Author Topic: SGOL ETF For Gold Allocation: What are the risks?  (Read 5192 times)

BearBones

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Re: SGOL ETF For Gold Allocation: What are the risks?
« Reply #12 on: February 08, 2012, 08:12:48 PM »
Ok, that was good, Craig. Looking forward to this book...

MachineGhost

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Re: SGOL ETF For Gold Allocation: What are the risks?
« Reply #13 on: February 09, 2012, 08:31:47 AM »
I agree that the ZGLD ETF is probably the "hardiest" of the bunch. But this ETF is not available for purchase by Americans. You could jump through some hoops to get it on a foreign exchange, but this is a bad idea because of potential tax and other issues not being registered here. So even if you can buy it, you should be aware that it is strongly discouraged.

I don't mean to be a hard ass, but this is the second time you've made the claim that ZGLD is not "available" to be purchased by Americans.  As I mentioned in the other thread, it is the U.S. broker's fault if they dont have a business relationship with the Swiss Exchange (not counting buyng it OTC).  I can go to my U.S. broker, punch in the ticker, and readily buy it.  You are almost infering that it is illegal to do so.

What tax and other issues are there?

Who is "strongly discouraging" it other than you?

MG
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as permitted to render such advice!

SteveGo

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Re: SGOL ETF For Gold Allocation: What are the risks?
« Reply #14 on: February 09, 2012, 09:14:50 AM »
From: http://solari.com/articles/ZKB_Precious_Metals_ETFs/

According to these prospectuses, the ZKB Gold and Silver ETF shares may not be "offered, sold, resold or delivered either directly or indirectly in the United States, to US citizens or persons resident in the United States, or to stock corporations or other legal entities established or organized under the laws of the United States" except in a transaction exempt from US securities laws and such US-domiciled investors may not redeem any shares they hold in exchange for precious metals. This policy was confirmed by a representative of the gold ETF in Switzerland, who was not willing to provide a copy of the prospectus to our US-based attorney due to these limitations.

At least two brokers we talked to in the US told us that purchases of ZKB precious metals ETFs on the Swiss exchange (i.e., in the secondary market) by US domiciled investors are prohibited. At least two other dealers were willing to purchase and hold ZKB ETFs on behalf of our affiliate’s US-domiciled clients. Thus, it appears that a US-domiciled investor may succeed in purchasing ZKB Gold and Silver ETF shares in the secondary market, but he or she will need to rely upon the secondary market for sales and cannot expect to be able to redeem shares for gold or silver.



Here is some info directly from ZKB at:
http://media.fundinfo.com/pdf/2012/02/03/2823639.pdf/MR_en_CH_CH0047533549_2011-12-30.pdf

The site won't allow cut and paste, so you will have to follow the link, and look at page 2, under "Legal Information."
« Last Edit: February 09, 2012, 09:31:30 AM by SteveGo »
Steve G

craigr

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Re: SGOL ETF For Gold Allocation: What are the risks?
« Reply #15 on: February 09, 2012, 11:18:37 AM »
What tax and other issues are there?

I called one of my contacts in Switzerland last night that is very familiar with this fund and Swiss banking financial products. He also specializes in servicing American clients, is a SEC registered financial advisor, and has been in the private banking business for over 20 years.

He stated, once again, that the ZGLD fund should not be bought by Americans. For one reason it is not registered in the states so it is subject to much higher taxation as a foreign investment company. This leads to a lot of risks for people that buy the fund. Secondly the bank does not want to deal with American clients so you are taking risks of buying a product where the issuer doesn't want your business.

Quote
Who is "strongly discouraging" it other than you?

I'm just telling you what I know based on what several people inside the industry have told me. Zurich Canton bank is a great institution, but they don't want to deal with American clients. They probably won't even talk to you if they see you are calling from an American area code on your phone.

And again it's still an ETF. So you still have virtually the same ETF risks such as it being in street name, proving ownership, etc. just like the other ones SGOL or PHYS have. So not only are you still stuck with the ETF problems as others, but you have the additional problem of investing in an unregistered product and a bank that to doesn't want your business!

« Last Edit: February 09, 2012, 11:21:47 AM by craigr »

Ad Orientem

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Re: SGOL ETF For Gold Allocation: What are the risks?
« Reply #16 on: February 10, 2012, 08:14:13 PM »
...Probably the best form of paper gold, with the least layers of intermediaries, is the Perth Mint Certificate or Mocatta Delivery Order as that is specific title to a specific claim of assets (if allocated).  Very easy to transport across borders too...

...But, Hong Kong is the next best place for storing gold after Switzerland.  They even sell gold in ATMs over there!...

I concur with your opinion of the Perth Mint.  Right now I think that's the best bet for overseas gold. 

Re: Hong Kong I'm a bit more skeptical.  Hong Kong works well at the moment because for the most part they are left alone to do their thing.  But Hong Kong IS NOT an asiatic Switzerland.  It is part of the People's Republic of China.  And the PRC is not a democratic state with a strong history of respect for the rule of law or property rights.  Nor are they a neutral state in foreign affairs.  Point in fact the PRC's foreign policy is, if perhaps not hostile to ours, at least less than friendly.

Is Hong Kong a safe place to do business?  On a near term basis I think so.  Long term I am not so sure.  If your looking for an uber safe place to stash gold I would shy away from anywhere that is run by an authoritarian police state with a history an adversarial relationship with our country.
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