Investing in Gold

[alrick]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

[smitcat]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

We have very little gold but do have other metals - silver and palladium.
Our method has been in 'bars' of whatever you want to invest in.

[Nowizard]

Would probably suggest to keep thinking since there has been a run-up already. You have not mentioned how large a position you would take. If it is small, there are a number of us who just purchase a few bullion coins and put them in the SD box, not so much as an investment as use of play money. Others, particularly at times like this, may take larger positions, often in mutual funds. Generally, gold is more of a psychological play than investment strategy with larger positions, in my opinion. For example, we purchased several bullion pieces or mint offerings in the 1980's for approximately $950 each. They are now worth about $1,500-1,600 each. Almost 30 years and waiting for value to double without subtracting a portion of SD box fees. That comes out to be 2-2.5% annual average for items purchased during a period of uncertainty like we are now experiencing. Still, we enjoy looking at them, and the purchase was relatively small. No regrets or investment with a return to crow about at a party!

Tim

[Sandtrap]

1
Gold (physically held) as a "safe haven"?
2
Gold (physically held) for "EOTWAWKI" (end of the world as we know it)?
3
Gold (via brokerage) as an "investment" in the market via a type of fund?

The danger of 1-2 is having physical gold that is not worth or barely worth the purchase price "when sold" while that value could be used elsewhere better, or restricts lifestyle or retirement. (cost of fear)

As for #3, there are tons of threads/posts on the value of gold relative to market movement. It is not what advertisements and gold sale promotions say in times of fear.

Gold to Market Correlation article:
https://www.investopedia.com/markets-pr ... on-4775626

j

[technovelist]

I would recommend against buying gold due to its recent outperformance. That is market timing at its worst.

However, that doesn't mean that gold doesn't have a place in a portfolio, e.g., in the Permanent Portfolio, which has been the subject of a number of threads.

At its simplest, the Permanent Portfolio looks like this:
25% t-bills
25% long t-bonds
25% gold
25% stocks

This portfolio historically has almost the same CAGR as a stock/bond portfolio but a much lower maximum drawdown and can sustain higher withdrawal rates without exhaustion.

William Bernstein has an excellent article about this portfolio: http://www.efficientfrontier.com/ef/0adhoc/harry.htm, which explains why it doesn't work for most people: "There’s nothing wrong with Harry’s portfolio—nothing at all—but there’s everything wrong with his followers, who seem, on average, to chase performance the way dogs chase cars."

[scoreboard]

I don't own gold but if I did I would glance at IAU (fidelity ishares) or I suppose GLD

[ExitStageLeft]

I don't own gold but if I did I would glance at IAU (fidelity ishares) or I suppose GLD

I'll echo the sentiment and add in GLDM. It has the lowest expense ratio, I believe. I read a thread recently about gold where someone listed suitable funds. I'll post it if I can find it.

Edit: viewtopic.php?f=10&t=189431&p=5059324&h ... u#p5059324

[houseofnine]

I don't own gold but if I did I would glance at IAU (fidelity ishares) or I suppose GLD

I took a position in IAU after researching various portfolios containing gold (mainly All Weather and Golden Butterfly). Not sure that my current allocation % is relevant, but plan to add to it over time.

[StormShadow]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

[smitcat]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

Because equities have bottomed and gold is at a high point?

[RonSwanson]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

Because equities have bottomed and gold is at a high point?

Nobody knows! Many people guess

[unclescrooge]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

We have very little gold but do have other metals - silver and palladium.
Our method has been in 'bars' of whatever you want to invest in.

While I hold 30oz of gold (bought for under $600/oz) as part of my "get out of Dodge" fund, buying a gold ETF and rebalancing ona regular basis had shown to improve the risk/return characteristics.

3 weeks ago I increased my gold allocation to 6% in my portfolio.

[NotTooDeepLearning]

IAU is probably the best option for most people.

[smitcat]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

Because equities have bottomed and gold is at a high point?

Nobody knows! Many people guess

Exactly my point.

[Rosencrantz1]

IAU is probably the best option for most people.

+1 We hold a very small portion of our portfolio in IAU. Like someone upthread, we also hold some silver/gold coins as a potential "get out of Dodge" ticket - although, not very sure how, exactly, that might work. The upside is that we have destination in mind - it's just getting there that'd likely be troublesome in an "end of the world" scenario

[artfulinvestor83]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

The answer may depend on the reasons for you wanting to add gold to your portfolio. What are they?

[StormShadow]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

Because equities have bottomed and gold is at a high point?

