Gold ETFs vs Silver ETFs – Best Investments for 2019?

Gold ETFs vs Silver ETFs – Best Investments for 2019?

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hey YouTube I’m Jimmy in this video I’m
going to go through the advantages and disadvantages of investing in gold and
silver the best way to invest in them and which is better gold or silver from
an investment standpoint so in a recent video I published a question came up
about investing in gold and silver ETFs and although I know a decent amount
about gold as a hedge and a pretty good understanding of how gold as a commodity
is traded I realized that I don’t know a ton about gold or silver ETFs and
probably not as much as I could about gold or silver itself but as luck would
have it I happen to know one of the world’s leading experts on gold his name
is Will Rhind and I’ve known him for a few years and I know him because he started
a company called Granite Shares they manage a few ETFs the reason I
thought of him when I was prepping for this video is that one of those ETFs is
called the granite shares gold trust ticker symbol ba R now his ETF is very
similar to a spider ETF which is called the spider gold ETF ticker symbol there
is GLD GLD is the largest gold ETF in the world with about 30 billion in
assets so what’s interesting about Will and one of the reasons that I turn to
him when I have questions about the commodity markets specifically gold was
that we’ll spent two years as the CEO of GLD so clearly he’s one of the best at
this okay so now let’s kick it off with the first question if we want to invest
in gold or silver what’s the best way to do it is it in fact ETFs why don’t we
just buy the commodity itself well let’s say we would go ahead and we were to buy
the commodity let’s say we’re to buy gold a gold coin or bullion or gold bar
whatever it might be well the first thing we’re gonna have to do is we’re
gonna have to store that how’re we going to store it safely do we put it in safe
maybe a safe deposit box we stick it on drawer mattress either way there’s going
to be a cost involved in storing it or at least throwing it smartly but the
biggest reason that we don’t want to buy gold itself is the pricing you would get
so when you go ahead and buy gold and let’s say you buy gold gold coin from
where you buy some reputable store online well they’re not gonna sell to
you at the current spot price of a $1,250 per ounce they’re gonna mark it
up so that they can make their money and now let’s say you want to sell it back
to them well when you sell it back to them the same issue they’re gonna mark
it down they’re gonna pay less than the current spot price so you get hit twice
when you buy and sell it so if we’re gonna buy a gold ETF what do we get and
what’s the risk and the same will hold true for silver but I’m just going to
focus on gold for now so the two to ETFs that I narrowed it down to was BAR and
GLD and functionally the two of them act very similar to each other when you buy
a share either those gold ETFs you’re buying one tenth of an ounce
so 10 shares is the same as buying one ounce of gold
now when the ETF gets money when you invest money in the ETF the ETF takes
that money and they go ahead and they actually buy the gold and they store it
in vaults in London they serve them in different folks but either way the
concept is the same you buy btf they take that money they buy actual gold so
in theory that ETF is completely backed by gold this means that the price
of these two ETFs should closely track the price of gold
actually it should closely track one tenth of the price of gold the only real
difference between gold and the ETF is the fees and this brings me to why I
like BAR over GLD. BAR charges 17 and 1/2 basis points and GLD charges 40
basis points to me it’s as simple as that they both do the very same thing
why pay more now just to be clear yes I know Will and I like him and he’s helped
me further understand the markets but I’m not getting paid from him to say
anything like this it’s as simple as they do the same thing as GLD but they
charge less to me that’s a huge advantage so if we switch the silver
well one thing I noticed that there’s not nearly as much money in silver ETF
as a raising gold ETF the largest silver ETF I could find was the iShares silver
trust they’ve got about four and a half billion dollars and they charge a fee of
about 50 basis points so 1/2 of 1% then there’s also the aberdeen standard
physical silver ETF their ticker symbols SIVR once again they do the same
thing as SLV except that they only charge 30 basis
points so to my way of thinking SIVR seems to make more sense and I don’t
know anybody at that ETF so I’m gonna have to branch out my network a little
bit and see if I can expand that for a future video ok now this brings us to
the next question which is better gold or silver so people often link gold and
silver together and they talk about them as if they’re interchangeable
investments and interestingly they’re really not
broadly speaking gold isn’t they very usable commodity sure it’s used in
jewelry and some electronics but historically gold has been mostly it’s
mostly been a way to store people’s wealth silver on the other hand has many
more industrial uses than gold has and ultimately what this means for us is
that silver is much more tied to the business cycle than gold would be this
should also make silver more volatile and when I went ahead and checked the
one year standard deviation for both SIVR and BAR SIVR came in at about 10
and BAR came in about 7.3 so it seems that gold is less volatile than silver
at least it has been over the past year so this leads us to the question are
gold and silver ETF is a good investment right now well based on what I’ve seen
from a silver perspective I would feel much more comfortable investing in SIVR if we were closer to the bottom of the business cycle since they are in fact
more closely tied to the economy so if a recession does hit and the market does
keep going down well silver may not perform as well since the industrial
demand for silver would likely slow this chart right here this is a chart of
silver compared to the S&P 500 and since the start of 2018 the S&P is down about
3% and SIVR is down about 14% when we switch to gold well we can once again
see that the S&P is down about three and BAR is down about 4% now it looks like
silver is in fact less resilient than gold so this supports our thesis that
the potentially slowing economy could spook silver investors more than gold
investors but there is something interesting about this chart and that is
that gold has been down since about March sure when the market got a bit
more in this area well gold started moving
higher but why the reversal of gold prices back in the march/april area and
our answer lies in this chart this is a chart of DXY. DXY is the US dollar
index basically it’s a US dollar versus all
the world major all the world’s major currencies so it’s a clean way of
looking at the price of dollar first as much of the rest of the world and we
could see that when we look at how gold did against the US dollar we can see
that they move rather opposite of each other they move inversely so when the
dollar Falls gold will rise and I think that this is crazy important because
perhaps gold isn’t the hedge it’s believed to be well it is but not for the reasons
that many people thought it was at least the way I was thinking it was before I
went ahead and did the research for this video and that’s because in a recession
often times the value of the dollar weakens so we know that if the dollar
weakens well gold will move higher so ultimately it’s likely the value of the
dollar that’s driving gold higher and not the recession or not the S&P 500 so to
test this I actually put together this chart this is a chart of gold versus the
US dollar during the Great Recession and as we could see when the dollar fell
early onlet on gold jumped higher then when the dollar started to rally while
gold began to fall then towards the end of the recession the dollar fell off
again and once again gold began to move higher so now we know what we’re dealing
with as far as gold is concerned we know that the silver that the price of silver
is often tied to the business cycle that being said do we think that silver and
gold are good investments right now now personally I’m not a huge fan of silver
at this point because like I mentioned before I actually think that we’re
closer to the end the to the top of the business cycle than we are the bottom
and I’d rather wait for the bottom we’re gonna jump in silver so we already saw
that the gold is tied to the US dollar and we know that the dollar rising helps
create this dip in the price of gold but what made the dollar rise well the
dollar is tied to many different things but one of the main drivers of the
dollar is interest rates and if you pay attention to the markets at all in
recent years then you’ve likely heard that interest rates have been rising
rising rates tend to drive the dollar higher and we
know that if we drive the dollar higher we’re gonna drive gold lower that
explains why the S&P is down and so is gold and this brings us full circle as
to why gold does work as a hedge see in recession the Federal Reserve is
unlikely to keep rising rates in fact they’re more likely to lower rates often
leading to a falling dollar which we know will lead to rising gold prices so
should we buy gold for 2019 and for me I think it makes a lot of sense to have
this type of hedge in place and any pullback in the economy or uptick and
inflation will almost certainly stop the Fed from raising rates any further this
should help gold and ultimately our portfolios so if you’ve been following
our channel at all well you may have seen that we’re doing a series called
the Dow of 30 where we’re analyzing all 30 stocks in the Dow Jones Industrial
Average and then what we’re going to do is we’re going to take that analysis
we’re gonna build three different portfolios a value of growth in a
dividend portfolio well with that in mind it might make sense to consider
adding gold as a hedge as one of our positions to see if it could help hedge
our portfolios when we go ahead and build those now for me
I would add BAR over GLD simply for the fact that the fees are lower I think
watching fees is crucially important and we’re getting the same thing we’re
getting one tenth of an ounce for every share that we buy but what do you think
should we add BAR to our portfolios is gold the smartest investment for 2019
it could be let me know what you think in the comments below and if you haven’t
done so already hit the subscribe button thank you for sticking with me all the
way to the end of the video and I’ll see in the next video thanks

