Are ETF’s for Investors or Just Traders?

etf trading vs investing, investing with etfs, bullion or etfs

Q: Are ETFs good for investing or only for trading?

A: The difference between a trader and an investor is primarily time and technique. A trader buys and sells quickly, rarely holding an asset long (usually only minutes, hours, or days.) He trades based on short-term, technical things like market panic or bliss, technical tops or bottoms, events in the news, etc. An investor buys something based on fundamentals and value, usually with intent to hold the asset for longer periods of time, years or decades.

Exchange Traded Funds (ETF’s) are essentially mutual funds for gold that was set up by Wall Street in order for that industry to make money by selling gold without losing control of their clients’ money. In theory, paper gold is supposed to match the spot price of physical gold, and the fund should theoretically have the same amount of actual physical gold in reserves backing up the paper gold shares you’re buying. This has never been proven or validated to be the truth.

I highly recommend only buying physical gold and silver if your objective is to hedge your wealth. Paper gold won’t do it, because it’s tied to the same Wall Street system as the rest of the currency and paper markets, such as stocks and bonds. The paper-gold strategy may seem easier, but it’s a house of cards waiting to collapse.

Bottom line, it doesn’t make any sense to hold any of your wealth in paper gold or paper silver, unless you’re a trader using the paper shares to buy and sell very quickly. ETF’s simply don’t serve the investor’s need for stability and value – only the trader’s need for convenience. The only real way for an investor to hedge in gold and silver over the long term is to own real physical gold and silver.