What to do with VGPMX (Vanguard Precious Metals and Mining)?

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FlyingMoose
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What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by FlyingMoose » Mon Dec 08, 2014 9:02 am

A couple of years ago, when setting up my portfolio, I decided to do the 5% Wild Money thing, and put 5% into VGPMX
(Vanguard Precious Metals and Mining). Looking at the history of the fund, it seemed to be a leveraged bet on gold, and I figured it would act as an insurance policy for my portfolio for things like what happened between 2006 and now.

I have rebalanced into it, so now, while it is still 5% of my portfolio, it has cost me 6% of the present value (which is much larger now than it had been). I've lost about 1/2 of my initial investment in it, and about 1/3 of the total I put in including rebalancing.

I wouldn't mind so much, but it is no longer what it once was. It used to be called an index, whether it was or not. It's apparently now only half precious metal and the other half is commodities. It's also not very evenly distributed and is also actively managed. If it was still an actual index, I wouldn't mind as much, even if it had lost more money. I feel that it might not capture the gains in precious metals, if the economy and other commodities are down but gold is up.

However, I'm conflicted about dumping it, because I really don't like the idea of locking in my losses. But I'm not sure if it will revert to its "mean" because the composition is different compared to the past. Also, I put it in my Roth, because I wanted to put the biggest gainers there, which makes it hurt even more.

I guess if I really wanted to stick to my guns, I could find another fund which is an actual index (to act as a leveraged gold bet), especially since most of them are down more than VGPMX at the present time. But I don't know how hard it would be to buy a non-Vanguard fund in my Vanguard account.

After a recent serious illness which was exacerbated, if not caused, by stress, I just simplified the rest of my portfolio because of the stress it was causing me (got rid of Small Value and International Small and put them into Total US and Total Int'l). It wasn't difficult because, even though they were up and down, they're currently about where I bought them, so I could make the change and be in the same position as if it'd never happened. This will allow me to be more tax-efficient (because one of my accounts has more choices in this area) and make rebalancing easier (which was difficult because of all the little pieces trying, and sometimes failing, to be tax efficient across 6 accounts).

If I sell VGPMX at a loss, I will have taken the risk without getting the reward. So I guess my options are:

1. Keep going as I am, rebalancing into it and hoping it pays off big some day.
2. Keep it but don't rebalance (and maybe take this year's rebalance amount back out since it's still about the same price), and hope it pays off big some day.
3. DCA out of it over a year or so, and split the money among my 3-fund portfolio (40% US, 40% Int'l, 20% Bond)
4. Try to market-time a good time to dump it and split the money among my 3-fund portfolio.

lazyday
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Re: What to do with VGPMX?

Post by lazyday » Mon Dec 08, 2014 9:34 am

Another option might be to move 3 or 4% to a more pure PME (precious metals equity) fund, and the other 1 or 2% to Total International.

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Re: What to do with VGPMX?

Post by staythecourse » Mon Dec 08, 2014 9:45 am

My opinion, pick what you want and STICK to it. It seems you make some great reasons/ excuses to change your asset allocation in the recent past. They may be legitimate, but in the end they are another example of not sticking to the plan. I have NEVER seen a person's portfolio blow up having money in gold equities or not (especially at 5%), but have seem many folks doomed because they keep manipulating their asset allocation.

Pick one and stick to it.

If you had stress from just adding SCV and international small then I don't think you have the mentality to be a slice/ dice guy. No problem with that just have to accept it and move forward knowing that when formulating your asset allocation.

My suggesting would be stick to broad indexes with a heavy home country bias as that should reduce tracking error the most. Then just let your investments do their job!!

Good luck.

p.s. If didn't see such behavioral issues my advice would have been find a fund that fits what you were looking for in the Vanguard precious metal and mining fund.
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Re: What to do with VGPMX?

Post by Lafder » Mon Dec 08, 2014 9:55 am

Is this held in a retirement or taxable account? If taxable, consider it a tax loss harvesting opportunity and take it.

If a retirement account, you need to just decide whether to be done or not and stop stressing about it. At less than 5% of your portfolio, how much does it really matter ?

I admit that I sold my REIT holdings around 2008 at a loss and still regret it since they are more than above where they were. But, I am glad I now hold no REITS.

lafder

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Re: What to do with VGPMX?

