As I feel this is still an outstanding issue of GLD, I will repost this here. Feel free to verify this for yourselves:
“Did anyone try calling the GLD hotline at 866-320-4053 and asking for any numerical details on GLD's insurance? I reached a State Street representative that told me to look at the prospectus but I am sure the prospectus doesn't give any numbers or percentages to how much of GLD's physical gold is insured. The prospectus only vaguely mentions HSBC holding some kind of insurance policy for GLD. This State Street representative proceeded to feign ignorance when informed of this and said they were just the "marketing agent" for GLD. What kind of marketing agent doesn't know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.
There are not many ways for the average investor to verify GLD's physical assets since most retail investors won't even have the right to redeem their shares for physical bullions. The prospectus is full of legal writing protecting GLD organizations from any liabilities but not a single clause to protect investors from bullion lending. On top of everything, the GLD manager - State Street, has been shown to be less than trustworthy (Carina CDO, multiple instances of forex fraud). Where is the credibility in GLD?"
They just told me that GLD fully insures its assets. I'm somewhat confused since the prospectus specifically states that this is impossible. "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."
Did anyone notice how much discomfort these insurance questions cause these GLD agents? The more I pushed the subject, the more nervous the GLD agent sounded... almost to an unusual level. Why would an agent of this ETF display such nervousness around simple insurance inquiries?
This is without a doubt, interesting. I got a very similar response to the one mentioned in the opening post. A representative from State Street explicitly told me that they don't know anything about the insurance of GLD. I find this strange since they are the marketing agent of GLD. Why wouldn't they know? Or maybe they're just "feigning ignorance" as you put it.
I had a slightly different experience when I asked specifically for the numbers behind GLD's insurance. They threw a bunch of excuses at me. One excuse revolves around the "daily changes in amount of gold". They should be able to determine a minimum level and insure accordingly. As mentioned by another poster, having a catch all insurance policy is not at all impossible either. They could have a policy that insures everything that goes into the vault and if more insurance coverage is needed, they can add to it. Ultimately, the "daily change in gold" is a somewhat deceptive and poor excuse on their part.
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 which they conveniently avoided mentioning. 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.
It sure seems that way. The GLD marketing group refusing to divulge GLD's insurance information only raises more questions. Why hide GLD's insurance information? There is not a single good reason for them to say "they do not disclose this information publicly".
You're right. This GLD marketing agent not only claimed to not know anything about GLD's insurance but they also appeared to be quite nervous when I brought up the subject. How can they be a marketing agent without knowing such basic information about the product they are marketing? Something stinks here.
If the GLD organizations allowed an outside insurance firm to poke around their gold, how would they get away with their shady dealings like bullion lending?
Just look at CNBC's Bob Pisani visit to the GLD vaults. It was their intention to prove gold was actually there but the visit turned out to be a glaring red flag when the gold bar held up by Bob Pisani had the serial number ZJ6752 and did not appear on the most recent bar list at that time (dated Aug 31). Zero Hedge who first noticed this also mentioned that the GLD tonnage was relatively flat over the previous weeks so its very unlikely that many bars have been removed up to the time of the visit.
"In any event, shortly afterwards people noticed that the gold bar he held up on air actually wasn’t even on GLD’s gold bar list. But wait it gets even better. It seems that Ned Naylor-Leyland of Cheviot Asset Management has discovered that the famous Pisani GLD bar was actually owned by another gold ETF! Yes folks, fractional reserve gold investing. I’ve said it before and I’ll say it again. You’d have to be a complete fool or totally irresponsible to own GLD as a money manager or investor."
This is probably one of the stronger signs of GLD not owning all the gold it claims to own and is a reason why GLD cannot insure its gold.
They were very evasive around the subject of GLD's insurance when I called. They gave me a HSBC number to call but when I called that number, I was told to call back to the official GLD number. Are they running a shady operation inside GLD or what?
That's exactly what they told me when I called. They gave me a dead-end HSBC number that told me to call back to 866-320-4053. We shouldn't even need to put this much effort to obtain some basic information on GLD. They are acting very suspect.