Mutual funds that invest in physical gold?

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czeckers
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Mutual funds that invest in physical gold?

Post by czeckers »

Are there any reasonable mutual fund alternatives to GLD or IAU (Gold ETFs)?

Ideally, the fund would buy physical gold rather than gold mining stocks, have a reasonable ER, and have no load.

Thank you.
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MP123
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Re: Mutual funds that invest in physical gold?

Post by MP123 »

I don't think there are any MFs that hold 100% physical gold in the way that the gold ETFs (IUA, GLD) do.

The "gold" or "precious metals" mutual funds typically hold mining stocks and maybe a token amount of bullion, generally with a high ER and/or loads.

Leaving aside the wisdom of investing in gold do you have an objection to the ETF vs. Mutual Fund structure for holding physical gold? They would seem to be quite similar from a practical standpoint.
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Re: Mutual funds that invest in physical gold?

Post by alex_686 »

MP123 wrote: Wed Mar 28, 2018 12:00 pm The "gold" or "precious metals" mutual funds typically hold mining stocks and maybe a token amount of bullion, generally with a high ER and/or loads.
IIRC funds either invest in gold (physical or synthetic) or mining stocks, rarely both.

Mining stocks have a very low correlation to their physical commodities. You are buying a business and these business often hedge their output.

Also, why physical gold and not synthetic gold? Investing in gold futures should earn you the return of gold plus a modest roll return.
Last edited by alex_686 on Wed Mar 28, 2018 2:19 pm, edited 1 time in total.
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VinhoVerde
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Re: Mutual funds that invest in physical gold?

Post by VinhoVerde »

There is a closed end fund named Central Fund of Canada that contains a mixture of Gold and Silver bullion.
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Re: Mutual funds that invest in physical gold?

Post by lack_ey »

alex_686 wrote: Wed Mar 28, 2018 12:05 pm Also, why physical gold and not synthetic gold? Investing in gold futures should earn you the return of gold plus a modest roll return.
Wait, what roll return, on what, why?

I don't see that in the structure:
http://www.cmegroup.com/trading/metals/ ... /gold.html

Why would you get more return here than on holding physical or via an ETF that holds physical? There's plenty of supply. Is this a temporary condition or a long-term phenomenon you're referencing?
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Re: Mutual funds that invest in physical gold?

Post by xenial »

VinhoVerde wrote: Wed Mar 28, 2018 2:13 pm There is a closed end fund named Central Fund of Canada that contains a mixture of Gold and Silver bullion.
VinhoVerde
Central Fund of Canada is now the Sprott Physical Gold and Silver Trust.
Sprott Physical Gold and Silver Trust began trading on January 16, 2018, on the NYSE Arca (Symbol: CEF) and the Toronto Stock Exchange (Symbol: CEF.U in U.S. dollars and CEF in Canadian dollars).

The launch of Sprott Physical Gold and Silver Trust marks the successful completion of Sprott’s acquisition of the common shares of Central Fund of Canada. Sprott will administer and manage the Central Fund of Canada’s assets, and Central Fund of Canada’s class A shareholders are now unitholders of the Sprott Physical Gold and Silver Trust.
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Re: Mutual funds that invest in physical gold?

Post by barnaclebob »

Are there any funds that actually take possession of their physical gold investments or do they just buy the rights to a chunk of a pile of gold supposedly sitting in a vault in New York?
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MP123
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Re: Mutual funds that invest in physical gold?

Post by MP123 »

alex_686 wrote: Wed Mar 28, 2018 12:05 pm
MP123 wrote: Wed Mar 28, 2018 12:00 pm The "gold" or "precious metals" mutual funds typically hold mining stocks and maybe a token amount of bullion, generally with a high ER and/or loads.
IIRC funds either invest in gold (physical or synthetic) or mining stocks, rarely both.
Agreed, most gold mutual funds just hold mining company stock. But there is Tocqueville Gold Fund (TGLDX) which claims an 80/20 split between mining companies and physical gold.

I think you have to go to the ETFs to get a pure play on physical gold though.
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Re: Mutual funds that invest in physical gold?

Post by xenial »

barnaclebob wrote: Wed Mar 28, 2018 3:23 pm Are there any funds that actually take possession of their physical gold investments or do they just buy the rights to a chunk of a pile of gold supposedly sitting in a vault in New York?
I don't pretend to understand the finer points of precious metal custodial arrangements, but Sprott claims superiority over other bullion funds.
The Trusts' precious metals are fully allocated which provides the Trusts with direct beneficial ownership. Unlike other bullion funds, the Trusts do not have an unallocated account that is used to facilitate transfers of bullion between financial institutions that act as authorized participants. Without exception, all of the bullion owned by the Trusts is held in the Trusts' allocated accounts in physical form.