Post by FuzzyButtons » Mon Dec 08, 2014 10:04 am

FlyingMoose wrote:If I sell VGPMX at a loss, I will have taken the risk without getting the reward.
That's the thing about risk. Sometimes there is no reward. :P

As others have said, evaluate why you have this in your portfolio and whether it still meets the needs for which you picked it. It sounds like you wanted something that would follow the price of gold and provide a large long term return with lots of volatility. To me, that sounds contradictory. The long term return of gold tends to be zero, when adjusted for inflation. I hold gold to reduce volatility during periods of high inflation, but I intended to balance in and out of it as needed. It's volatile, all right. But it's not about large long term gains.

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Re: What to do with VGPMX?

Post by FlyingMoose » Mon Dec 08, 2014 10:32 am

FuzzyButtons wrote:
FlyingMoose wrote:If I sell VGPMX at a loss, I will have taken the risk without getting the reward.
The long term return of gold tends to be zero, when adjusted for inflation.
That's why I invested in a fund of miners, which pay dividends, instead of physical gold or a gold ETF.

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Re: What to do with VGPMX?

Post by ResearchMed » Mon Dec 08, 2014 10:38 am

As mentioned above a few times, what is important is to stick with whatever plan you have, and not jump in and out (thus locking in losses, usually).

This is what should be the case *unless* your situation has changed - it has, the medical/stress situation - and/or you original reason for a particular investment (or several) has changed (and not just "because it's doing poorly) - and again, you now question your assumptions/reasons for selecting this fund in the first place.

So it seems you have a few choices, but think carefully about the reason(s) you use to make the choice:

- You can "hold tight", "stay the course", etc., and just wait for the fund to "do what you originally bought it for" (even if this is only a "just in case" scenario);
- You can change to a different but similar fund that you now realize is better attuned to what your original goals were (but careful here, as it's easy to keep coming up with justifications to do lots of tinkering this way);
or
- You can decide that given all of the above, especially the stress (including stress due to the portfolio management specifically), you want to change your holdings to something like a very basic 3-fund portfolio, or lifecycle, or some other single balanced fund.

And then set it and forget it, and try to relax. Your health is too, too important!

Good luck with your health problems, and with your investment decisions.

Added: You can do the first in two ways, continuing to rebalance, or perhaps just leave it "as is" and let it ride.

RM
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Re: What to do with VGPMX?

Post by FuzzyButtons » Mon Dec 08, 2014 10:40 am

FlyingMoose wrote:
FuzzyButtons wrote:The long term return of gold tends to be zero, when adjusted for inflation.
That's why I invested in a fund of miners, which pay dividends, instead of physical gold or a gold ETF.
Fair enough. :beer

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Re: What to do with VGPMX?

Post by Stonebr » Mon Dec 08, 2014 3:37 pm

FlyingMoose wrote: I wouldn't mind so much, but it is no longer what it once was. It used to be called an index, whether it was or not. It's apparently now only half precious metal and the other half is commodities. It's also not very evenly distributed and is also actively managed. If it was still an actual index, I wouldn't mind as much, even if it had lost more money. I feel that it might not capture the gains in precious metals, if the economy and other commodities are down but gold is up.
I don't know where you got this idea. This is not an index fund. It has never been an index fund. It has always been actively managed. The fund was primarily precious metals mining stocks until about 2005 when stocks of non-precious metals and other minerals mining companies were added. I've heard that management was changed recently.

I suggest that if you have this much misunderstanding of the fund you should not own it.
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Re: What to do with VGPMX?

Post by Browser » Mon Dec 08, 2014 4:11 pm

I would sell it yesterday. Oh, come to think of it, that's what I did several months ago. This investment thing is a snap....
We don't know where we are, or where we're going -- but we're making good time.

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Re: What to do with VGPMX?

Post by Jeff7 » Mon Dec 08, 2014 4:13 pm

staythecourse wrote:My opinion, pick what you want and STICK to it. It seems you make some great reasons/ excuses to change your asset allocation in the recent past. They may be legitimate, but in the end they are another example of not sticking to the plan. I have NEVER seen a person's portfolio blow up having money in gold equities or not (especially at 5%), but have seem many folks doomed because they keep manipulating their asset allocation.

Pick one and stick to it.

If you had stress from just adding SCV and international small then I don't think you have the mentality to be a slice/ dice guy. No problem with that just have to accept it and move forward knowing that when formulating your asset allocation.

My suggesting would be stick to broad indexes with a heavy home country bias as that should reduce tracking error the most. Then just let your investments do their job!!

Good luck.

p.s. If didn't see such behavioral issues my advice would have been find a fund that fits what you were looking for in the Vanguard precious metal and mining fund.
Bolding added.


I throw money at my investments in the hope that they'll eventually increase. I may look at them from time to time, but that's it. I fiddle with them once a year, which is what I agreed (with myself) to do, and then only if they need it.
Don't try to mix gambling with investing. ;)

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Re: What to do with VGPMX?