Kinda, sorta.

If you have a portfolio that includes gold, then I think its a good time to re-balance.

[mokaThought]

I was considering adding a little ETF gold to my Roth IRA last month. The idea was to wait until my existing funds paid their dividends and then use them to buy the ETFs so as not to sell the funds and take on a 60-day restriction. Too late.

--

Don't forget to check volume, bid-ask spread, and expense ratio when comparing gold ETFs. There are already a few threads on here about that. Also, OUNZ offers future physical delivery of the gold, if that matters to you.

[DarkHelmetII]

GLD should work. Key thing: gold is insurance not an investment. Point is one needs to pick a percentage and stick with it for decades. Otherwise you will inevitably perpetually buy high and sell low.

[smitcat]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Now is a good time to trade gold in for equities.

Food for thought.

Because equities have bottomed and gold is at a high point?

Kinda, sorta.

If you have a portfolio that includes gold, then I think its a good time to re-balance.

Interesting - not today thank you.

[UpperNwGuy]

My IPS says "never be tempted by gold."

[technovelist]

GLD should work. Key thing: gold is insurance not an investment. Point is one needs to pick a percentage and stick with it for decades. Otherwise you will inevitably perpetually buy high and sell low.

Exactly, other than that I don't trust GLD. Physical in a safe deposit box is much better for insurance purposes.

[DarkHelmetII]

GLD should work. Key thing: gold is insurance not an investment. Point is one needs to pick a percentage and stick with it for decades. Otherwise you will inevitably perpetually buy high and sell low.

Exactly, other than that I don't trust GLD. Physical in a safe deposit box is much better for insurance purposes.

Is it not the case however that GLD did its job during the Great Recession? I guess my point is that I see the degree of insurance a spectrum.

[retired@50]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

Maybe you can buy the gold from the OP in this thread?

viewtopic.php?f=1&t=306544

Regards,

[MarySueSays]

I feel I have a unique perspective here: I am a hobby jewelrysmith, and while I greatly prefer copper and silver as mediums, I have been known to work in gold.

Resale value of precious metals, in my experience, is never, ever, ever spot market price.

You're going to get maybe 70%, 75% if you have a good relationship with your smelter/dealer.

I entirely quit reselling and just save up scrap metal til I have enough to process into my own ingots and roll those out into sheet and wire. That takes me hours of work but it's entirely less frustrating than turning over a pound of sterling silver scraps and getting an offer of 60% of spot (and can be seen as a form of dollar cost averaging, since I sure as shootin' had to pay spot+15% for the original sheet!)

This, of course, does not apply to ETFs, just metal in hand.

A final note, my relatives bring me 'gold' they bought off QVC or mail order mint a lot to look at because of my hobby. The number of times I've had to tell an older family member their 'gold' is at best a thin plate layer, at worse brass? Too many. If you're going to buy precious metals as investment vehicles, at the barest minimum please tap 'em with a magnet!

[technovelist]

I feel I have a unique perspective here: I am a hobby jewelrysmith, and while I greatly prefer copper and silver as mediums, I have been known to work in gold.

Resale value of precious metals, in my experience, is never, ever, ever spot market price.

You're going to get maybe 70%, 75% if you have a good relationship with your smelter/dealer.

I entirely quit reselling and just save up scrap metal til I have enough to process into my own ingots and roll those out into sheet and wire. That takes me hours of work but it's entirely less frustrating than turning over a pound of sterling silver scraps and getting an offer of 60% of spot (and can be seen as a form of dollar cost averaging, since I sure as shootin' had to pay spot+15% for the original sheet!)

This, of course, does not apply to ETFs, just metal in hand.

A final note, my relatives bring me 'gold' they bought off QVC or mail order mint a lot to look at because of my hobby. The number of times I've had to tell an older family member their 'gold' is at best a thin plate layer, at worse brass? Too many. If you're going to buy precious metals as investment vehicles, at the barest minimum please tap 'em with a magnet!

I don't know anyone who recommends buying sheets of metals as an investment.

However, I have bought and sold gold coins numerous times in the last 40 years.

I recall no time when the bid/ask spread for a reasonable-sized coin (1/4 ounce or larger) was larger than 5%, and recently it has been far smaller than that.

For example, right now usgoldbureau (https://www.usgoldbureau.com) has one-ounce American Gold Eagles at 1660 bid, 1710 ask, which is a 3% spread, and that's for one piece. The spread is less for quantities of 10 coins or more.

