For many banks, it is still a problem to buy the silver and gold ETFs of the Zürcher Kantonalbank (ZKB – Zurich Canton Bank). Actually, I wanted to show the purchase based on the DKB securities accounts (article in German language), but that did not work out as desired. I will tell you more on that later.
The video clip shows how easy and cheap one can purchase the ZKB ETFs through the Comdirect bank – my second favourite bank. Who has not yet seen or read the video article “What ZKB Silver ETF should one buy“, maybe should do this before viewing this clip (video in German language).
Investing cheaply in ZKB ETFs following the Comdirect – Video instructions
Why is it generally so difficult to buy ZKB ETFs?
The answer to this question borders the limits of political correctness. When one is looking for the truth, one comes across many excuses and bold lies. I say it like it is, because I was able to take part in some interesting background talks in the past six years.
Let´s approach the facts:
Gold and silver were used as money for millennia. Today, they are still considered money, even if they have disappeared from the daily payment transactions in almost all countries since decades – and therefore from the minds of people.
The argument often comes up that gold and silver are constantly changing in value and therefore, cannot be considered money.
One has to regard gold as well as silver as independent currencies, just like the US dollar or the Swiss franc. These vary continuously compared to the Euro.
In addition, gold (and partly also silver) is held by the central banks around the globe as a reserve asset, just like other currencies are also held by central banks as reserve assets.
Gold and silver prices are manipulated
Yes, this is true. There are already many publications about this subject, most of them full of evidences. I was able to meet Dimitri Speck, the author of “Geheime Goldpolitik” (secret gold politics) in person and can truly recommend his book as research material.
It is nothing new that stock markets and financial markets are being manipulated. That happens all the time out of different motivations. In order to manipulate the silver market, not much is required from the position of the “rulers”. All silver, which is traded on the commodities stock market, is “only” worth a few billions!
Before and during the further course of the financial crisis, billions of US dollars and Euros (!) of new money were produced at the push of a button in the banking system! There is enough money to push the silver price.
How can one manipulate the silver price?
One sells silver futures, which one does not even have, at the commodities stock market forward. One does not have to have it, as forward means: I am selling now silver to you at a fixed price and will deliver it, for example, in a year.
Of course, one does not deliver it after one year, but the contract (technical jargon) will continue to be traded.
One does not pay the full price, but deposits only a security (technical jargon: margin).
The US American CME-Group operates the world’s largest commodities exchange market. One contract of silver is 5,000 ounces. Today, this is roughly an equivalent to a market value of Euros 75,000. Whether the contract silver is purchased or sold today, nobody pays the Euros 75,000.
Just the margin, which is currently US$ 7,000 – about Euros 6,400 for the 5,000 ounce contract is. (Source: Comex).
The average annual production from mines and from the recycling (urban mining) was an average of 34,000 tonnes over the last 10 years. These are the equivalent to 1.093 billion ounces of silver.
If one would want to buy all the silver (mining and recycling) of a year through the stock market, one would only need Euros 1.4 billion, thanks to the margin system.
Of course, this is one a sample calculation, which is lagging, because if one would start to buy silver on a large scale, the price would rise strongly. This example only serves to illustrate that one does not need a lot of capital to manipulate the market.
In the 20th century (actually only until the 1970s), gold and silver were considered a thermometer (scoreboard) to know the state of the paper money system. This worked relatively well, if one looks at the price swings, for example, in times of inflation and war.
But what if one manipulates the thermometer to gloss over the (desolate) state of the world financial system? Perhaps you remember your school days, when the thermometer was heated in school in the summer to get days off because of excessive heat?
From the point of view of the powerful people (and beneficiaries) of the current global financial system, it makes sense to push the price of gold and silver.
So, should I even invest in precious metals, if the prices are being manipulated?
Yes, of course. That way, you can even buy them cheaper!
One cannot keep the prices permanently low, as one must release “air from the boilers” from time to time – sold contracts have to be swapped and this way, there are peaks in price again and again.
You need to understand the important background:
The price of gold and silver is also determined by the stock exchange market (paper money), but the real economy needs the metals and silver many times more than gold. This silver is funded mainly from mines. Mines are companies that want and have to make profits in order to exist.
If the price of silver is permanently below the cost of production, the production will be paused (otherwise, one is burning money!) and one waits, until the price rises to a level at which one can produce again.
This price will come, as silver is in great demand especially by the emerging technologies sector. The metal is urgently needed by the real economy!
Who understands this fact, can be deeply relaxed, despite the manipulation!
Why is it difficult to buy the Silver ETF of the ZKB?
As described above, gold and silver have a monetary character and from the perspective of the paper money representatives, one wants to keep the “confidence thermometer” at a relaxed state.
One does not mind, when private investors are speculating with the silver and, of course, gold too, at best via certificates or CFDs (contracts for difference).