Post by Browser » Mon Dec 08, 2014 4:23 pm

Seriously, whenever you invest in anything you have to ask yourself how you'd feel about it if it dropped 50-60%. The problem with most stuff like VGPMX is that in all honesty you'd be doing what the OP is doing -- questioning the wisdom of buying the stuff in the first place and working on a rationale for getting out. That's why most people should never do it -- they can't stick with it. I've done that sort of thing plenty of times in the past, and I was happier just bailing out and considering it tuition for continuing education on how I should invest. I don't do this kind of thing as much anymore, so maybe I've learned something.
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Re: What to do with VGPMX?

Post by SpringMan » Mon Dec 08, 2014 4:43 pm

It's apparently now only half precious metal and the other half is commodities.
Actually it is more equities of producers of precious metals and commodities, not the precious metals / commodities themselves. I have no crystal ball but I would probably exchange out of the fund into something more diversified. It has about 58 stocks so it is quite concentrated.
Best Wishes, SpringMan

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Re: What to do with VGPMX?

Post by nisiprius » Mon Dec 08, 2014 4:59 pm

FlyingMoose wrote:...A couple of years ago, when setting up my portfolio, I decided to do the 5% Wild Money thing, and put 5% into VGPMX. Looking at the history of the fund, it seemed to be a leveraged bet on gold, and I figured it would act as an insurance policy for my portfolio for things like what happened between 2006 and now....
1) It's not leveraged. It's a plain vanilla long-only mutual fund that invests in stocks.

Source: Morningstar
Image

2. It isn't a bet on gold. Although in theory its fund rules allow it to hold gold, it doesn't hold any. As of the last semiannual report, 7/31/2014, it owned no gold, and a very small amount of platinum bullion amounting to 0.1% of the fund's value.

3. Between 2006 and now, during the time period when Total Stock experienced a 50% drop, far from acting as "insurance" it dropped 70% and thus made things worse.
...It used to be called an index, whether it was or not....
By whom? I cannot ever remember anyone saying such a thing.
It's apparently now only half precious metal and the other half is commodities.
No is isn't. I don't think it ever held any substantial amount of precious metal--anyone know?

It currently is 99.9% stocks in companies in "a small area of the market, investing in companies that are involved in the mining of or exploration for precious and rare metals and minerals." That is Vanguard's description of it.

I don't know what you should do. Certainly you should ignore the "sunk cost." What I am concerned about is that I don't think you checked out what is in this fund--it isn't what you seem to think it is. That is probably a better reason to get rid of it than anything else.
Last edited by nisiprius on Mon Dec 08, 2014 5:07 pm, edited 1 time in total.
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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Garco » Mon Dec 08, 2014 5:06 pm

To those advising the OP to stick with the plan, or stay the course, you're missing the point.

He didn't have a plan. He had a wish. He wanted to play roulette. He lost.

There's no reason to double up on a bad bet. No reason to throw good money after bad.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 5:34 am

"leveraged bet on gold"

This sounds about right, I think PME has often acted as something of a levered bet on gold. Of course it won't always behave that way.

I think in other threads on PME or VGPMX, people have posted about how much VGPMX is or is not a PME fund, including charts on performance vs a real PME fund like GDX.

There's been some debate about what PME or gold bullion protects against. Some have claimed inflation protection, or protection for crises. But I believe some studies have disputed these claims.

I think that if you're willing to stick with PME through decades of bad performance, then it might be worth owning a tiny bit, simply because it might zig when the rest of your portfolio zags. Backtests have shown benefit to including a little in the portfolio, if you rebalance like a robot.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by dumbmoney » Tue Dec 09, 2014 6:34 am

Have you read this?

"The Longest Discipline"
http://www.efficientfrontier.com/ef/adhoc/gold.htm
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 7:28 am

After a recent serious illness which was exacerbated, if not caused, by stress, I just simplified the rest of my portfolio because of the stress it was causing me
If you think owning VGPMX or another PME fund will cause you more stress than it's worth, you could just dump it all at once, or DCA out. 5 or 6% of the portfolio is pretty small.

You could write rules into your IPS to restrict adding any new asset classes, to try to avoid something similar in the future. Also I think there's less risk of a fund changing on you if you stick to broad index funds from Vanguard, like TSM and TISM. The only one I know of is Tax Managed International, and I don't think the change was drastic.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by VirginiaBob » Tue Dec 09, 2014 8:16 am

Sell low now so that I can buy from you. I like making money off the recency bias of others.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by FlyingMoose » Tue Dec 09, 2014 8:17 am

lazyday wrote: If you think owning VGPMX or another PME fund will cause you more stress than it's worth, you could just dump it all at once, or DCA out. 5 or 6% of the portfolio is pretty small.

