Did anyone try reaching out to State Street Global Advisors and asking if GLD's physical assets are insured? I contacted them at 866-320-4053 to ask if the physical gold bars are insured. They said that there is no insurance but at the same time they said HSBC bank has “some sort” of insurance on their holdings. Why won't they specify on this 'insurance'?
There are not many ways for the average investor to validate GLD's physical assets. Even the prospectus is full of legal writing removing liability. On top of everything, the GLD manager - State Street, has been shown to be less than trustworthy (Carina CDO, multiple instances of forex fraud). Is there a shred of credibility left in GLD?
I'm more than willing to bet that GLD will fold like a deck of cards if it was ever discovered that there was no real gold behind GLD. Heck, even the sketchiness of GLD's insurance is enough to keep me away from this shady investment vehicle.
I tried to dig up information on GLD's insurance a long time ago and turned up nothing. The notion that GLD has any definitive insurance is laughable. Even if GLD's prospectus mentioned HSBC holding some kind of insurance policies, they are largely non-existent as proven by SSgA's inability to specify on these policies. No one to date has been able to answer: just how much of GLD's physical gold is insured?
When people talk about the costs of investing in gold, the costs usually refers to transportation, storage, and insurance. Many GLD investors are probably oblivious to the sketchy GLD's insurance but investors who want clarification on this subject are justified. Exactly how much of GLD's assets are insured? The million dollar question.
I tried researching GLD's insurance recently and it seems you are right. I specifically asked for numbers on how much of GLD's assets are insured and they just gave me a bunch of excuses. One excuses revolves around the "daily changes in amount of gold". Surely they can still insure a majority of the assets based on an average. Another excuse involved the 'event' that occurred. I was given some ridiculously farfetched examples such as physically stolen gold or war destroying the gold. A more reasonable example would be fraud but I digress. In any case, this does not justify the lack of insurance at all. It seems as if they want to cling onto this line of credibility even if they really don't have insurance.
This was the response I got when I asked for numerical specifics on HSBC's insurance policies. They beat around the bush and give out random situational excuses. In the end, they were unable to give a clear cut answer on just how much of GLD's assets are insured. Why would they hide the numbers behind GLD's insurance?
You realize George Soros and John Paulson have the option of delivery while everyone else doesn't right? I'm willing to bet these individuals can make a call to secure their own physical gold while the rest of us are left holding the bag. If such a condition as hyperinflation were to occur, you might find the authorized participants draining all the metal from GLD.
From a different perspective, even the wealthy are just human. I'd point to Enron, Bear Stearns, GM, and etc. Although many might disagree, I'd say a number of Warren Buffet's investments were foolish for retail investors.
This "billionaires trust it" argument is faulty.
Why won't you people get off this subject? Insurance is unimportant and doesn't concern you folks so just lay off. Neither SSgA nor HSBC bank have any obligations to disclose such information to insignificant people like you.
Sorry but not everyone is willing to blindly jump into GLD for the sake of 'convenience'. A degree of credibility - such as insurance - goes a long way. I'll get off this subject when I get hard numbers on the mysterious "HSBC insurance policies" that are mentioned in the prospectus.
When I called in the past, the representatives at State Street would side step the inquiry and just state that HSBC bank has “some sort” of insurance on the holdings. They won't directly say that GLD's physical assets are insured but they also wouldn't say GLD is uninsured too. This sudden change in response must be a result of increased scrutiny on this particular issue. An increasing number of investors are likely calling in to ask about this sketchy issue.
Major update on this: I called in and reached a Mike who said "Every bar of gold is fully covered." Now this directly conflicts with what is stated in the prospectus "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody."
But because a representative of SSgA officially stated that every bar of gold is fully covered, I assume we can all legally hold them accountable if that representative is lying. Can someone else confirm SSgA's reversal on this issue?
That is how my insurance inquiries first went. I'm planning on calling in to ask specifically about HSBC's insurance policies this time. I'll see this "question dodging" for myself.