\n<\/div><\/div><\/div><\/div>
\n\t
10<\/div>
Gold\u00a0protects against crisis\u00a0\u00a0<\/div>\n\t
\n\t\tIn a world of elevated risks on multiple fronts,\u00a0gold\u00a0offers lower risk, greater safety, and bigger upside than any other investment.\u00a0\n\t<\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div>

3 Reasons Why Investors Should Avoid\u00a0Gold\u00a0ETFs<\/h3>

\nCounterparty Risk on All Levels\n<\/h4>\n

\nUnlike physical\u00a0gold\u00a0bullion\u2014which is a tangible asset\u2014ETFs\u00a0are a\u00a0financial product that have counterparty risk. Counterparty risk is present when there\u2019s a possibility the other party in an agreement will default or fail to live up to their obligations.\n<\/p>\n

\nAs we\u2019ve discussed before, one of\u00a0gold\u2019s primary benefits is being the only financial asset that is not simultaneously somebody else\u2019s liability. Therefore, these ETFs are a poor substitute.\n<\/p>\n

\nWhen we look at\u00a0how these ETFs function, the problems quickly become apparent.\n<\/p>\n

\nLet\u2019s analyze the operations of the world\u2019s largest\u00a0gold\u00a0ETF\u2014the SPDR\u00a0Gold\u00a0Trust (GLD). To gain exposure to the price of\u00a0gold, investors\u00a0buy\u00a0GLD shares through an Authorized Participant. An Authorized Participant is usually a large financial institution, like a market maker, which is responsible for obtaining the underlying assets necessary to create ETF shares.\n<\/p>\n

\nWhen they do so,\u00a0they are buying shares in the funds trustee\u2014the SPDR\u00a0Gold\u00a0Trust. The trustee then uses a custodian, in this case HSBC, to source and store the\u00a0gold\u00a0for them. As the custodian is tasked with sourcing and storing the\u00a0gold\u00a0on behalf of the trustee, they are a major counterparty.\n<\/p>\t\t\n

\nHerein lies the first problem. Many investors\u00a0buy\u00a0gold\u00a0as\u00a0portfolio insurance against a systemic failure in the financial system. As GLD is intertwined with one of the world\u2019s largest banks, it doesn\u2019t fit this purpose. If HSBC became impaired,\u00a0GLD shares could be negatively impacted.<\/p>

\nBut the problems go deeper. Custodians like HSBC use sub-custodians,\u00a0such as the Bank of England, to source and store\u00a0gold. So, in addition to carrying custodian risk, investors also have sub-custodian risk.\n<\/p>\n

\nSounds like a lot of counterparty risk. But there has to be rules in place to protect investors if something goes awry\u2014right?\n<\/p>\n

\nTrustee Trouble\n<\/h4>\n

\n\tBased on old LBMA rules, there are\u00a0no written contractual agreements\u00a0between sub-custodians and the\u00a0trustees or the\u00a0custodians. As a result, the ability of\u00a0trustees and\u00a0custodians to take legal action against sub-custodians is limited. Therefore, the\u00a0trustee is on the hook for any negligence. But\u00a0trustees are insured against such events\u2014correct?\n<\/p>\n

\n\tIt turns out that\u00a0trustees don\u2019t insure their\u00a0gold\u00a0holdings. They leave the responsibility of insurance to the\u00a0custodian\u2026 And the plot thickens. Custodians only insure the contents of the vaults for\u00a0limited general insurance cover. Such coverage\u00a0falls greatly short of the value of the\u00a0gold\u00a0held inside the vaults.\n<\/p>\n

\n\tPutting it all together, if anything happens to any of the counterparties,\u00a0the investor has zero recourse. Besides carrying major risks, there is another issue with\u00a0gold\u00a0ETFs.\n<\/p>\n

\nNo Exposure to\u00a0Gold\n<\/h4>\n

\nYou may be surprised to learn\u00a0gold\u00a0ETFs don\u2019t give you exposure to\u00a0gold but, it\u2019s true. The GLD prospectus states\u00a0\u201cGLD represents\u00a0fractional, undivided interest in the Trust.\u201d\u00a0When you invest in\u00a0gold\u00a0ETF,\u00a0you are buying shares of the Trustee. Basically, you are a shareholder of the trust, not a\u00a0gold\u00a0holder.\t\n<\/p>\n

\n\tAs such, GLD shares represent a paper claim on\u00a0gold, not\u00a0gold\u00a0itself. This negates a major reason for owning it's protection during crises. If the economy collapsed and brought down a part of the financial system with it, the Trustee will settle your claim in cash, not\u00a0gold.\n<\/p>\n

\n\tThe real irony is the price of\u00a0gold\u00a0could be skyrocketing and the ETFs could be going bankrupt at the same time.\n<\/p>\n

\n\tGiven these issues,\u00a0long term investors would be wise to avoid\u00a0gold\u00a0ETFs. Luckily, for those wanting to\u00a0buy\u00a0physical\u00a0gold,\u00a0things have never been better.\n<\/p><\/div><\/div><\/div><\/div><\/div><\/div>

\t\n<\/div><\/div><\/div><\/div>

Contact Us<\/h3>
\nmarvinchiu@hongkong-gold.com
\n(+852) 2687-1387
\n
\nUnit G10A, Hankow Centre,
\n 5 - 15 Hankow Road, Tsim Sha Tsui,
\nKowloon, Hong Kong\n<\/div>\n