Exchange Traded Funds

If you can't spot the sucker at the table its probably you - old poker adage.

It is possible to buy gold in the form of shares in an Exchange Traded Fund. The shares are priced at the mid point between the buying and selling price of the spot price of gold.

There are several disadvantages to this way of owning gold.   While the expenses of the gold ETF are low, the Trust will have to sell part of its gold stores to pay these expenses.  Thus, over time, the fractional amount of physical gold represented by each share will decrease. Indeed it is not clear how much, if any, gold some of the ETFs actually possess.

If you are bullish on gold it is probably better to short DZZ rather than go long UGL or DGP as prices will erode if gold drifts sideways. Shorting an ultra-long ETF is similar to shorting an out-of-the-money call. The same applies to silver: it is better to short ZSL than go long AGQ.

SGOL: 170.93

GLD: 167.64

IAU: 16.818

This would suggest that the market has the greatest confidence in SGOL.

Futures and Options

The principle futures contracts are YG, YI, ZG GC and SI.You can also buy and sell options on these contracts.

The CBOE Gold ETF Volatility Index ("Gold VIX", Ticker - GVZ) measures the market's expectation of 30-day volatility of gold prices by applying the VIX methodology to options on GLD. Like other VIX benchmarks, GVZ uses options spanning a wide range of strike prices.

Following is a table detailing known gold holdings by exchange-traded funds:

 
================================================================================
                   Current     --Daily Change--   --Monthly Change--       Last
                    Ounces       Ounces       %      Ounces       %      Update
================================================================================
Worldwide          65,984,801    218,527    0.3%    -575,826   -0.9%        n/a
--------------------------------------------------------------------------------
SPDR               38,887,654    243,649    0.6%    -646,586   -1.6%   5/23/2011
ETF Securities      9,304,120          0    0.0%     -80,104   -0.9%   5/20/2011
ZKB                 6,252,650    -25,069   -0.4%      94,429    1.5%   5/20/2011
iShares             4,351,981          0    0.0%      43,119    1.0%   5/20/2011
Swiss & Global      2,955,203          0    0.0%      -2,441   -0.1%   5/19/2011
Central Fund CA     1,694,644          0    0.0%           0    0.0%   5/20/2011
NewGold             1,593,924        -53    0.0%      11,133    0.7%   5/20/2011
Central GoldTrust     610,832          0    0.0%           0    0.0%   5/20/2011
Claymore              328,793          0    0.0%       4,624    1.4%   5/20/2011
Dubai                   5,000          0    0.0%           0    0.0%   5/23/2011
================================================================================
                    ----Yearly Change----       Fund holdings as a percent
                      Ounces          %         of total gold held in ETFs:
================================================================================
Worldwide           3,918,069       6.3%              100.0%
--------------------------------------------------------------------------------
SPDR                 -341,436      -0.9%               58.9%
ETF Securities        414,885       4.7%               14.1%
ZKB                 1,036,872      19.9%                9.5%
iShares             1,702,936      64.3%                6.6%
Swiss & Global        633,841      27.3%                4.5%
Central Fund CA       190,410      12.7%                2.6%
NewGold               114,835       7.8%                2.4%
Central GoldTrust     207,842      51.6%                0.9%
Claymore              -42,117     -11.4%                0.5%
Dubai                       0       0.0%                0.0%
================================================================================
NOTE: Figures are in troy ounces.