Well, the education I’m getting out of this has been great. So ETFs can be considered as derivatives? I’ve always had a “to each his own” attitude, if you like PPNs, or ETFs, or run-of-the mill mutual funds, stock-picking, options, currency trading… then all the more power to you, AS LONG AS you understand it.

I’ve exposed my weakness in ETF’s. Thanks guys!

It is true that some ETFs use derivatives. Examples include the old iUnits XSP and XIN.

But most ETFs are real assets. A ETF does have the actual underlying securities backing it. Take the IVV, which tracks the S&P 500. If you have enough shares of IVV, you can exchange it for the underlying stocks that make the S&P 500. In fact that is how the issuer makes sure the ETF tracks the index. If it deviates too much, arbitrageurs will buy the ETF and exchange it for shares and vice-versa.

I read the article you have linked and the author is talking mostly non-sense. Hard-core gold bugs want us to sell everything (they always rant about paper assets) and buy gold bullion and bury it in a hold in our backyard. Gold pays no interest, costs money to store and protect and gives a measure of inflation protection and nothing else.