In contrast, unallocated gold does not correspond to specific bars and does not provide direct beneficial ownership or title. Counter party risk is a key consideration when investing in unallocated gold as there may not be a sufficient amount of gold backing all of the ownership claims and in the event of bankruptcy, you will likely become an unsecured creditor.
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

MP123 wrote: Wed Mar 28, 2018 12:00 pm Do you have an objection to the ETF vs. Mutual Fund structure for holding physical gold? They would seem to be quite similar from a practical standpoint.
I would love to use the ETFs. Unfortunately I only have access to Mutual Funds, not ETFs.
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Re: Mutual funds that invest in physical gold?

Post by David Jay »

czeckers wrote: Thu Mar 29, 2018 10:39 am I would love to use the ETFs. Unfortunately I only have access to Mutual Funds, not ETFs.
I bet you can fix that...
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

The Touqueville Fund is the only one I've been able to find.

Unfortunately, looking at the fund info, it appears to be primarily an active Precious Metals Mining Fund that happens to hold 15% of it's assets in physical Gold. They also seem to use leverage. The ER is a cringeworthy 1.39%

Investment Strategy
•Invest at least 80% of net assets, plus borrowings for investment purposes, in gold and other precious metals and the securities of companies located throughout the world that are engaged in mining or processing gold
•Employ a value approach to investing to identify companies that are undervalued based the portfolio managers' assessment of the company’s relative value and growth potential.
I like the idea of having a slice of Gold as diversifier a la the Permanent Portfolio. However, without access to ETFs, it doesn't look like there is a really good way to invest in it for me. I'm reluctant to hold physical gold in large enough quantities to be meaningful in relation to my overall portfolio size.
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

David Jay wrote: Thu Mar 29, 2018 10:48 am
czeckers wrote: Thu Mar 29, 2018 10:39 am I would love to use the ETFs. Unfortunately I only have access to Mutual Funds, not ETFs.
I bet you can fix that...
I'm fortunate to have access to a lot of tax-deferred space through my employer-based retirement accounts. Unfortunately, the brokerage window is limited to mutual funds only. The decision was consciously made to discourage frequent trading.
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Re: Mutual funds that invest in physical gold?

Post by David Jay »

czeckers wrote: Thu Mar 29, 2018 10:52 am
David Jay wrote: Thu Mar 29, 2018 10:48 am
czeckers wrote: Thu Mar 29, 2018 10:39 am I would love to use the ETFs. Unfortunately I only have access to Mutual Funds, not ETFs.
I bet you can fix that...
I'm fortunate to have access to a lot of tax-deferred space through my employer-based retirement accounts. Unfortunately, the brokerage window is limited to mutual funds only. The decision was consciously made to discourage frequent trading.
That's a really unusual arrangement. Most employers offer a limited choice or a self-directed account.
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

Limited choice of funds. There is a brokerage window for mutual funds but not ETFs.
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Re: Mutual funds that invest in physical gold?

Post by Whakamole »

There appears to be a fund called "The Gold Bullion Strategy Fund", ticker symbol QGLDX, whose stated goal is to track the price of gold using futures contracts. 1.6% ER, oy vey.

Here is a five year comparison chart between QGLDX and GLD. As you can see it isn't 100% though I don't think it's going to be (and the fund managers are doing something very different than GLD which actually buys and stores physical gold.) Comparison chart
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Re: Mutual funds that invest in physical gold?

Post by not4me »

czeckers wrote: Thu Mar 29, 2018 11:04 am Limited choice of funds. There is a brokerage window for mutual funds but not ETFs.
As I read the thread, I was going to mention about tax considerations. Sounds like your sole interest is in tax-deferred. Some of the "funds" are not really open-end mutual funds, but rather trusts, etn, etc. They may have K1 instead of 1099, taxed as collectibles, etc.

What is your objection to the permanent portfolio....not solely gold?
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Re: Mutual funds that invest in physical gold?

Post by alex_686 »

lack_ey wrote: Wed Mar 28, 2018 3:10 pm
alex_686 wrote: Wed Mar 28, 2018 12:05 pm Also, why physical gold and not synthetic gold? Investing in gold futures should earn you the return of gold plus a modest roll return.
Wait, what roll return, on what, why?

