Gold ETFs are rising in popularity due to their convenience. They’re easy to trade, there’s no need to store anything, and no one is going to break into your house to steal your GLD shares.
But there are a lot of hidden dangers inherent in the structure and operation of gold ETFs that few investors are aware of—and these risks are more pronounced than ever, as the threat of another financial crisis is always around the corner.
When you look at both assets more closely, it’s clear that gold ETFs and gold bullion are very different investments.
While gold ETFs can be a fine investment, they come with a lot of counterparty risk inherent in their chain of custody. And this risk will only grow commensurately with systemic uncertainties.