Last week’s market activity was another reminder that not all precious metals investments are created equal.

Investors worried about a virus outbreak and watching the blood bath on Wall Street rushed to buy coins, rounds, and bars.

As one of the largest and most respected U.S. dealers, Money Metals saw the biggest surge of buying activity in years. Clients bought the physical metal as a safe haven, knowing it is scarce, intrinsically valuable and carries no counterparty risk.

Meanwhile, the opposite occurred on the COMEX because buying contracts there is anything but safe.

For starters, futures contracts for gold and silver are unlimited in supply. We don’t care what any COMEX official or sleepy CFTC regulator might say. No one who wants a contract is being turned away regardless of how large the float of paper gold and silver gets relative to the number of actual bars in exchange vaults.

A futures contract is not an asset with intrinsic value. It is nothing more than a wager on the price of the metal on a particular future date. There is ultimately a winner and a loser for each wager. And retail investors gambling in futures are the losers a lot more often than not.

In contrast to an investment in physical metal, it’s highly possible to lose everything when trading futures. In fact, lots of people just did.

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