Precious metals fund VGPMX
Precious metals fund VGPMX
Newbie here. Hold a diversified portfolio (across US total mkt, developed market, and US total bond). Pre-paying home mortgage with 3.75% interest with monthly payments. Had some idle cash.
Needed opinions from forum users on the Vanguard precious metals fund VGPMX. Any thoughts?
Needed opinions from forum users on the Vanguard precious metals fund VGPMX. Any thoughts?
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Re: Precious metals fund VGPMX
I don't have any specific information about that fund, but I think you should have some gold in your portfolio. However, that is not the common wisdom around here.
In theory, theory and practice are identical. In practice, they often differ.
Re: Precious metals fund VGPMX
Why mess up a good thing with pointless complexity?tnslona wrote:Newbie here. Hold a diversified portfolio (across US total mkt, developed market, and US total bond). Pre-paying home mortgage with 3.75% interest with monthly payments. Had some idle cash.
Needed opinions from forum users on the Vanguard precious metals fund VGPMX. Any thoughts?
As far as idle cash: "Idle hands are the Devil's workshop." (and many variations thereon)
Re: Precious metals fund VGPMX
There was a fairly recent thread about this. You can read many opinions here:
http://www.bogleheads.org/forum/viewtop ... 0&t=119318
-Brad.
http://www.bogleheads.org/forum/viewtop ... 0&t=119318
-Brad.
Re: Precious metals fund VGPMX
unless you know what your doing and can be a knowledgable trader commodities are a loser.commodities are not for holding-they are for buying and selling
Re: Precious metals fund VGPMX
That fund is not a commodities investment. It is an investment in the stocks of mining and minerals processing companies.gerrym51 wrote:unless you know what your doing and can be a knowledgable trader commodities are a loser.commodities are not for holding-they are for buying and selling
You're assessment of investing in commodities may be well taken, but doesn't have much to do with VGPMX. That does not mean there is any good reason to invest in that fund.
Re: Precious metals fund VGPMX
At $10.87 the fund looks attactive eh? I understand it is good mix of base metal/mineral stocks and rare metal/mineral stocks.
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Re: Precious metals fund VGPMX
You'll probably find as many opinions as people. For a number of reasons, putting the word "gold" in the same sentence as "investment" causes all sorts of emotions and reactions. I'll add my 2 troy ounces:
First, be sure what you're investing in is what you want. VGPMX is a precious metals and mining fund, investing in the stocks of companies that are in the business of mining for these metals. Gold is one such metal, but the fund does invest in mining companies involved in other metals as well. The latter does make it more diversified than a true gold fund; demand for platinum, palladium, etc. will all affect the performance of the fund to some degree.
The fund itself is not a bullion nor a commodity fund; it's a stock fund, focused on stocks in the mining sector. The stock prices of these companies are quite closely correlated in movement with the prices of precious metals, which can be extremely volatile. However, the tracking is not perfect. If you bought gold bullion when it was $1000/oz, and the price fell to $500/oz and stayed there for 10 years, your investment in the bullion would earn you nothing in those 10 years. In the case of a fund like VGPMX, you would have some chance of share appreciation; mining companies would eventually adjust to a stable commodity price and return decent profits to their shareholders. Keep in mind that many of these companies are non-US based and are definitely in the small-to-mid cap range. And, of course, you can't use mutual fund shares to pay the ferry man after the apocalypse.
VGPMX is therefore not the same as trading in commodities; you are instead buying a fund that closely tracks commodity prices in a particular sector. The question is whether you want to be exposed to that sector. Due to the fact that the prices of precious metals are relatively uncorrelated with the price of stocks and bonds, a fund such as VGPMX can add some diversification to your portfolio. However, it's prudent to keep exposure to that sector to be no more than 5%. And it's probably best to get the rest of your portfolio in order first.
There is one really nice attribute of this fund: the expense ratio of 0.26% is very low indeed for such a fund.
First, be sure what you're investing in is what you want. VGPMX is a precious metals and mining fund, investing in the stocks of companies that are in the business of mining for these metals. Gold is one such metal, but the fund does invest in mining companies involved in other metals as well. The latter does make it more diversified than a true gold fund; demand for platinum, palladium, etc. will all affect the performance of the fund to some degree.