29 comments

  1. Even though it's not owned by your pal ;-), GLDM seems more attractive to me. While it has same price (@ 18 basis points), it does seem to attract higher liquidity & it's backed by a more well known company- State Street (parent company of the popular SPDRs).
    Thanks again for a great video Jimmy 😁

  2. Both gold and silver have some strong advantages and disadvantages, but people still love them as a cover up for a crashing stock market so, logic says we might see increasing prices in 2019. I'm currently eyeballing the batter metals market a bit closer (vanadium, lithium, cobalt).

    Great and super-high-quality video, as per usual. You make sure to keep 'em coming, Jimmy!

  3. I will at gold in my portfolio because if the market interest rate go down. I want to use gold as a hedge. Great video

  4. I bought some GLD when the gold price was 1200 and I am hesitating to buy more now. When us is in economic recession all the other country should be in the same situation as EU, Australia, Cananda, China have the same debt bomb. Then the usd price will go up at first and then drop significantly.

  5. Shouldn't the amount of shares of an etf be fixed? When I buy a share of a gold etf it isn't a new share created for me, I'm just buying it from someone else. So the amount of gold should be fixed as well?

  6. why would you want to invest in gold and silver etfs something that pays in cash wen the whole point of gold and silver is to hedge against cash failing and inflation… don't fall for the scam buy the physical.

  7. Great Video I love the Speacial Metal industry if you follow the Price of Gold and Silver and buy on dips you are set 👍👍

  8. Thanks for the video, great quality! What do you think about Mutual Funds composed of short term treasury notes (2-3 years maturity) given the almost flat yield curve? They can also act as a hedge as in case of a recession, short term rates would most certainly fall under the action of the Fed (and therefore prices increase). In addition, they still produce a roughly 2.4% yield in the meantime.

  9. Excellent video, already on 3rd replay except I think the ratio for BAR should be 1:100 not 1:10 seeing gold spot is !$1,412 and BAR is about $14.07 /ps.

  10. I prefer physical gold and siver. If the grid should crash I have the physical gold and silver in hand. Storage really isn't an issue. I already have a fire proof safe for important documents. A poor mans safe is the freezer. It is fairly fire proof, and a criminal isn't going to be looking in your freezer.

  11. People will eventually stop buying gold if the price keeps going up. It has no uses. When the world completely switches over to electric cars and solar power, silver will skyrocket, making it a good long term investments imo.

  12. This is the season to buy into Precious metals and even some ETF's.The world is looming into a recession or perhaps a depression..Before anything everyone should have some physical SILVER,at least.

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