You could write rules into your IPS to restrict adding any new asset classes, to try to avoid something similar in the future. Also I think there's less risk of a fund changing on you if you stick to broad index funds from Vanguard, like TSM and TISM. The only one I know of is Tax Managed International, and I don't think the change was drastic.
I didn't add it, I put it in when I created the portfolio. And contrary to what another poster said, my reasoning was fear rather than greed. At the time there was more fear about a market crash, or even the whole country going to crap, and the fresh memory of the higher inflation before the crash (and it certainly felt higher than the government numbers, the whole feeling of "spend it before it's worthless"). I would have been afraid to put as much in total indexes without it, so I think that net I came out ahead. It's easy to look back now, after all the gains, but at the time things seemed different.

I'm just questioning whether it's still the "insurance policy" that I thought it was (against inflation, "the end of the world as we know it", other similar calamities). If this is true I will keep it. I would own physical gold but it's not very practical so I wanted something similar in my portfolio. Plus the whole issue of gold not paying dividends.

[edited to fix quotes]

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 8:35 am

I think it could help in some crises, and not in others. Think about long term nominal Treasuries, they help in some (most?) credit crises, but in case of serious stagflation, they might not help you.

2013 article by Alan Roth:
In his recent book, Deep Risk How History Informs Portfolio Design, William Bernstein makes the case for PMEs. Bernstein told me, "PME is an excellent hedge against inflation, likely better than bullion, though a lot more volatile." This volatility is a double-edged sword in that it takes far more discipline to rebalance. But Bernstein noted that the higher volatility leads to a higher bonus from rebalancing.
There's also some discussion on how much VGPMX is a PME fund.
http://www.cbsnews.com/news/the-case-fo ... -equities/

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 8:40 am

FlyingMoose wrote:I didn't add it, I put it in when I created the portfolio. And contrary to what another poster said, my reasoning was fear rather than greed
I think some people are being a bit harsh; hope you didn't take my post that way.

As the fund changed on you, I'm not sure this was a behavioral mistake. And if it was, well hey, normal healthy people make behavioral mistakes!

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by tibbitts » Tue Dec 09, 2014 8:58 am

lazyday wrote:
FlyingMoose wrote:I didn't add it, I put it in when I created the portfolio. And contrary to what another poster said, my reasoning was fear rather than greed
I think some people are being a bit harsh; hope you didn't take my post that way.

As the fund changed on you, I'm not sure this was a behavioral mistake. And if it was, well hey, normal healthy people make behavioral mistakes!
Where does everyone get the idea that the fund changed? Many years before the OP bought the fund, it slightly broadened its holdings into a wider variety of mining issues, but as far as I know, in the OP's era, all that has changed have been individual equity holdings, not the objective of the fund. I have a very small amount of this fund, like close to the minimum to open it, but don't follow the buys/sells. As with some of the active VG funds that nobody complains about because of the their performance (healthcare, for example), it's probably possible to question individual holdings - if you have expertise. But I don't even know enough about the industry to complain about the diversification. I'm just guessing, but maybe it's concentrated because it would be impossible to put together a fund with the same objectives and hundreds or thousands of holdings. Maybe there just aren't that many publicly traded businesses in this industry.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 10:45 am

tibbitts wrote:Many years before the OP bought the fund,
I didn't take "couple years" literally. Also sometimes I research a fund, don't invest, and then years later do invest. With only a quick glance before investing, I might have missed this change, depending on the top holdings at the time.

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Re: What to do with VGPMX?

Post by magneto » Tue Dec 09, 2014 11:23 am

FlyingMoose wrote:
FuzzyButtons wrote:
FlyingMoose wrote:If I sell VGPMX at a loss, I will have taken the risk without getting the reward.
The long term return of gold tends to be zero, when adjusted for inflation.
That's why I invested in a fund of miners, which pay dividends, instead of physical gold or a gold ETF.
As only 5% invested in the fund, hopefully not a major issue to add to stress health problems, and the dividends help.

Note : Commodities, both energy and mining, are depressed currently (but can well go much lower), and here in the UK we are adding gently (not a full rebalance), to a fairly high yielding closed end fund UK:BRCI, each time the fund price drops 10%. This is reluctant action, (dividends may well be cut), represents about 9% of our stocks, 3% of total portfolio, and we are not expecting outperformance anytime soon.

Last para not a recommendation!