The fund itself is not a bullion nor a commodity fund; it's a stock fund, focused on stocks in the mining sector. The stock prices of these companies are quite closely correlated in movement with the prices of precious metals, which can be extremely volatile. However, the tracking is not perfect. If you bought gold bullion when it was $1000/oz, and the price fell to $500/oz and stayed there for 10 years, your investment in the bullion would earn you nothing in those 10 years. In the case of a fund like VGPMX, you would have some chance of share appreciation; mining companies would eventually adjust to a stable commodity price and return decent profits to their shareholders. Keep in mind that many of these companies are non-US based and are definitely in the small-to-mid cap range. And, of course, you can't use mutual fund shares to pay the ferry man after the apocalypse.
VGPMX is therefore not the same as trading in commodities; you are instead buying a fund that closely tracks commodity prices in a particular sector. The question is whether you want to be exposed to that sector. Due to the fact that the prices of precious metals are relatively uncorrelated with the price of stocks and bonds, a fund such as VGPMX can add some diversification to your portfolio. However, it's prudent to keep exposure to that sector to be no more than 5%. And it's probably best to get the rest of your portfolio in order first.
There is one really nice attribute of this fund: the expense ratio of 0.26% is very low indeed for such a fund.
Re: Precious metals fund VGPMX
Thx georgewall for the thoughts!
Re: Precious metals fund VGPMX
You've stumbled onto a site where the prevailing view is that investments aren't bought or sold based on some arbitrary idea about whether a price is attractive or not (or whether it is likely to go up or down, is at a peak or a trough, etc). The prevailing view is that investors endeavor to capture their fair share of the market in line with their investment plan, and tend to buy and hold except for rebalancing or drawing down on their portfolio after retirement.tnslona wrote:At $10.87 the fund looks attactive eh? I understand it is good mix of base metal/mineral stocks and rare metal/mineral stocks.
So the answer to the question of whether it makes sense to invest in this fund should have nothing to do with how attractive its price is, but whether a precious metals fund has any place in your portfolio to start with. If the answer is "Yes, it belongs in your portfolio," then make a plan to acquire it up to the allotted portion of your portfolio it should be (ie, if you think your portfolio should hold 3% precious metals, then you hold 3% in this fund whether or not you think it's a good price right now).
Some people here like to keep some amount of precious metals/related funds in their portfolios. Most people probably don't. I'm one of the people who doesn't.
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Re: Precious metals fund VGPMX
1) The prevalent opinion in this forum is probably that expressed by Larry Swedroe, in his book, The Quest for Alpha, as rule #17 of his "Rules for Prudent Investing:"
Consumer Discretionary VCR
Consumer Staples VDC
Energy VDE
Financials VFH
Health Care VHT
Industrials VIS
Information Technology VGT
Materials VAW
REIT VNQ
Telecommunication Services VOX
Utilities VPU
If you are interested in sector investing, you might want to look over that list, and you might also want to tell us why you are interested specifically in precious metals and mining, which is even narrower than "materials." And because sector investing is not really a Vanguard specialty, you might want to look into funds and ETFs from other companies as well.
4) Be very clear on this: investing in the stock of companies that are in the gold mining business is quite different from investing in gold itself. If the idea is "gold," you probably want something else, such as the GLD ETF. And you probably want to read the Permanent Portfolio threads. I haven't read Craig Rowlandson's recent book, "The Permanent Portfolio" but it's gotten excellent reviews from forum posters.
2) If you are going to invest in precious metals equity, be sure to read William J. Bernstein's short essay, The Longest Discipline.Owning individual stocks and sector funds is more akin to speculating, no investing. The market compensates investors for risks that cannot be diversified away, like the risk of investing in stocks versus bonds. Investors shouldn't expect compensation for diversifiable risk--the unique risks related to owning one stock, or sector or country fund. Prudent investors only accept risk for which they are compensated with higher expected returns.
3) This fund is a little unusual in the Vanguard lineup. They seem to have been undecided about whether to do sector funds. (I am almost sure Bogle has said that he's regarded their decision to do sector funds as being something he regrets). There are certain anomalies here. You may notice that Vanguard actually has a full suite of sector ETFs, but not mutual funds. The sector ETF list looks like this:That’s nearly a quarter century of zero real returns, pilgrims. How hard was it hard to keep the faith? To quote Klaus von Bulow, You’ve No Idea.... Make no mistake about it: over the very long term, precious metals equity should provide your portfolio with a mean-variance boost. Just be sure that you’re prepared for the long term—the very long term—behavior of this asset class.
Consumer Discretionary VCR
Consumer Staples VDC
Energy VDE
Financials VFH
Health Care VHT
Industrials VIS
Information Technology VGT
Materials VAW
REIT VNQ
Telecommunication Services VOX
Utilities VPU
If you are interested in sector investing, you might want to look over that list, and you might also want to tell us why you are interested specifically in precious metals and mining, which is even narrower than "materials." And because sector investing is not really a Vanguard specialty, you might want to look into funds and ETFs from other companies as well.
