Are ETFs or Central Fund of Canada a better way to own bullion than actually purchasing the physical bullion?
Both the precious metals ETFs and the Central fund of Canada (CEF) can be viewed as exchange traded vehicles that track the price of bullion. They are useful for speculation. You are not actually purchasing the bullion nor can you ever redeem your shares for physical bullion. In times of economic stress both the CEF and ETFs will behave in the same manner as stocks or equities and will trade at a discount to the spot price of the underlying metal as was demonstrated by Central Fund of Canada during the October 1987 market plunge. There are other risks involved with ETFs that include lack of transparency, lack of answerability and possible asset exposure due to the fact that the bullion may not be fully insured. It is highly recommended that, prior to investing, you become familiar with the risks involved with these trading vehicles by reading the risk disclosure statements contained in their prospectus. These problems, amongst others, would put your assets at risk when you need them mo
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