Precious Metals ETF

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PTGuy1
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Precious Metals ETF

Post by PTGuy1 »

What are people's thoughts on :

1) keeping small allocation in precious metals?

2) Precious Metal ETF or MF vs physical coins/rounds?

I have some ideas on the pros and cons but I would love to here from others about their thoughts/experiences.
Jack FFR1846
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Re: Precious Metals ETF

Post by Jack FFR1846 »

1) no

2) 5 or 6 years ago, I thought this was a great idea, did research and bought silver US junk silver coins from a wholesaler. So I paid only the spread in the spot bid/ask. Then I held it. Then it went down. Then it went down more. Then I thought about the $20 in all copper pennies I had in a box and how inflation is making it's value drop. So I started selling the silver coins at a loss to a craigslist buyer, as it would be more expensive selling to any dealer or with the fees of eBay and paypal and the scams, that wasn't the way to go and I didn't want to pay the spread again and ship to Apmex. I dumped the $20 in pennies in my credit union coin machine (zero fee).

Soon, I'll dump more of my silver coins. Want to buy any?
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vineviz
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Re: Precious Metals ETF

Post by vineviz »

PTGuy1 wrote: Wed Jul 25, 2018 8:33 am What are people's thoughts on :

1) keeping small allocation in precious metals?

2) Precious Metal ETF or MF vs physical coins/rounds?

I have some ideas on the pros and cons but I would love to here from others about their thoughts/experiences.
I think if you are looking for something that will lower both the volatility and long-term total return of your portfolio that an allocation to precious metals makes sense.

An ETF like SIVR (ETFS Physical Silver) is a pretty good portfolio diversifier, but I don't expect it's long term return to approach the return of equities.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
asif408
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Re: Precious Metals ETF

Post by asif408 »

The question you have to ask regarding either one is: what benefit will it bring, and will I use it properly to benefit from holding it?

1) I personally haven't found an answer to this question, so I don't own any.

2) I can partially answer this question. Precious metals equities have, at times, zigged when everything else zagged, and I could possibly benefit if I rebalance periodically while holding it, though no guarantees, and it is more expensive to hold. The other consideration with this one is that PME historically has lower long run returns than the overall market, so most years it will do worse and I will more often than not be buying more of a poorly performing asset and only see the actual benefits on rare occassions. If you are not emotionally prepared for this I suggest avoiding it.

If you do decide to invest in PME, find a low cost MF or ETF.
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jimb_fromATL
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Re: Precious Metals ETF

Post by jimb_fromATL »

Just to give you a feel for how some of the precious metals funds compare to popular index and balanced funds, here are some gee-whiz figures for some funds I happened to have in a spreadsheet. These include fairly recent YTD returns for 2018.

Most people I know invest in 401(k)s or IRAs and other accounts periodically instead of just a single lump sum, and the end result can vary widely depending on whether the lump sum was invested near the top or bottom of the market. So this includes the results for Dollar-Cost-Averaging with annual contributions.
  • CAGR (Compound Annual Growth Rate) or APY for a single lump sum and APY for DCA (Dollar Cost Averaging) with annual contributions:

    VG Precious metals and mining:
    For 34 years from 1985 through 2018 VGPMX has had a CAGR of 5.394% for a lump sum. The APY for DCA with annual contributions has been 4.312%. For the last 10 years the lump CAGR has been .48% and DCA contributions have averaged an APY of -2.188%.

    Fidelity metals and mining:
    For 33 years from 1986 through 2018 FSAGX has had a CAGR of 4.415% for a lump sum. The APY for DCA with annual contributions has been 3.27%. For the last 10 years the lump CAGR has been -3.05% and DCA contributions have averaged an APY of -3.281%.

    US Global Investors Gold & Prec Mtls:
    For 34 years from 1985 through 2018 USERX has had a CAGR of -2.322% for a lump sum. The APY for DCA with annual contributions has been 1.539%. For the last 10 years the lump CAGR has been -.574% and DCA contributions have averaged an APY of -.102%.

    SPDR Gold Shares (GLD):
    For 15 years from 2004 through 2018 GLD has had a CAGR of 6.658% for a lump sum. The APY for DCA with annual contributions has been 4.144%. For the last 10 years the lump CAGR has been 3.209% and DCA contributions have averaged an APY of .223%.

    ETFS Physical Silver (SIVR):
    For 8 years from 2011 through 2018 SIVR has had a CAGR of -.264% for a lump sum. The APY for DCA with annual contributions has been -.348%.

    VG S&P 500 Index:
    For 34 years from 1985 through 2018 VFINX has had a CAGR of 10.913% for a lump sum. The APY for DCA with annual contributions has been 9.722%. For the last 10 years the lump CAGR has been 13.79% and DCA contributions have averaged an APY of 12.549%.

    Vanguard Total Stock Mkt Idx Inv:
    For 26 years from 1993 through 2018 VTSMX has had a CAGR of 9.365% for a lump sum. The APY for DCA with annual contributions has been 8.755%. For the last 10 years the lump CAGR has been 14.099% and DCA contributions have averaged an APY of 12.635%.

