The Best Way to Play Gold’s New Highs
Shah Gilani|December 30, 2023
The Dow isn’t the only thing hitting new highs as we barrel toward the end of the year.
Gold recently also hit a new record high of $2,135.
And with the Fed talking about cutting interest rates… 2024 is looking to be a great year for the precious metal.
Now, it’s easier than ever for investors to get exposure to the gold market, thanks to instruments like the SPDR Gold Trust (GLD).
But you may be surprised to see I’m not recommending that…
It’s hard to say how much real gold each share of the fund is really connected to or backed by… not to mention who’s actually holding on to that gold.
That’s no good.
Instead, I have an alternative you need to look at.
There’s a lot to like about it…
It has a rock-solid provenance in physical gold for each share sold by the trust…
We know where that gold is stored…
And there are no middlemen to muddy the waters.
In the video below, which I sent to my Total Wealth subscribers back in September, before gold started heating up, you can see exactly what I recommend.
Gold’s on the move. Don’t wait to check this out.
Click on the image below to watch it.
Hey everybody. Shah Gilani here with your “Take it to the Bank Tuesday,” where I recommend what you should do with $100 today, as in right now.
Lots of people have been asking me about gold for the last, I would say maybe going on six months now. A lot of questions about gold. “Hey Shah, what do you think about gold?” Gold, gold, gold, gold, gold… and some questions about silver.
But today, I’m going to talk about gold.
I will start off by saying I’m not a gold bug. I’ve never been a gold bug. I never believed that gold is the be all, end all.
Yes, it’s a separate asset class. Yes, it’s pretty much noncorrelative with the other asset classes.
Yeah, I get all that stuff. I get the fact that it’s a store of value, but I don’t get a lot of other things about it.
I don’t get how we would, as some people are advocating (a lot more than I find reasonable)… advocate that we should go back to a gold standard. We may be the United States, we may be other parts of the world, and that’s where gold gets interesting.
So though I’m not a gold bug, what’s interesting about gold is the price of gold has been pretty level. It’s trading in the cash market at about $1,922. 1,922 bucks, thereabouts, right now. So $1,922.40 for an ounce of gold. So kind of flat, kind of doing a whole lot of nothing.
But the interesting thing about why I think people are asking me is because countries like the BRICS – Brazil, [Russia,] India, China, South Africa – who just had a meeting in Johannesburg, they are now incorporating and have invited other people to come and join them… quite a few other nations to join them in the so-called BRICS Union.
Now, one of the reasons they want to expand their group is to create a digital currency, and they expect that digital currency might be backed by gold.
So a lot of central banks have been accumulating gold. That’s one of the reasons that the price hasn’t gone down very much. So there seems to be a floor under gold. So that’s very interesting to me.
Again, though, I’m not a gold bug, I like buying things that go up. I like buying things that have inherent value that I think over time are going to go higher. Maybe a lot higher.
Now, I still don’t get the whole idea of gold as the be all, end all backing a digital currency. But far be it from me to decide that that’s what the BRICS or any other group of countries want to do with a digital currency or payments system backed by gold, because that’s their prerogative.
If they do, guess what? Gold’s going to go a lot higher. A lot higher. Yes. Limited capacity to hold gold. Limited quantities. It’s got to be mined, people.
It’s not like diamonds. They haven’t found a way with gold, as they do with zirconium, to imitate the diamond. There’s nothing that I know that imitates gold.
So gold may have a different future than I thought.
So how do you play that? You can buy GLD, which is the [SPDR Gold Trust] ETF, and that’s the one that most people go with.
As far as GLD goes, there’s nothing wrong with GLD. If you want to track the spot price of gold, GLD does a great job. If you want to have exposure to gold, GLD does a great job. It’s trading right now at $177.43. Again, that’s how you want to play gold, so be it.
But if you want to own gold, not play gold… because GLD is more like paper gold. They supposedly have enough gold to back all of the shares that they have sold. Because as an ETF, it’s supposed to be backed up by shares of gold, but it’s still paper gold.
As far as GLD goes, people, they have something called sub-advisors, and they have sub-custodians. Those sub-custodians sometimes have sub-custodians themselves. Now, those custodians and sub-custodians and sub-sub-custodians are the ones that are supposed to be holding the gold in various places.
Who knows how much gold they’re really holding against your GLD share. Okay? So that would worry me. I’m not worried about it now, but if something was to happen, I don’t know what, I’d be worried about well, how much gold is actually in the vaults of people that control that gold that is allocated as my collateral for my shares of GLD? I’d be worried about that.
So for your $100 today, I got another way to play gold. It is the Sprott, that’s S-P-R-O-T-T, Physical Gold Trust, symbol PHYS.
Now, I’ve been doing some research on this because of all the questions I’ve been getting about gold. The Sprott Physical Gold Trust, symbol PHYS, keeps all of the gold, the more than $6 billion worth, which is the net asset value of the shares, because that’s what underlies them in the Royal Bank of Canada. At the Canadian Mint. So their gold is right there. You can look at it, and you can count it.
That, to me, is worth gold.
So there is no sub-custodian, there are no sub-sub-custodians. The custodian of the gold is the Canadian Mint, the Royal Canadian Mint.
So for my $100, for your $100 today, if you want to buy gold… and if the BRICS and if other countries are going to create digital currencies backed by gold, you want to own gold.
Rather than actual physical bars, which I have owned… Forget the coins, people. You’re paying a value that is not going to be returned as far as that minting, that numismatic value is not worth the extra.
So if you want to buy physical gold and store it, yeah, buy gold bars.
But if you want to buy physical gold that’s the closest thing to owning physical gold, then you buy PHYS, the Sprott Physical Gold Trust. It’s trading at just a shade under $15, versus GLD at $177.
I told you what I don’t love about GLD. What I love about Sprott Physical Gold is they hold the physical gold, people.
So for my $100, for your $100 today, I suggest you buy $100 worth of PHYS, of Sprott Physical Gold, and you take that to the bank, because that’s kind of like a bank in itself.
Catch you guys next week. Cheers.