Good Luck and All Best
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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Ninegrams » Tue Dec 09, 2014 11:45 am

Like the OP had about 5% of port invested in the fund, unlike OP I purchased most of the shares around 2002, so got a nice ride up. Every time it doubled I trimmed back, I never trusted it to continue. Finally exited sometime around 2011. I really don't recall why I purchased the fund to begin with, probably some tip on the internet. :wink:

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by georgewall42 » Tue Dec 09, 2014 6:49 pm

You should take a close look as to what this fund invests in: the stocks of companies involved in the mining of precious metals, including but not limited to gold. Which means the fund is a stock fund concentrated in one particular industry sector. There are a number of factors that affect the performance of this fund:

a.) First and foremost, the underlying companies profit/loss is greatly influenced by the price of the metal it mines. Mining costs are more or less fixed, but the price of the metal can be volatile. Which means when the price of the precious metal goes up, the profits zoom; when the price goes down, red ink bleeds all over the place.

b.) Due to (a), you can look at this fund as a "leveraged bet" on the price of precious metals.

c.) However, the "bet" is on several precious metals (gold, silver, platinum, diamonds), and even some non-precious metals (zinc, etc.).

d.) Lots of factors affect the price of these metals: industrial demand (applicable to platinum and zinc), consumer demand, supply issues, economic strength (good economy means strong industrial and consumer demand and high prices; poor economy has just the opposite affect), inflation (which has been very low lately, which is not good for these funds), and, of course, fear (which drives the price of gold, and, to a lesser extent, silver).

e.) Furthermore, most of these stocks are of foreign companies, so this fund has some of the same exposure as international funds when it comes to the strength of the US dollar (strong dollar lately has hurt international funds).

Looking at historical performance: from 2002 to 2007, this fund indeed acted as a "leveraged bet on the price of gold". Of course, that was also a period of strong economic growth and a declining US dollar (relative to the euro and the Canadian dollar, and a number of these companies are Canadian). The fund vastly outperformed the S&P 500.

In 2008, the price of gold went up slightly (4%), but the fund collapsed, losing more than half its value. Why? Well, the global economy tanked, the price of commodities fell through the floor as demand dried up, stock markets world wide crashed, and the US dollar gained against both the aforementioned currencies. After a nice recovery in 2009-10 (which corresponded to a bull market in gold), the fund started to decline in 2011 due to many of the factors mentioned above, including the recent slide in the price of gold (note that gold went up in 2011 and 2012, while the fund lost 22% and 13%, respectively).

If you want a truly leveraged bet on the price of gold, and gold alone, you should buy a gold ETF on margin, not that I would ever recommend that strategy. The price of gold can be volatile, as can this fund be, and making a levered bet on it adds substantial risk to your portfolio for which you may never receive the appropriate reward.

So, why invest in this fund at all? A couple of reasons:

a.) It has a weak correlation with the S&P500 (one web site claimed 0.12). That doesn't mean the fund goes up when stocks go down (see 2008). But it does mean that it moves mostly independently of the stock market, which, in turn, means that such funds can help diversify your entire portfolio. That assumes your portfolio is properly balanced according to your investing plan (which I assume you have, correct?).

b.) The fund's expense ration of 0.25% is quite low for this sector.

c.) The fund's exposure goes beyond just gold, which can be a good thing if the price of gold decides to go flat for an extended period (see 1982-2003 for just such a period).

If you want to see an argument to stay invested, see the following:

http://awealthofcommonsense.com/opportu ... ls-stocks/

However, if you really feel this fund is no longer serving your specific needs, by all means sell it, either now or over a period of time via DCA. OTOH, there's nothing saying you cannot own this fund, and shares of a gold ETF. While more closely correlated to each other, they do server similar but distinct purposes.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by tibbitts » Tue Dec 09, 2014 7:42 pm

lazyday wrote:
tibbitts wrote:Many years before the OP bought the fund,
I didn't take "couple years" literally. Also sometimes I research a fund, don't invest, and then years later do invest. With only a quick glance before investing, I might have missed this change, depending on the top holdings at the time.
Certainly not everyone looks at fund holdings at purchase or after, but I'd say anyone would be in the (extreme) minority in buying a fund - by a new name - that'd they'd researched carefully nearly a decade before, without re-examining the holdings. That's just my guess for the timeline, based on the last objective/name change that I recall.

But have we established that this fund was ever what the OP believed it to be - an index fund? Even back in 1984? Maybe this is just a case of the OP having accidentally bought the wrong fund, which is a mistake a lot of us could make.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Dutch » Tue Dec 09, 2014 8:00 pm

Well for a different perspective:

I've started buying into VGPMX since the beginning of October. Part of my new contributions each month are now going towards this fund. I figure now might not be a bad time to buy for the long term, even if it continues to go lower in the short term.