The financial sector earns excellently with this and there are plenty of “dumb sheep” at the market – this is how people from the industry are really calling them – from whom one can occasionally cash in through concerted actions.
This has been demonstrated several times impressively in publications, for example, by the Silberjunge (silver boy) Thorsten Schulte.
Certificates and CFDs mainly “play” with paper silver. These are financial bets in a vacuum. Not even one ounce of silver is moved by this.
This is different in Silver ETFs!
The ZKB Silver ETF (exchange traded funds) (just like the gold, platinum and palladium ETF) invests exclusively in physical metals. That is, buying standardized bars from the investors’ capital, thus depriving the metal from the physical market.
Let´s stay with the example of silver: silver, which is e.g. yours being an ETF investor, is located in the vault of the Zürcher Kantonalbank (Zurich Canton Bank) and cannot be processed simultaneously in a production operation.
If both want to have silver at the same time, the investor as well as the production facility, the price will rise until either the silver investor is willing to sell or the production facility switches to an alternative production.
As described above, this simple supply-demand price system only works for the physical silver, so physically deposited ETFs or if you directly buy bars and coins.
In order for private investors to evade to paper silver and thus to not deprive the physical silver from the market, one simplifies and promote the trading for them with certificates, but complicates the physical purchase.
This is the dirty secret!
… and unfortunately, many bankers play this game – some out of self-preservation reasons, because the jobs in the bank are somehow linked to the financial system, but many, because they do not (want to) understand it.
This leads to awkward situations, which I have experienced several times talking to bankers, and lately unfortunately also with a securities specialist of the DKB.
After an internal assessment, he informed me that the DKB does not allow their securities account customers to buy the ZKB Silver ETF, in order to protect the customers from themselves. Another bank “went the extra mile” and claimed that ETF are “non-transparent” investments. A total loss would be possible.
Nonsense, nonsense and again nonsense
The ETFs of the Zürcher Kantonalbank have such a good reputation at many precious metal insiders, because they do not apply such tricks, but are used for other funds. For example, lendings are excluded.
What are lendings?
There are also ETFs that buy precious metals and they lend them to someone else. The background is simple: precious metals do not pay interest rates. Therefore it is dead capital. In order to achieve a yield enhancement, there is the system of lendings.
Is the interest rate not the price for the risk?
At a lending, one borrows the item for a fee. The fee is the additional income. At the end of the lending time, the item will be returned.
So far the theory. In practice, the lending time is often extended, extended and extended. As a fund, one is happy about the regular fee income from the lending.
Incidentally, the central banks are also among the Gold-lenders. However, one cannot guess how much they have actually lent, because since some years their balance sheet only has one collecting position: gold and gold receivables.
What does the person do, who borrows gold and silver?
He/she sells it almost immediately, with the intention that the price decreases and he/she can thus buy it back later at a lower price. He/she earns from the price difference. That is not entirely risk-free, unless one is part of the powerful in the financial system or has monetary intentions.
The rental business, even if it leads to fee income, is actually counterproductive for the silver investor. Therefore, the ZKB does not implement it.
Additionally, if someday the financial system should actually crash, the investor does not have any shares in real silver, but only a lending slip. Well, and if the lender is gone bankrupt during the crisis, then it looks very gloomy!
Some years ago, the central bank of Portugal suffered this without financial crisis. It had lent large stocks of gold and its lending partner went bankrupt. The gold was gone!
Exactly this is avoided by the ZKB
What the ZKB does is very simple: It buys, as described above, the standardized bars, checks them for their authenticity and stores them. It makes money through the 0.6 percent of annual management fee.
The increase in value of the ETFs can only take place through the price increase of silver – enhanced or mitigated by changes in exchange rates (silver is traded in US dollars).
A total loss is definitely ruled out, as the value of a silver bar can not fall to zero, opposed to the paper silver.
Please do not wonder if your bank mentions such “funny” excuses, why the ETF is not purchasable.
In fact, the ETF is purchasable at many banks!
Banker love to conceal that the ETFs of the ZKB are still purchasable. However, not through the direct investment at the investment company. They know that German funds are easily purchasable and sometimes even with a discounted issue surcharge through the bank without stock exchange market directly to the fund company.
The precious metal ETFs of the Zürcher Kantonalbank are purchasable through all custodian banks that are connected with the Börse Zürich (stock exchange market of Zurich). This is the home stock exchange market of the ZKB, at which the fund units are traded on a daily basis.
However, many banks charge staggering order fees from a foreign stock exchange market! At the DKB, this is the flat rate of Euros 75 per order!
That is why I have chosen the Comdirect as a positive example of fair pricing and recorded the video clip with the instructions for the Comdirect securities account.
If you want to invest in the ETFs of the ZKB, then I can truly recommend the Comdirect bank. Already in 2009, I have bought ZKB-ETFs through the Comdirect.
As always, this is a recommendation for the bank, but not an investment advice to buy certain ETFs.
Everyone is responsible for his own actions