So while I'm sorry for your loss, that's not a reason not to buy gold.

[technovelist]

GLD should work. Key thing: gold is insurance not an investment. Point is one needs to pick a percentage and stick with it for decades. Otherwise you will inevitably perpetually buy high and sell low.

Exactly, other than that I don't trust GLD. Physical in a safe deposit box is much better for insurance purposes.

Is it not the case however that GLD did its job during the Great Recession? I guess my point is that I see the degree of insurance a spectrum.

Sure, it got through that fine. But after having read their indentures many years ago, I came to the conclusion that if they decided not to actually store the gold they said they had, there would be little or no recourse.
I'd rather deal with a storage facility that doesn't use options or futures, or lend gold.
Like https://www.texasbulliondepository.gov, for example.

[Watty]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

There are lots of threads about owning gold that you can look up using the search box in the top right corner of most of these webpages.

I would highly encourage you to do these two things;

1) Sit down and write a list of reasons that you want to own gold.

2) For each reason on your list do some research to figure out the best way accomplish that goal. It may not be gold.

[MarySueSays]

I don't know anyone who recommends buying sheets of metals as an investment.

However, I have bought and sold gold coins numerous times in the last 40 years.

I recall no time when the bid/ask spread for a reasonable-sized coin (1/4 ounce or larger) was larger than 5%, and recently it has been far smaller than that.

For example, right now usgoldbureau (https://www.usgoldbureau.com) has one-ounce American Gold Eagles at 1660 bid, 1710 ask, which is a 3% spread, and that's for one piece. The spread is less for quantities of 10 coins or more.

So while I'm sorry for your loss, that's not a reason not to buy gold.

In jewelrysmithing, bars and ingots are sheet, just very thick sheet. Making sheet out of coins would be ridiculous.

And I didn't lose anything, I have a very fine collection of jewelry I made with my own hands that brought hundreds of hours of enjoyment, that if I'd like, I can sell to people who enjoy unique, handcrafted jewelry for 4-10 times the pennyweight spot.

But it's not part of my portfolio.

[technovelist]

I don't know anyone who recommends buying sheets of metals as an investment.

However, I have bought and sold gold coins numerous times in the last 40 years.

I recall no time when the bid/ask spread for a reasonable-sized coin (1/4 ounce or larger) was larger than 5%, and recently it has been far smaller than that.

For example, right now usgoldbureau (https://www.usgoldbureau.com) has one-ounce American Gold Eagles at 1660 bid, 1710 ask, which is a 3% spread, and that's for one piece. The spread is less for quantities of 10 coins or more.

So while I'm sorry for your loss, that's not a reason not to buy gold.

In jewelrysmithing, bars and ingots are sheet, just very thick sheet. Making sheet out of coins would be ridiculous.

And I didn't lose anything, I have a very fine collection of jewelry I made with my own hands that brought hundreds of hours of enjoyment, that if I'd like, I can sell to people who enjoy unique, handcrafted jewelry for 4-10 times the pennyweight spot.

But it's not part of my portfolio.

Sheets of metal should not be part of anyone's portfolio.
However, that has very little to do with investing in gold, which involves coins or bars, e.g.,



These have much lower bid/ask spreads than sheets. Thus, your comments about the wide bid/ask spreads on sheets and scrap aren't relevant in the context of investment.

[miyaraj354]

Why is everyone advising against owning gold bars? From what I read on gold prices, it gained 64% in the last 5 years. That is a good return on investment. Am I missing something?

[suemarkp]

What did stocks gain in the last 5 years?
Bullion is not taxed as nicely as stocks (you don't get the 0/15/20% capital gain brackets).
There can be long periods of no growth.
There are never dividends.
Fears of storage, buy/sell spreads, and how to sell.
Paper gold addresses some of the issues, but creates counter party risk.

That being said, I own gold, silver, and platinum...

[miyaraj354]

What did stocks gain in the last 5 years?
Bullion is not taxed as nicely as stocks (you don't get the 0/15/20% capital gain brackets).
There can be long periods of no growth.
There are never dividends.
Fears of storage, buy/sell spreads, and how to sell.
Paper gold addresses some of the issues, but creates counter party risk.

That being said, I own gold, silver, and platinum...

I agree S&P 500 did better than gold but if I am looking at diversifying my portfolio, investing a little bit in gold isn't a bad decision, IMO. I still need to understand the implications of how capital gains are taxed.