4) Be very clear on this: investing in the stock of companies that are in the gold mining business is quite different from investing in gold itself. If the idea is "gold," you probably want something else, such as the GLD ETF. And you probably want to read the Permanent Portfolio threads. I haven't read Craig Rowlandson's recent book, "The Permanent Portfolio" but it's gotten excellent reviews from forum posters.
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Re: Precious metals fund VGPMX
[Emphasis added.]georgewall42 wrote:...
The fund itself is not a bullion nor a commodity fund; it's a stock fund, focused on stocks in the mining sector. The stock prices of these companies are quite closely correlated in movement with the prices of precious metals, which can be extremely volatile. However, the tracking is not perfect. If you bought gold bullion when it was $1000/oz, and the price fell to $500/oz and stayed there for 10 years, your investment in the bullion would earn you nothing in those 10 years.
...
Hi georgewall24, tnsolna,tnsolna wrote:Thx georgewall for the thoughts!
The part I've underlined is seldom correct. Miners sell forward their production using futures contracts. They do not get each day's spot price, or even the current month's contract price. Instead they get a predictable price which is adequate to inform their business decisions.
Furthermore, most silver and a lot of gold production is a byproduct of other mining. The largest gold mine in the world is a primarily a copper mine. As long as the sold-ahead price of copper is enough to keep them profitable they'll keep digging. It only takes the price of gold to be more than enough to offset the costs of refining it for them to bring the yellow metal to market.
All that said, I agree with others that there is no good reason for an investor to use Vanguard's Precious Metals and Mining fund.
PJW
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Re: Precious metals fund VGPMX
The VGPMX is first a stock investment and only indirectly a "precious metals" investment. In fact, if you look at the prospectus, you will see it has a significant allocation to non precious metals.tnslona wrote:Newbie here. Hold a diversified portfolio (across US total mkt, developed market, and US total bond). Pre-paying home mortgage with 3.75% interest with monthly payments. Had some idle cash.
Needed opinions from forum users on the Vanguard precious metals fund VGPMX. Any thoughts?
If you are interested in taking a position in precious metals, I recommend between 5-25% of your portfolio, in gold, or if you also want silver to make up part of that, keep the silver component at 1/5th of that or less.
I like the gold firm at www.golddealer.com for the best prices.
Taking physical possession is another form of diversification in that you directly hold a physical financial asset.
Re: Precious metals fund VGPMX
Wow 25% of your portfolio in gold? That would keep me awake at night...
70% Global Stocks / 30% Bonds
Re: Precious metals fund VGPMX
I believe that this fund was, at one point in 2008, the #1 overall mutual fund in existence over the previous 10 years (could be wrong). In any case, the tides certainly turned. 2-year return of around -50%, versus a VTSAX return of +50%. That's painful. If I had a "play money" portion of my retirement funds, I might look to take a flier this year on the fund with how badly it's crashed and burned. However, I don't, and I don't have any plans to.
Retirement investing is a marathon.
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Re: Precious metals fund VGPMX
VGPMX has a 0.4 R-squared correlation with the broader stock market; even the REIT fund has an r-squared of 0.6. Unfortunately, I don't know the time period for this calculation.
Also, while the performance of the fund is not correlated with gold, it is roughly correlated with the price of copper and related commodities, including platinum. Copper and Pt had a run up in price in the 2003-2007 period; the price of both fell dramatically in 2008, although gold did not. Copper prices have slowly tended downward since mid-2010 (around the time of VGPMX's peak). Same story with platinum and palladium (which do count as precious metals).
As to future contracts, hedging with forward futures contracts can only protect against price movement for so long. At some point, if there is lower demand for the metal being mined, the profits of these companies will shrink. And institutional investors in these companies will react to commodity price movements, which will cause the fund price to move with those same gyrations.
Also, not all of the companies in the fund's portfolio are actual mining companies; some are companies involved in mining technologies.
In any even, the fund is likely to continue to be very volatile, and does have the noted drawbacks of any sector fund. Whether the diversification benefits are enough to overcome the inherent volatility and connection to commodity prices is an open question. And whether one should invest in this fund, directly in GLD or IAU ETF's, both, or neither, is really an individual judgment, as there's no right or wrong answer. If you do decide to invest, keep the allocation low, as by themselves neither the fund nor GLD are diversified investments when it comes to asset classes.