Of course my cost basis is much lower than yours and that makes it easier to think that way. In the end, my crystal ball is as cloudy as yours.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by nisiprius » Tue Dec 09, 2014 8:01 pm

A question and a metaquestion. The fund's prospectus contains this statement:
The Fund may also invest up to 20% of its assets directly in gold, silver, or other precious metal bullion and coins.
Currently, it has holdings of platinum bullion amounting to 0.1% of the fund's market value--2009 troy ounces. The largest platinum bullion bars Google is showing me seem to be ten-ounce bars, so I guess we are talking about 200 of these and nine of the little one-ounce bars:

Image

a) Does anyone know whether the fund ever had a meaningful percentage of its portfolio invested in precious metal bullion?

b) Meta-question: how does one go about finding the answer to a question like (a)?
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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 10:51 pm

tibbits,

I doubt it ever was an index fund, but I think it was a much more of a PME fund in the past, holding mostly gold miners (some of which also mine other metals).

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Tue Dec 09, 2014 10:54 pm

nisiprius,

Could use edgar to look at old annual reports or portfolio holdings reports, though I don't know how far back you can see.

Really I think sometimes people say "gold" to mean the metal, and sometimes to mean gold mining companies. Same with commodities, commodity companies, and commodity futures.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by georgewall42 » Wed Dec 10, 2014 7:04 am

So-called "gold funds" have been around for decades, but nearly all of them held stocks of gold miners. Holding bullion was never the goal of these funds, although most are allowed to hold some percentage in bullion. There are a lot of reasons why these funds don't hold much bullion: trading costs, storage costs, lack of dividend, etc. It really wasn't until GLD and IAU came around that someone could own shares of a true bullion fund.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by OriolesFan89 » Wed Jan 07, 2015 8:04 am

Anyone know if there is going to be a dividend for this year? I see that under the "Distributions" tab on the VG website it lists "Fiscal year end : 1/31/2015". It seems like in past years the dividend has been paid by early January though.

countmein
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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by countmein » Wed Jan 07, 2015 1:24 pm

A good way to keep it simple...

Don't rebalance. Don't sell it. Don't look at it. Don't think about it. Then on some random day, say 5 or 10 years from now, when it is finally "up" from where you bought it, without any thought or analysis, just let it go (sell it), and never think about it again.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Castanea_d. » Wed Jan 07, 2015 7:47 pm

Since I’ve been in it, the dividend has mostly been late December, but they have also sometimes paid a dividend in March, including their only dividend in 2013. Most recent dates (going backwards)
3/19/13
12/28/12
3/21/12
12/16/11

Looking ahead, one plus is the lower fuel prices. If they continue, it is bullish for the miners, because fuel is such a large part of their operating expense.

Nisiprius, I don’t recall them ever having any significant bullion holdings, nothing close to what the prospectus says they are allowed. As for the small amount of platinum bullion, I recall a statement a while back (maybe in an annual or semiannual report?) that they did not like any of the platinum miners at the time which was their reason for purchasing some bullion. They have held shares in a large European platinum recycler, but I think they have continued to stay away from the platinum mining companies.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by nedsaid » Thu Jan 08, 2015 12:14 am

Being value oriented and a bit contrarian in my thinking, I keep wondering whether or not I should buy a precious metals fund. It has got to be the most hated asset class out there. Something in me thinks this is worth checking out. This is a hated area of the market and prices are way down. Hmmm. Not only that, as I get older I am thinking that maybe I need some portfolio insurance.

Not saying I will do it, but I am thinking about it.
A fool and his money are good for business.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by lazyday » Thu Jan 08, 2015 3:16 am

I hate the asset (gold miners) and always have. Because long term portfolio diversification benefit has been so good, I do own a tiny bit.

Gold in quantity is not useful, except because others say it is. Most is dug up then put back underground as bars.

Recently, a lot of demand comes from emerging markets. So the price might be correlated to EM economies, especially in big tail events.

Though spot price has come down, I'm not sure it's "cheap" if you look at the inflation adjusted price over time, such as since 1980 after Bretton Woods ended.

Most of the easy mining is exhausted, especially in stable economies. So miners' costs are rising. Better if you choose miners in places where confiscation risk is higher. But this risk is probably higher if gold price does go up in a crisis. Heads you win, tails I lose.