[suemarkp]

In most cases (if physical gold is involved), capital gains are taxed at your normal income rate but capped at 28%. They are treated as collectables, so look into how collectables are taxed. You also can't roll from one metal to the other and avoid capital gains. I was hoping to trade silver for gold or platinum for gold and not have a taxable event. But it is. Even gold to gold is. I think the only way to roll gain forward is to stay within the same family (e.g. US Gold Eagles) and trade one date for another and possibly different condition (e.g. MS65 -vs- MS70).

[dru808]

IAU is probably the best option for most people.

+1 We hold a very small portion of our portfolio in IAU. Like someone upthread, we also hold some silver/gold coins as a potential "get out of Dodge" ticket - although, not very sure how, exactly, that might work. The upside is that we have destination in mind - it's just getting there that'd likely be troublesome in an "end of the world" scenario

Curious, why is it better than gldm or bar?

[dh]

IAU is probably the best option for most people.

+1 We hold a very small portion of our portfolio in IAU. Like someone upthread, we also hold some silver/gold coins as a potential "get out of Dodge" ticket - although, not very sure how, exactly, that might work. The upside is that we have destination in mind - it's just getting there that'd likely be troublesome in an "end of the world" scenario

Curious, why is it better than gldm or bar?

First, I am no expert on Gold ETF. Yet, I made the decision to have a small investment (approximately 5% of my portfolio) in GraniteShares Gold ETF (BAR). I researched IAU and GLD, in addition to BAR, after watching a video of Richard Bernstein. The expense ratio and efficient tracking of Gold Bullion "nudged" me to use BAR. Best wishes to all!

[dh]

Duplicate Deleted

[ivgrivchuck]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

If you are preparing for a doomsday scenario then obviously physical gold is the only option.

If it's part of your investment portfolio, then etf gold like IAU is the most convenient.

Especially in zero interest rate environment having 5-10% of one's portfolio in gold is perfectly reasonable.

I don't currently have gold in my portfolio but might fully well add a small amount in the future.

[unclescrooge]

I am thinking of adding gold to my portfolio. What are the options a Boglehead would consider? Mutual funds, ETFs, Coins?

Appreciate perspectives...……...Thanks!

If you are preparing for a doomsday scenario then obviously physical gold is the only option.

If it's part of your investment portfolio, then etf gold like IAU is the most convenient.

Especially in zero interest rate environment having 5-10% of one's portfolio in gold is perfectly reasonable.

I don't currently have gold in my portfolio but might fully well add a small amount in the future.

The etf version also makes rebalancing easier.

[HENRYGRUGER]

To ALRICK,

I am joining this party late.

What did you ever decide to do? I ask because I have been having similar thoughts. 5%-10% in Gold...5% physical, 5% ETFs. Total investment @ $100,000. Or more correctly stated not ONLY Gold, but precious metals.

Thanks for any feedback folks.

Kevin

[HENRYGRUGER]

To ALRICK,

I am joining this party late.

What did you ever decide to do? I ask because I have been having similar thoughts. 5%-10% in Gold...5% physical, 5% ETFs. Total investment @ $100,000. Or more correctly stated not ONLY Gold, but precious metals.

Thanks for any feedback folks.

Kevin

[Unwinder]

GLD should work. Key thing: gold is insurance not an investment. Point is one needs to pick a percentage and stick with it for decades. Otherwise you will inevitably perpetually buy high and sell low.

Exactly, other than that I don't trust GLD. Physical in a safe deposit box is much better for insurance purposes.

Is it not the case however that GLD did its job during the Great Recession? I guess my point is that I see the degree of insurance a spectrum.

Sure, it got through that fine. But after having read their indentures many years ago, I came to the conclusion that if they decided not to actually store the gold they said they had, there would be little or no recourse.
I'd rather deal with a storage facility that doesn't use options or futures, or lend gold.
Like https://reliablegoldinvestment.com/gold ... nt-advice/, for example.

I realize I'm getting to this post a bit late, but I've been thinking about gold a lot lately. I am adding a little bit to my portfolio here and there. Since I'm new to gold investing, I'm trying a little of several things. A little bit of GLD, a little bit of physical that I own, and I didn't know about something like the Texas Depository, but that's interesting. I also think a lot of gold stocks in general look good. Some actually pay a healthy dividend and are trading at reasonable valuations. While I still prefer investing in great businesses that will compound for decades (like McDonalds), every asset has it's time and I think gold, over then next 3-5 years, will be a good place to put a portion of my portfolio.

[Abe]

https://www.youtube.com/watch?v=hW2XtG7hxF0