Also, while the performance of the fund is not correlated with gold, it is roughly correlated with the price of copper and related commodities, including platinum. Copper and Pt had a run up in price in the 2003-2007 period; the price of both fell dramatically in 2008, although gold did not. Copper prices have slowly tended downward since mid-2010 (around the time of VGPMX's peak). Same story with platinum and palladium (which do count as precious metals).
As to future contracts, hedging with forward futures contracts can only protect against price movement for so long. At some point, if there is lower demand for the metal being mined, the profits of these companies will shrink. And institutional investors in these companies will react to commodity price movements, which will cause the fund price to move with those same gyrations.
Also, not all of the companies in the fund's portfolio are actual mining companies; some are companies involved in mining technologies.
In any even, the fund is likely to continue to be very volatile, and does have the noted drawbacks of any sector fund. Whether the diversification benefits are enough to overcome the inherent volatility and connection to commodity prices is an open question. And whether one should invest in this fund, directly in GLD or IAU ETF's, both, or neither, is really an individual judgment, as there's no right or wrong answer. If you do decide to invest, keep the allocation low, as by themselves neither the fund nor GLD are diversified investments when it comes to asset classes.
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Re: Precious metals fund VGPMX
Well, the Permanent portfolio isn't for everybody. For you...5%.z3r0c00l wrote:Wow 25% of your portfolio in gold? That would keep me awake at night...
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Re: Precious metals fund VGPMX
It's not for me either; if I had only 25% I would have trouble sleeping.hazlitt777 wrote:Well, the Permanent portfolio isn't for everybody. For you...5%.z3r0c00l wrote:Wow 25% of your portfolio in gold? That would keep me awake at night...
But I know I'm an outlier.
In theory, theory and practice are identical. In practice, they often differ.
Re: Precious metals fund VGPMX
Check the past 10 years for the top 10 holdings of this fund and you can see why it did particularly well up to 2007, had a nice bump after that, and suffered lately. The fate of this fund relies mostly on a few extremely volatile stocks and with some luck, when a few of them skyrocket 1000% or so, the fund does well. When some unexpected turmoil falls over the potash industry (?!) then the fund drops to $10. Would be more fun to just pick the stocks at that point.kenyan wrote:I believe that this fund was, at one point in 2008, the #1 overall mutual fund in existence over the previous 10 years (could be wrong). In any case, the tides certainly turned. 2-year return of around -50%, versus a VTSAX return of +50%. That's painful. If I had a "play money" portion of my retirement funds, I might look to take a flier this year on the fund with how badly it's crashed and burned. However, I don't, and I don't have any plans to.
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Re: Precious metals fund VGPMX
tnslona:tnslona wrote:Needed opinions from forum users on the Vanguard precious metals fund VGPMX. Any thoughts?
Pat and I held Vanguard's Precious Metals Fund (then called "Vanguard Gold Fund") in 1993. That year it gained 93%. Five years later it had the worst 5-year return of all Vanguard funds.
We don't own that fund anymore.
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Precious metals fund VGPMX
I don't know the specifics of VGPMX. But I used to follow commodities in my line of work in media. I know energy (particularly oil) a lot more than minerals. But hopefully I'll add some thoughtful words.
1) One of the questions you have to ask when looking at a precious metals company is "Who is doing the mining?" The other is "Where is the end product headed to?" In the second question, the answer, right now, is primarily China and other developing world countries. I'd imagine that any fund manager would make sure companies with exposure to China is represented in the fund.
However, a lot of mining is also done in China and the developing world. And mining industries in China and other countries are well-known for their ties to government cronies, corruption, etc. Take for instance: Puda Coal. It was a really small Chinese coal comapny traded on AMEX that was a big fraud. Chances are that it wouldn't pass the smell test from a fund manager (or be large enough to affect a portfolio) but CalPERS invested in this company before it went under.
2) Commodity prices themselves -- not the company, but the actual commodity itself -- fluctuates a lot depending on the value of the dollar, the price point for every commodity I can think of off the top of my head. The general theory in oil, for instance, is that a weaker dollar makes it cheaper for investors who use other currencies to buy a good, and that pushes up demand and the price. And also the inverse -- a stronger dollar makes it more expensive to buy a commodity from other currencies, which shrinks demand. (This is far from a universal theory. But, in my experience, it does have some weight.)
So a lot of companies that do their business in commodities need to have good management sense in terms of currency fluctuations, especially in really global industries. A company's bottom line could be really affected by how well they invested their own money.
1) One of the questions you have to ask when looking at a precious metals company is "Who is doing the mining?" The other is "Where is the end product headed to?" In the second question, the answer, right now, is primarily China and other developing world countries. I'd imagine that any fund manager would make sure companies with exposure to China is represented in the fund.
