Originally Posted by Prozema View Post
I don't know much about the option market in the precious metal space.

IMO the premiums over spot on physical gold is a huge bummer but if the shit hits the fan physically having control of the asset may make it worth it. Personally I don't think it will get that bad and a mutual fund or ETF is probably a better option for most people. On the other hand even if it does get that bad, might the government just come in and take the gold away from us like they did in the past? Who knows....

Anyway, my thoughts on precious metals was in mutual fund space containing miners. Invesco Gold & Special Minerals Fund Class A (OPGSX) is one I was looking at and favoring. The reason that pushes me to that fund is that I have an account with Fidelity and the load is waived at Fidelity. I'm in a weird regulatory place with ETFs... I do think those might be a better option than a mutual fund but since it's harder for me to own those I don't pay a lot of attention to them. There are a bunch of ETF gold funds out there. I would start with IAU... They have a ton of assets under management and the market for those share appears very liquid. Second biggest would be GLD.

I'm a little (understatement) out of my space here, so please take this with a grain of salt. I hold no positions and have no interest in any of these funds as of writing this post.
The problem with that theory is a thing called backwardation. That is when the physical items sells for more than the spot price. Currently you can't hardly find any silver at $35 a troy ounce. But the futures market says it is worth $26. That's because the bullion banks have an unlimited ability to dump metal that doesn't exist by selling a contract into the market absorbing paper investor's demand. There is currently about 186x the yearly world mining production sold. If you dig into the exchange reports, etf's, and other things.
A lot of people think they own silver when in reality all they own is a piece of paper with a promise that could not possibly be filled if even a fraction of the holders demanded delivery. Silver is the most oversold commodity the world has ever seen. The US government used to have 4 billion ounces in reserve. Today they have zero and the Mint has to go into the market to purchase.
As the rules with most exchanges and funds allowing for cash settlement only allows the scam to be carried further into the future. As more people wake up and force delivery along with holding. The markets will fail to deliver. At that point it is possible for the spot to go to zero. Because who wants an empty promise? At the same time the physical becomes unobtanium except for a ridiculous price.