Costs are related to energy prices. Mining requires more and more energy, because of low and decreasing gold content in rocks. But the gold added each year by miners is dwarfed by the gold already in circulation. So miners might become negatively correlated to inflation, and maybe some of the old diversification benefit is lost.

Just my thoughts; I'm not well read on gold.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by ge1 » Thu Jan 08, 2015 6:40 am

I did even better than that, I bought GDX and GDXJ in my brokerage account.... Needless to say, they were awful investments. In an effort to simplify my portfolio I sold them all in December, at least they were in a taxable account.

What I certainly wouldn't do in your situation is double down on your investment or try to find a more suitable hedge against an economic crisis. You will just outsmart yourself again. Either sell everything or as the other poster said, keep it, forget about it and years down the road when everybody talks about how wonderful gold is, sell it then.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by bottomfisher » Thu Jan 08, 2015 5:06 pm

nisiprius wrote:A question and a metaquestion. The fund's prospectus contains this statement:
The Fund may also invest up to 20% of its assets directly in gold, silver, or other precious metal bullion and coins.
Currently, it has holdings of platinum bullion amounting to 0.1% of the fund's market value--2009 troy ounces. The largest platinum bullion bars Google is showing me seem to be ten-ounce bars, so I guess we are talking about 200 of these and nine of the little one-ounce bars:

Image

a) Does anyone know whether the fund ever had a meaningful percentage of its portfolio invested in precious metal bullion?

b) Meta-question: how does one go about finding the answer to a question like (a)?
Start here: viewtopic.php?f=10&t=142958

Barry Barnitz posts this link for Vanguard SEC annual report listings: http://www.bogleheads.org/wiki/Vanguard_SEC_listings

Brings you to this SEC webpage with Vanguards specialized funds: http://www.sec.gov/cgi-bin/browse-edgar ... getcompany

To another SEC webpage link: http://www.sec.gov/cgi-bin/browse-edgar ... scd=series

To this page with a listing of links to Vg Precious Metals and Mining fund's Annual reports: http://www.sec.gov/cgi-bin/browse-edgar ... s&count=40

Its actually bundled in with other Vg specialized funds - HealthCare, REIT, Energy. But this is a different format from my prior visit to similar SEC page quite a while ago. Previously you could simply select the year you were in search of and open the archived annual report to see fund holdings then. The format on this last link is very confusing and not user friendly any longer to efficiently find the information you are looking for. I'm not sure if this a different route than I previously took? But I figured I would at least offer this link since no one else has suggested another yet.

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bottomfisher
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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by bottomfisher » Thu Jan 08, 2015 5:25 pm

^^^ Further tinkering on "EDGAR Search Results BETA" with filing type N-CSR yielded this page: http://www.sec.gov/cgi-bin/browse-edgar ... output=xml

Listing of shareholder reports - annual and semi-annual. This is (similar) page I was having difficulty locating in my reply immediately above. From there you can look through the prior reports for fund holdings for any given year. Again all the Vg Specialized funds are bundled into one report in separate sections. Hope that helps if you're still interested in seeking answer to your original question.

EDIT TO ADD: Page 10 of the 2003 Vg Precious Metals and Mining Shareholder report, the earliest report (scroll approximately 1/2 entire document), indicated the fund held 2009 troy ounces of platinum bullion then too (so unchanged)

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Jagman » Mon Jul 20, 2015 8:57 pm

nedsaid wrote:Being value oriented and a bit contrarian in my thinking, I keep wondering whether or not I should buy a precious metals fund. It has got to be the most hated asset class out there. Something in me thinks this is worth checking out. This is a hated area of the market and prices are way down. Hmmm. Not only that, as I get older I am thinking that maybe I need some portfolio insurance.

Not saying I will do it, but I am thinking about it.
May 16, 2008: $39.75/share
Jan 8, 2015: $9.45/share
Jul 20, 2015: $7.32/share (6.87% drop today)

How low will it go?

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by Prokofiev » Tue Jul 21, 2015 12:17 am

May 16, 2008: $39.75/share
Jan 8, 2015: $9.45/share
Jul 20, 2015: $7.32/share (6.87% drop today)

How low will it go?
Not sure, but that was a major drop today.

Not only do I have a position in VGPMX, but I somehow mysteriously acquired Vanguard Energy ETF - down 30% this past year, along with PCRIX (a Larry Swedrow special) down 60% over past 4 years and Russia ETF RSX - down 55% over past 4 years. All rather painful.

I am presently looking to add a North Korean Small Cap Value fund to the mix for added diversification. I heard that all N Korean stocks are small cap with very little growth.