However, a lot of mining is also done in China and the developing world. And mining industries in China and other countries are well-known for their ties to government cronies, corruption, etc. Take for instance: Puda Coal. It was a really small Chinese coal comapny traded on AMEX that was a big fraud. Chances are that it wouldn't pass the smell test from a fund manager (or be large enough to affect a portfolio) but CalPERS invested in this company before it went under.
2) Commodity prices themselves -- not the company, but the actual commodity itself -- fluctuates a lot depending on the value of the dollar, the price point for every commodity I can think of off the top of my head. The general theory in oil, for instance, is that a weaker dollar makes it cheaper for investors who use other currencies to buy a good, and that pushes up demand and the price. And also the inverse -- a stronger dollar makes it more expensive to buy a commodity from other currencies, which shrinks demand. (This is far from a universal theory. But, in my experience, it does have some weight.)
So a lot of companies that do their business in commodities need to have good management sense in terms of currency fluctuations, especially in really global industries. A company's bottom line could be really affected by how well they invested their own money.
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Re: Precious metals fund VGPMX
The price of a mutual fund share is useless for investment outlook.I own two S&P 500 FUNDS , one is over $100 per share and the other is Around $30 but are invested in the same thingtnslona wrote:At $10.87 the fund looks attactive eh? I understand it is good mix of base metal/mineral stocks and rare metal/mineral stocks.
John
Re: Precious metals fund VGPMX
He is comparing it to previous NAVs for the same fund, so it has some meaning. However, perhaps he is not taking the massive dividends (one of 15%!) into account. Total return on this fund shows that it is still down quite a bit, but not as much as a 40 nav to 10 nav would imply.Johm221122 wrote:The price of a mutual fund share is useless for investment outlook.I own two S&P 500 FUNDS , one is over $100 per share and the other is Around $30 but are invested in the same thingtnslona wrote:At $10.87 the fund looks attactive eh? I understand it is good mix of base metal/mineral stocks and rare metal/mineral stocks.
John
70% Global Stocks / 30% Bonds
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Re: Precious metals fund VGPMX
I threw a little dollop into this fund several weeks back (about 1.2% of overall) just to sate my urge to gamble a little. I can't resist things that have tumbled precipitously when they're linked to a pretty basic industry that isn't going away in my lifetime. Best case it stays very volatile and supplies a little outward rebalancing money (doubt I'll rebalance back into it). It's in a small bit of tax advantaged space that I don't have a lot of variety in at present. Worst-case, it's like I hired an investment adviser for a year or two (but much more fun)
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Re: Precious metals fund VGPMX
Thanks guys for your inputs.
Re: Precious metals fund VGPMX
I will also admit to being very tempted by this fund when it is so low, why not buy $3000 of it and have a decent shot at getting that to $10,000 before the decade is over. But then looking over the portfolio it is clear that the past performance of this fund is based mostly on seemingly one-time events in the major stock holdings, things that one cannot expect to repeat even if the economy recovers. Indeed the economy is booming back, and this fund has not done much. Gold, platinum, silver, are all still pretty valuable too and the fund does not seem to react. If potash becomes the hot new jewelry, maybe that will help.
70% Global Stocks / 30% Bonds
Re: Precious metals fund VGPMX
Glad things are going well for you in North Dakota. The rest of us... not so much.Indeed the economy is booming back
Paul
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Re: Precious metals fund VGPMX
Today Aug 15 - VGPMX was only Vanguard Fund with a positive return +0.80% (ignoring money market funds paying 0%)
Although, Gold Miners ETF (GDX) was up +6.03% today.
It seems GDX has significantly outperformed VGPMX recently.
Any thoughts ?
Although, Gold Miners ETF (GDX) was up +6.03% today.
It seems GDX has significantly outperformed VGPMX recently.
Any thoughts ?
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Re: Precious metals fund VGPMX
If you are interested in precious metals, I personally believe the best way to do it is with actual gold and silver. You could by gld and slv etfs or buy the actual physical product if you are more conspiratorial like myself. Just by eyeballing the charts, it appears the Sharpe ratio is a good deal higher for physical gold/silver vs their respective mining/processing companies.
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Re: Precious metals fund VGPMX
Vanguard's VGPMX is no longer a pure precious metal equity fund. It is now called "precious metal and mining" fund.Fat-Tailed Contagion wrote:Today Aug 15 - VGPMX was only Vanguard Fund with a positive return +0.80% (ignoring money market funds paying 0%)
Although, Gold Miners ETF (GDX) was up +6.03% today.
