I was reading some articles about value investors going into gold (e.g. Khaner, Einhorn). Coincidentally, I just watched Chris Martenson’s Crash Course which is predicting the collapse of the fiat monetary system, which is one main reason why people are buying into gold. One of the most popular ways to playing gold is to buy a Gold ETF (e.g. SPDR Gold Trust, NYSE:GLD). I was just thinking how exactly does a Gold ETF work, and whether there would be a situation similar to the GFC (e.g. FIs insuring the gold without proper checks, insurance gets passed around to multiple parties, ownership claims of the gold is one long chain similar to the housing crisis and a fractional reserve banking system, etc.)
Interestingly, there are quite a few articles on the GLD ETF highlighting that it is suspicious and may not be fully backed by real gold that are directly attributable to shareholders. That may be one reason why Einhorn is switching to owning physical gold as compared to GLD shares (the reason given was that the storage costs are lower than the expense ratio of GLD).