I don't see that in the structure:
http://www.cmegroup.com/trading/metals/ ... /gold.html

Why would you get more return here than on holding physical or via an ETF that holds physical? There's plenty of supply. Is this a temporary condition or a long-term phenomenon you're referencing?
Is gold in contango and not normal backwardations? If so, my bad. On the flip side, with synthetic you can avoid storage costs or take physical delivery and lease it out.
xenial wrote: Wed Mar 28, 2018 4:04 pm I don't pretend to understand the finer points of precious metal custodial arrangements, but Sprott claims superiority over other bullion funds.
For me this is a negative. There are tricks to squeeze out a few extra bps with synthetic gold so why not use them? I can't think of the last time a exchange or counterpart went bankrupt and the investors were not made whole. I would argue that anything that chaotic to would causes losses would also cause chaos and harm to investment vehicles in general. Having a gold ETF won't help in a zombie apocalypse. Best to keep your physical gold next to you guns and canned tuna fish.
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Re: Mutual funds that invest in physical gold?

Post by bearcub »

The Merk Fund. It invest in physical gold that is held in Perth Australia.
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Re: Mutual funds that invest in physical gold?

Post by MP123 »

bearcub wrote: Thu Mar 29, 2018 4:09 pm The Merk Fund. It invest in physical gold that is held in Perth Australia.
But that's an ETF, right? OP needs a Mutual Fund.
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Re: Mutual funds that invest in physical gold?

Post by alex_686 »

MP123 wrote: Thu Mar 29, 2018 4:19 pm
bearcub wrote: Thu Mar 29, 2018 4:09 pm The Merk Fund. It invest in physical gold that is held in Perth Australia.
But that's an ETF, right? OP needs a Mutual Fund.
I don't think you are going to get a mutual fund. I don't think it would meet the diversification test that a mutual fund has to meet by law.
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Re: Mutual funds that invest in physical gold?

Post by MP123 »

alex_686 wrote: Thu Mar 29, 2018 4:21 pm
MP123 wrote: Thu Mar 29, 2018 4:19 pm
bearcub wrote: Thu Mar 29, 2018 4:09 pm The Merk Fund. It invest in physical gold that is held in Perth Australia.
But that's an ETF, right? OP needs a Mutual Fund.
I don't think you are going to get a mutual fund. I don't think it would meet the diversification test that a mutual fund has to meet by law.
Yes, that may very well be why there don't seem to be any. Perhaps it's possible to wrap an ETF around a gold holding trust but not a Mutual Fund.
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Re: Mutual funds that invest in physical gold?

Post by bearcub »

The Merk Fund is or was a fund not an ETF when I invested in it. That was many years ago before I dicovered Vanguard + this site. He also had a currency fund. Take care.
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

alex_686 wrote: Thu Mar 29, 2018 4:21 pm
MP123 wrote: Thu Mar 29, 2018 4:19 pm
bearcub wrote: Thu Mar 29, 2018 4:09 pm The Merk Fund. It invest in physical gold that is held in Perth Australia.
But that's an ETF, right? OP needs a Mutual Fund.
I don't think you are going to get a mutual fund. I don't think it would meet the diversification test that a mutual fund has to meet by law.
That's a good point.
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Re: Mutual funds that invest in physical gold?

Post by czeckers »

not4me wrote: Thu Mar 29, 2018 3:51 pm
What is your objection to the permanent portfolio....not solely gold?
No objection. I'm aiming for the "Golden Butterfly" variation of the PP. I was just trying to steer the discussion away from the pros/cons of the PP.
The Espresso portfolio: | | 20% US TSM, 20% Small Value, 10% US REIT, 10% Dev Int'l, 10% EM, 10% Commodities, 20% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."
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Re: Mutual funds that invest in physical gold?

Post by boglerdude »

Vanguard's i401k is also funds only, no Admiral shares or ETFs

Might be ideas about gold funds here
https://www.gyroscopicinvesting.com/for ... um.php?f=5
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Re: Mutual funds that invest in physical gold?

Post by not4me »

czeckers wrote: Thu Mar 29, 2018 9:19 pm
not4me wrote: Thu Mar 29, 2018 3:51 pm
What is your objection to the permanent portfolio....not solely gold?
No objection. I'm aiming for the "Golden Butterfly" variation of the PP. I was just trying to steer the discussion away from the pros/cons of the PP.
Don't blame you for wanting to find your "ideal", but doubt that's going to happen. I had originally thought too that mutual funds regs would prevent that, but didn't have an authoritative source to back it up. As much as anything, IF they went fully invested in bullion, they'd had a tough time getting their expenses paid!

So what is next best thing? I don't know & some of it depends on how strongly you feel about GB portfolio. If you have a long time horizon, then I think owning some mining stocks isn't as bad as often portrayed. Another possibility is that you swap the gold exposure between you tax-deferred & other taxable accounts.

Good luck!
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Re: Mutual funds that invest in physical gold?

Post by alex_686 »

not4me wrote: Fri Mar 30, 2018 8:23 am As much as anything, IF they went fully invested in bullion, they'd had a tough time getting their expenses paid!
They could just sell the gold. That is allowed. Sale of assets to cover expenses happens all of the time.
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