It seems GDX has significantly outperformed VGPMX recently.
Any thoughts ?
If you want pure exposure to precious metal equity, you need to use GDX (ER 0.52%) or BGEIX (ER 0.69%).
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Re: Precious metals fund VGPMX
The possibility of nationalization in South Africa is no longer zero.
This would be bad for Anglo American and some gold producers. It would be good for platinum and gold prices.
Surely at these levels there is value in American Barrick (remembering the nostrums about catching the falling knife)?
This would be bad for Anglo American and some gold producers. It would be good for platinum and gold prices.
Surely at these levels there is value in American Barrick (remembering the nostrums about catching the falling knife)?
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Re: Precious metals fund VGPMX
This is what options and future's trading are for. As a retail investor, holding physical gold in any substantial amount is not very feasible as taking delivery of the product has real costs. To me, gold & silver are way too speculative of commodities to invest directly in them. I personally believe in using index funds/mutual funds for positions in most other asset classes. However, commodities are a different game as they are a 90% speculative play. Holding gold will do you no good, unless you believe the US is going to collapse & suddenly gold is the only currency (if you believe that, then holding holding gold will be the least of one's concerns).AndrewJackson wrote:If you are interested in precious metals, I personally believe the best way to do it is with actual gold and silver. You could by gld and slv etfs or buy the actual physical product if you are more conspiratorial like myself. Just by eyeballing the charts, it appears the Sharpe ratio is a good deal higher for physical gold/silver vs their respective mining/processing companies.
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Re: Precious metals fund VGPMX
Not quite true.neoptolemus412 wrote:This is what options and future's trading are for. As a retail investor, holding physical gold in any substantial amount is not very feasible as taking delivery of the product has real costs. To me, gold & silver are way too speculative of commodities to invest directly in them. I personally believe in using index funds/mutual funds for positions in most other asset classes. However, commodities are a different game as they are a 90% speculative play. Holding gold will do you no good, unless you believe the US is going to collapse & suddenly gold is the only currency (if you believe that, then holding holding gold will be the least of one's concerns).AndrewJackson wrote:If you are interested in precious metals, I personally believe the best way to do it is with actual gold and silver. You could by gld and slv etfs or buy the actual physical product if you are more conspiratorial like myself. Just by eyeballing the charts, it appears the Sharpe ratio is a good deal higher for physical gold/silver vs their respective mining/processing companies.
Gold has done well in scenarios when the US did not collapse. And in many countries (India, Iran for example) it's what people hold when they are worried about the politics-- Indians are largest retail buyers in the world.
It's not just an apocalypse hedge. And in those scenarios, guns, ammunition, antibiotics, canned goods, razor blades, marketable practical skills are going to matter at least as much.
The tradeoff is always the same: low or negative inherent return vs. diversification benefits. That's the gold conundrum. You want to own it when conventional wisdom says it is not necessary.
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Re: Precious metals fund VGPMX
India and Iran are outliers for different reasons. I travel to India quite a bit. Gold has greater significance as a gift in India than anywhere else in the world. It is very customary to use it in clothing, jewelry, or other items for a wedding or religious ceremony. Iran is a blacklisted country and the rial has had violent swings the past 30 years. Gold is a necessity due to volatile currency in this country. Both nations are not similar to the US economy nor the average investor's fears.Valuethinker wrote:Not quite true.neoptolemus412 wrote:This is what options and future's trading are for. As a retail investor, holding physical gold in any substantial amount is not very feasible as taking delivery of the product has real costs. To me, gold & silver are way too speculative of commodities to invest directly in them. I personally believe in using index funds/mutual funds for positions in most other asset classes. However, commodities are a different game as they are a 90% speculative play. Holding gold will do you no good, unless you believe the US is going to collapse & suddenly gold is the only currency (if you believe that, then holding holding gold will be the least of one's concerns).AndrewJackson wrote:If you are interested in precious metals, I personally believe the best way to do it is with actual gold and silver. You could by gld and slv etfs or buy the actual physical product if you are more conspiratorial like myself. Just by eyeballing the charts, it appears the Sharpe ratio is a good deal higher for physical gold/silver vs their respective mining/processing companies.
Gold has done well in scenarios when the US did not collapse. And in many countries (India, Iran for example) it's what people hold when they are worried about the politics-- Indians are largest retail buyers in the world.
It's not just an apocalypse hedge. And in those scenarios, guns, ammunition, antibiotics, canned goods, razor blades, marketable practical skills are going to matter at least as much.
