Thursday, February 18, 2010

New COMEX Rule: Another Reason to Fear ETFs

Regardless of their expensive annual fees, frequent tracking errors, and the simple fact that you'll never be able to actually touch the gold or silver your ETF claims to hold, there are several more reasons ETFs should never be used by precious metals investors. An important rule change by COMEX, the American commodity exchange, allows ETF substitutes for precious metal delivery.

Paper as Metal

To address a temporary problem of liquidity, COMEX has systematically created an even bigger problem for investors. The exchange allows investors to make good on their futures positions with gold and silver ETFs rather than the real assets, thus opening up the door for hugely distorted market prices. (more)

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