Is this the right Fund for Metals?

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leo28
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Is this the right Fund for Metals?

Postby leo28 » Thu Apr 13, 2017 1:18 pm

Hi,

Im relatively new to investing and recently decided to add precious metals to my portfolio, I was wondering if this is the right fund to go into (VGPMX).

Also, if I wanted to get into gold, what is the best way to do it on Vanguard?

Thanks

Leo

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flamesabers
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Re: Is this the right Fund for Metals?

Postby flamesabers » Thu Apr 13, 2017 1:29 pm

I think this fund invests in mining companies rather then in actual physical metals. According to its prospectus:

Under normal circumstances, the Fund invests at least 80% of its assets in the stocks of foreign and U.S. companies principally engaged in the exploration, mining, development, fabrication, processing, marketing, or distribution of (or other activities related to) metals or minerals


Here's a thread on this forum concerning your question about gold:

viewtopic.php?t=100800

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Pajamas
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Re: Is this the right Fund for Metals?

Postby Pajamas » Thu Apr 13, 2017 6:10 pm

VGPMX may not be what you are really looking for. The investment strategy was expanded beyond a strict focus on precious metals and mining a few years ago, but the top holdings are still concentrated in precious metals and mining. If you want to speculate on gold prices you would do better with an ETF, maybe even a leveraged one.

https://personal.vanguard.com/us/funds/ ... 0053#tab=2

https://personal.vanguard.com/us/FundsS ... IntExt=INT

I can't vouch for the accuracy of this website but it looks like a reasonable place to start research on gold ETFs:

http://etfdb.com/type/commodity/preciou ... /gold-etf/

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leo28
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Re: Is this the right Fund for Metals?

Postby leo28 » Thu Apr 20, 2017 1:16 pm

Appreciate the feedback as always, I have done some research on the information provided but I am still not sure what to do if I want to Invest in precious metals, if VGPMX is not right for me, what is?

young-ish
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Re: Is this the right Fund for Metals?

Postby young-ish » Thu Apr 20, 2017 10:22 pm

leo28 wrote:Hi,

Im relatively new to investing and recently decided to add precious metals to my portfolio


Welcome Leo.

What interests you about buying precious metals? Have you read books and research papers about the subject?

Metals and the stocks of the companies that mine them tend to be very volatile.
Many people who decide to invest in metals are quickly turned off by extreme moves in the market.

Castanea_d.
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Re: Is this the right Fund for Metals?

Postby Castanea_d. » Fri Apr 21, 2017 12:14 pm

For part of your question: thinking strictly Vanguard funds/ETFs, the VGPMX is pretty much all there is for precious metals. As other have indicated, it is mostly the stocks of mining companies, not gold/silver directly. The mining shares often (not always) move in the same direction as gold/silver prices - sometimes more drastically. But they have their own set of risks/rewards, for they are businesses, generally carrying a lot of debt and with considerable uncertainties as to their prospects, so they sometimes move with equities, not the metals.

If you want a more direct investment in gold/silver, you could do so from within a Vanguard brokerage account. This is what I have done (besides owning some VGPMX), with a fairly long-term holding in Central Fund of Canada (CEF), which is a closed-end fund that holds gold and silver bullion. There are ETFs such as GLD and SLV that serve a similar purpose, and the Sprott funds (PHYS, PSLV). Probably others. I would absolutely avoid leveraged funds, or leverage in your investment in such funds. You will get plenty of ups and downs without leverage.

Highly recommend setting a SMALL allocation as a percentage of your portfolio and rebalancing to it. This will help you keep your sanity as the metals gyrate up and down.

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ruralavalon
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Re: Is this the right Fund for Metals?

Postby ruralavalon » Fri Apr 21, 2017 4:59 pm

leo28 wrote:Hi,

Im relatively new to investing and recently decided to add precious metals to my portfolio, I was wondering if this is the right fund to go into (VGPMX).

Also, if I wanted to get into gold, what is the best way to do it on Vanguard?

Thanks

Leo

Vanguard Precious Metals and Expense Fund (VGPMX) invests in stocks of companies in the mining industry. It is not limited to companies that mine precious metals. It invests almost nothing in precious metals.

This fund is extremely volatile.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

anil686
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Re: Is this the right Fund for Metals?

Postby anil686 » Fri Apr 21, 2017 11:29 pm

ruralavalon wrote:
leo28 wrote:Hi,

Im relatively new to investing and recently decided to add precious metals to my portfolio, I was wondering if this is the right fund to go into (VGPMX).

Also, if I wanted to get into gold, what is the best way to do it on Vanguard?

Thanks

Leo

Vanguard Precious Metals and Expense Fund (VGPMX) invests in stocks of companies in the mining industry. It is not limited to companies that mine precious metals. It invests almost nothing in precious metals.

This fund is extremely volatile.


+1 - I would also add that many of these mining companies will do more than mine for gold or silver (like mining for four or five metals) - often it will be mining for copper or other metals like nickel - which is more common than gold and hence their stock will move more with less precious metals than with gold - JMO based on reading a few books that included this subject....


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