ETFs Suddenly Frozen

Think you’re safe investing in ETFs (Exchange Traded Funds)? Many of us have invested in the silver ETF (SLV) and gold ETF (GLD) in recent years. They offer the advantage of trading as substitutes for the physical metal without the storage hassles of the real thing.

But yesterday, European investors who owned ETFs issued by ETF Securities Limited were shocked when trading in all their commodity ETFs was suddenly halted.

Why?

The ETFs are backed by the giant US insurer AIG. When AIG’s credit rating was downgraded market-makers, concerned with the viability of the ETFs, halted trading. If you owned $10,000 worth of the ETFs in question you now cannot sell them. You’re stuck. [link]

The affected ETFs include:
-Grains
-Cocoa
-Coffee
-Corn
-Cotton
-Soybeans
-Sugar
-Wheat
-Hogs
-Cattle

The precious metals ETFs are not affected as of now. But remember, ETFs are only as good as the company issuing (or backing) them. They ARE NOT the same as the actual underlying commodity. 

◊◊◊◊ Now: Gold @ $828.10, Silver @ $11.34, USDX @ 78.85 ◊◊◊◊
◊◊◊◊ Now: DJIA 10,797.25

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