    VG Wellington:
    For 34 years from 1985 through 2018 VWELX has had a CAGR of 10.291% for a lump sum. The APY for DCA with annual contributions has been 9.283%. For the last 10 years the lump CAGR has been 10.124% and DCA contributions have averaged an APY of 8.664%.

    VG Wellesley:
    For 34 years from 1985 through 2018 VWINX has had a CAGR of 9.243% for a lump sum. The APY for DCA with annual contributions has been 8.17%. For the last 10 years the lump CAGR has been 7.993% and DCA contributions have averaged an APY of 6.414%.

    VG Star fund:
    For 33 years from 1986 through 2018 VGSTX has had a CAGR of 9.093% for a lump sum. The APY for DCA with annual contributions has been 8.452%. For the last 10 years the lump CAGR has been 9.89% and DCA contributions have averaged an APY of 8.402%.
jimb
pennylane
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Re: Precious Metals ETF

Post by pennylane »

I keep about $1000 in precious metals. Anything more than that is a waste
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aspirit
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Re: Precious Metals ETF

Post by aspirit »

PTGuy1 wrote: Wed Jul 25, 2018 8:33 am What are people's thoughts on :

1) keeping small allocation in precious metals?

2) Precious Metal ETF or MF vs physical coins/rounds?

I have some ideas on the pros and cons but I would love to here from others about their thoughts/experiences.
Thoughts & experiences ?

FWIW: The Google search box in the top right corner produced several pages ofsimilar results entered with : precious metals etfs site:bogleheads.org ::FWIW

There are many PM offerings, i'd give any i planned on speculating in full analysis.
PMs might add value, ..as could bitcoin. You've seen jimb_fromATL above's input w/ PMs CAGR's.

VG energy(vgenx) and PMs(vgpmx) sector offerings have done very well since 2016.
Good luck!
Last edited by aspirit on Wed Jul 25, 2018 10:13 pm, edited 1 time in total.
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~
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Peter Foley
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Re: Precious Metals ETF

Post by Peter Foley »

Do a little research on Harry Brown's "Permanent Portfolio." It has evolved a bit over time:

Harry Brown Permanent Portfolio: Original configuration S&P 500 stocks, the longest Treasury bonds, Spot Gold, money market funds. Revised: 35% government securities, 20% gold bullion, 15% aggressive growth stocks, 15% real estate and natural resource stocks, 10% Swiss franc bonds and 5% silver bullion.

Personally I would not invest as Harry Brown suggests. I do think there is a valid point in terms of diversification beyond stocks and bonds. Perhaps 5% precious metals and 5% natural resources. Again, not for me, but "perhaps." Edit - some people add REITs for more diversification.
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jimb_fromATL
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Re: Precious Metals ETF

Post by jimb_fromATL »

Peter Foley wrote: Wed Jul 25, 2018 10:06 am Do a little research on Harry Brown's "Permanent Portfolio." It has evolved a bit over time:

Harry Brown Permanent Portfolio: Original configuration S&P 500 stocks, the longest Treasury bonds, Spot Gold, money market funds. Revised: 35% government securities, 20% gold bullion, 15% aggressive growth stocks, 15% real estate and natural resource stocks, 10% Swiss franc bonds and 5% silver bullion.

Personally I would not invest as Harry Brown suggests. I do think there is a valid point in terms of diversification beyond stocks and bonds. Perhaps 5% precious metals and 5% natural resources. Again, not for me, but "perhaps." Edit - some people add REITs for more diversification.
HERE is a little research using PortfolioVisualizer comparing Harry Brown's portfolio to the Bogleheads three fund. This is for monthly contributions of $400 with rebalancing annually.

jimb
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ruralavalon
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Re: Precious Metals ETF

Post by ruralavalon »

PTGuy1 wrote: Wed Jul 25, 2018 8:33 am What are people's thoughts on :

1) keeping small allocation in precious metals?
2) Precious Metal ETF or MF vs physical coins/rounds?

I have some ideas on the pros and cons but I would love to here from others about their thoughts/experiences.
My thoughts -- don't speculate on precious metals, either physical or coins or ETF or fund.

Instead of speculating in anything, invest in a diversified index fund of some kind. Vanguard Precious Metals and Mining (VGMPX) ER 0.36% invests in stocks of companies in the mining industry.
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alfaspider
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Re: Precious Metals ETF

Post by alfaspider »

If you run portfolio visualizer with gold instead of bonds in an 80/20 allocation, the result is fairly similar, although bonds win over most time horizons and the portfolio with gold is a bit more volatile.

Personally, I don't see it as worth messing with. Some people hold a small amount of physical gold for the purpose of the apocalypse, but nobody really knows if it would actually be of much use in a dire situation.
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Re: Precious Metals ETF

Post by DesertDiva »

alfaspider wrote: Wed Jul 25, 2018 11:38 am If you run portfolio visualizer with gold instead of bonds in an 80/20 allocation, the result is fairly similar, although bonds win over most time horizons and the portfolio with gold is a bit more volatile.

Personally, I don't see it as worth messing with. Some people hold a small amount of physical gold for the purpose of the apocalypse, but nobody really knows if it would actually be of much use in a dire situation.
+1
I believe that in an emergency scenario, a can of soup or a gallon of water would be of more practical benefit. IMHO, collecting coins or rounds is more in the hobby/collectable category... similar to collecting watches or art.
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