But the good news is I am able to extend the duration of my bond portfolio according to Larry since I am covered on the unexpected inflation front. Unless interest rates should rise while commodities fall. But that seems unlikely . . .
Everything should be made as simple as possible, but not simpler - Einstein

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Re: What to do with VGPMX (Vanguard Precious Metals and Mini

Post by nedsaid » Sat Jul 25, 2015 10:19 am

Jagman wrote:
nedsaid wrote:Being value oriented and a bit contrarian in my thinking, I keep wondering whether or not I should buy a precious metals fund. It has got to be the most hated asset class out there. Something in me thinks this is worth checking out. This is a hated area of the market and prices are way down. Hmmm. Not only that, as I get older I am thinking that maybe I need some portfolio insurance.

Not saying I will do it, but I am thinking about it.
May 16, 2008: $39.75/share
Jan 8, 2015: $9.45/share
Jul 20, 2015: $7.32/share (6.87% drop today)

How low will it go?
Rick Ferri has posted that the long term trend of Gold should price it in at about $800/ounce. Gold is still above the trend and this is one reason I have not purchased. Gold is also a hedge against a falling US Dollar. Notice that the Dollar has been kicking rear lately and has been very strong. Inflation has also been very low. It is not surprising that the precious metals funds and the underlying metals have not been doing very well. Also the commodities boom has gone bust.

I don't know how low it will go. Nobody does. All I know is that it is better to buy assets when they are hated rather than when they are loved. By the way, I have not bought in.
A fool and his money are good for business.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by cfs » Sat Jul 25, 2015 11:45 am

Past performance.

Precious Metals and Mining (VGPMX) (there goes that past performance thing).

1YR: -24.83%
5YR: -10.99%
10YR: -0.04%
2005: 43.79%
2006: 34.30
2007: 36.13%
2008: -56.02
2009: 76.46%
2010: 37.45%
2011: -21.70
2012: -12.98
2013: -35.13
2014: -11.41
2015: -19.66% (YTD)

Numbers from Vanguard (YTD as of 07/24/2015; 1,5,10 years as of 06/30/2015; yearly returns are from prospectus dated 05/28/2015).

Shameless disclaimer: My post shall not be taken as an investment recommendation--my signature applies.
~ Member of the Active Retired Force since 2014 ~

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Toons
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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by Toons » Sat Jul 25, 2015 12:04 pm

I have always listened intently when Warren speaks about Gold as an "investment"
3 minute youtube link below,,worth listening to :happy

"Warren Buffett on Investing in Equity vs Gold"

https://www.youtube.com/watch?v=YuJBMVz5DLQ
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by Northern Flicker » Sat Jul 25, 2015 12:45 pm

Not to dispute W. Buffett's position, but unlike gold metal (or other commodities), which offers no revenue, gold mining stocks generate revenue by mining and selling the metal.

I think the OP was in a quandary because the investment was a speculation that lost (5% Wild Money Thing were the OP's words).

On the other hand, if someone bought vgpmx to diversify risk of US stocks by virtue of being uncorrelated to the broad US market, then they won the game, as US stocks rallied significantly, and vgpmx did its job of being uncorrelated rather effectively.

If you can only feel good about an investment like vgpmx when a 5% stake in it is up around 80% while a large stake in the broad stock market simultaneously is down about 40%, then it is not the right diversification for you.

-jalbert

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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by Jagman » Mon Jul 27, 2015 5:50 pm

Down another 2.35% today. Now $7.07 per share.

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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by Jagman » Thu Dec 17, 2015 6:54 pm

Down almost 5% today. Anybody buying at $6.00/share?

btenny
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Re: What to do with VGPMX (Vanguard Precious Metals and Mining)?

Post by btenny » Thu Dec 17, 2015 7:35 pm

Well here is what I know today. I live in Arizona and Lake Tahoe part time. Both areas have major mining companies and major mining operations. Right now the area mining companies in both places are cutting back and laying off people. Lots of people. Mining is very much a boom and bust business. Companies go bankrupt and have big issues and sell out to other companies.

I have lived here for 60+ years. I have seen many boom and bust cycles. Each time the price of gold and copper goes up a lot the companies ramp up production and open mines and hire tons of people. Then they work like mad and sell tons of stuff and stock pile tons of ore so when the prices drop they can shut down. Well the prices have dropped and the companies are shutting down. These cycles usually last 3-5 years or longer before the mines start back up producing at low levels. Right now we are at the front end of a bust. So think 3-5 years before things rebound.

http://www.riotinto.com/copperandcoal/r ... -4682.aspx

http://www.copperarea.com/pages/asarco- ... g-to-area/

http://www.reviewjournal.com/business/g ... 1988-level

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