The tradeoff is always the same: low or negative inherent return vs. diversification benefits. That's the gold conundrum. You want to own it when conventional wisdom says it is not necessary.
Gold is a purely speculative play. One can point to it's rise & fall, but I would place holding a physical commodity like gold near the bottom of potential investments in a retail investor's portfolio.
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Re: Precious metals fund VGPMX
I think we are agreed that gold can do well in scenarios that are not 'US collapse'?neoptolemus412 wrote: India and Iran are outliers for different reasons. I travel to India quite a bit. Gold has greater significance as a gift in India than anywhere else in the world. It is very customary to use it in clothing, jewelry, or other items for a wedding or religious ceremony. Iran is a blacklisted country and the rial has had violent swings the past 30 years. Gold is a necessity due to volatile currency in this country. Both nations are not similar to the US economy nor the average investor's fears.
Gold is a purely speculative play. One can point to it's rise & fall, but I would place holding a physical commodity like gold near the bottom of potential investments in a retail investor's portfolio.
I happen to agree with your conclusion-- because there is no inherent way of valuing gold, it is speculative.
Given an investor who has access to inflation linked bonds and to assets in other currencies like foreign stocks and bonds, I would agree with you that gold seems to add little value to most investors' portfolio.
Read William Bernstein 'the Most Patient Asset' for the counter argument.
In either case, the prospective buyer of gold wants to wait until gold is truly out of favour (for example in 1998 when the Bank of England announced it would sell half its gold) before buying in.
Re: Precious metals fund VGPMX
Did VGPMX miss a dividend last month? It has paid a Dec dividend for 10 years in a row.
Re: Precious metals fund VGPMX
According to the "returns" page on the Vanguard website for VGPMX:sobrien60 wrote:Did VGPMX miss a dividend last month? It has paid a Dec dividend for 10 years in a row.
https://personal.vanguard.com/us/funds/ ... INT#tab=1a
this fund only had a 0.04% "income return" for 2013. That is less than half a cent per share (and was perhaps swallowed up by the expense ratio for the fund). Previous "income returns" have ranged from 0.42% to 9.03% in the last 10 years.
2013 was just a bad year for income or capital returns for the companies held in this fund.
-Brad.
Re: Precious metals fund VGPMX
I put 1.5% of my portfolio in VGPMX near the end of December and this year will be directing some of my retirement funds there as they are deducted from my paycheck.
It could have another rough year but 2013 was pretty bad for this fund.
One caution I would throw out there is that it has new management.
It could have another rough year but 2013 was pretty bad for this fund.
One caution I would throw out there is that it has new management.
Re: Precious metals fund VGPMX
What shocks me more than last year's performance is the degree to which this fund has made an about-face from its earlier success, with respect to its benchmark.
Performance vs. benchmark (overall return)
1998: +12.58% (-3.91%)
1999: +1.74% (+28.82%)
2000: +3.32% (-7.34%)
2001: -1.24% (+18.33%)
2002: -8.46% (+33.35%)
2003: +9.24% (+59.45%)
2004: +14.40% (+8.09%)
2005: +11.47% (+43.79%)
2006: +1.03% (+34.30%)
2007: -4.34% (+36.13%)
2008: -6.58% (-56.02%)
2009: -8.20% (+76.46%)
2010: -2.59% (+37.45%)
2011: +2.06% (-21.70%)
2012: -12.53% (-12.98%)
2013 -3.65% (-35.13%)
Extremely impressive outperformance from 1998 until 2006, 2002 excepted. After that point, terrible underperformance, 2011 excepted. I suppose that's the risk you take with active management, even low-cost active management.
Performance vs. benchmark (overall return)
1998: +12.58% (-3.91%)
1999: +1.74% (+28.82%)
2000: +3.32% (-7.34%)
2001: -1.24% (+18.33%)
2002: -8.46% (+33.35%)
2003: +9.24% (+59.45%)
2004: +14.40% (+8.09%)
2005: +11.47% (+43.79%)
2006: +1.03% (+34.30%)
2007: -4.34% (+36.13%)
2008: -6.58% (-56.02%)
2009: -8.20% (+76.46%)
2010: -2.59% (+37.45%)
2011: +2.06% (-21.70%)
2012: -12.53% (-12.98%)
2013 -3.65% (-35.13%)
Extremely impressive outperformance from 1998 until 2006, 2002 excepted. After that point, terrible underperformance, 2011 excepted. I suppose that's the risk you take with active management, even low-cost active management.
Retirement investing is a marathon.
Re: Precious metals fund VGPMX
I was just going through this thread today, but noticed this was the last post. I'm a bit confused by this because I'm not sure where the numbers are coming from. At Morningstar, VGPMX had a higher return than the benchmark at all durations summarized (3yr, 5yr, 10yr, and 15yr), while at the same time having lower volatility than the benchmark for all of those periods. Morningstar return for 3yr, and 5yr is further summarized as "above average". And to be clear, this shouldn't have been skewed by performance since the last post since VGPMX had does horrible relative to its benchmark measured YTD (YTD 5.51% vs. 12.99% for category giving it a "100" for rank in category for YTD (100 being the worst)), source again being morningstar.kenyan wrote:What shocks me more than last year's performance is the degree to which this fund has made an about-face from its earlier success, with respect to its benchmark.
Extremely impressive outperformance from 1998 until 2006, 2002 excepted. After that point, terrible underperformance, 2011 excepted. I suppose that's the risk you take with active management, even low-cost active management.
Re: Precious metals fund VGPMX
Numbers were from the source of the fund, Vanguard. Quick glance shows that they are using different benchmarks; without delving into it, I'd think that Vanguard would be more attuned to their own fund than Morningstar. Also, using 5year, 10year, etc. comparisons does not capture the year-to-year performance of a fund.azanon wrote:I was just going through this thread today, but noticed this was the last post. I'm a bit confused by this because I'm not sure where the numbers are coming from. At Morningstar, VGPMX had a higher return than the benchmark at all durations summarized (3yr, 5yr, 10yr, and 15yr), while at the same time having lower volatility than the benchmark for all of those periods. Morningstar return for 3yr, and 5yr is further summarized as "above average". And to be clear, this shouldn't have been skewed by performance since the last post since VGPMX had does horrible relative to its benchmark measured YTD (YTD 5.51% vs. 12.99% for category giving it a "100" for rank in category for YTD (100 being the worst)), source again being morningstar.kenyan wrote:What shocks me more than last year's performance is the degree to which this fund has made an about-face from its earlier success, with respect to its benchmark.
Extremely impressive outperformance from 1998 until 2006, 2002 excepted. After that point, terrible underperformance, 2011 excepted. I suppose that's the risk you take with active management, even low-cost active management.
Retirement investing is a marathon.
Re: Precious metals fund VGPMX
It's also worth pointing out that the Bernstein article was written in 2005. How has this fund done since then? In 2005-08 it more than doubled your money, then in the 2008 crash it lost more than 50%, then in 2009-2011 it doubled again. Since 2011 it has again lost >50%.nisiprius wrote: 2) If you are going to invest in precious metals equity, be sure to read William J. Bernstein's short essay, The Longest Discipline.That’s nearly a quarter century of zero real returns, pilgrims. How hard was it hard to keep the faith? To quote Klaus von Bulow, You’ve No Idea.... Make no mistake about it: over the very long term, precious metals equity should provide your portfolio with a mean-variance boost. Just be sure that you’re prepared for the long term—the very long term—behavior of this asset class.
The key word is rebalance.
Dr. Bernstein said in a thread a few months ago that he still feels precious metal equities can be good diversifier for investors who can stand the volatility.
Most of my posts assume no behavioral errors.
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Re: Precious metals fund VGPMX
This fund has been doing better so far in 2016 than any other fund. Glad I got in when it was down, I just wish I had put all of my money in it when I did get in
- Taylor Larimore
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Re: Precious metals fund VGPMX
ratsnest 74:ratsnest74 wrote:This fund has been doing better so far in 2016 than any other fund. Glad I got in when it was down, I just wish I had put all of my money in it when I did get in
When did you get in?
Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Precious metals fund VGPMX
about 30 days ago I bought in
up $1380 as of yesterday
up $1380 as of yesterday
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Re: Precious metals fund VGPMX
Dear Colleagues
Be warned that most of this thread dates from 2013-14.
Be warned that most of this thread dates from 2013-14.
Re: Precious metals fund VGPMX
I'm happy with the recent performance, but this fund got a terrible spanking in 2015 and it has not been easy to stick with it. Only this week has the stock price risen above my cost basis.
Re: Precious metals fund VGPMX
Does this encourage you to market time more often?ratsnest74 wrote:about 30 days ago I bought in
up $1380 as of yesterday
Re: Precious metals fund VGPMX
We had multiple threads discussing VGPMX, which I've combined. Please continue the discussion in the combined thread here: VG Precious Metals & Mining Fund up 21% this year. Why aren't other ETFs?
(Thread locked to redirect the discussion.)
(Thread locked to redirect the discussion.)