Gold ETF

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mikeguima
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Gold ETF

Post by mikeguima » Fri Oct 06, 2017 2:02 pm

Hi everyone,

After having finally decided that Gold as an asset does belong into my portfolio (took me a while to make this decision), I'm now considering how I can hold it.

I was thinking of doing so through an ETF, but I have one question: does the ETF provider actually own the gold (so that my participation in the fund is actually backed by real, physical gold that I'm entitled to) or just tracks it? What could be the implications of owning a gold tracker instead of the actual gold?

Thanks!

MP123
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Re: Gold ETF

Post by MP123 » Fri Oct 06, 2017 2:16 pm

IAU and GLD hold physical gold in vaults and are probably the easiest way to buy and "hold" bullion if that's what you're after.

There are a wide variety of other Gold ETFs that track indexes, hold options, and so on. There are also some that invest in gold mining companies which is another angle you can play.

You really need to drill into the prospectus on these Gold ETFs...

stlutz
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Re: Gold ETF

Post by stlutz » Fri Oct 06, 2017 10:30 pm

Here is a good writeup of the the various ETF/ETNs work:

http://www.etf.com/commodities_precious_metals_gold

ralph124cf
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Re: Gold ETF

Post by ralph124cf » Sat Oct 07, 2017 1:22 am

An ETF like GLD will closely track the price of gold, and your gains or losses will be close to what you would have gotten by owning the physical gold.

I prefer to invest in gold mine mutual funds such as those offered by Fidelity and USAA. They had fantastic gains from about 1990 to about 2007. They have been terrible since, as has the price of gold.

The interesting thing is that these mutual funds can make money even when the price of gold is static. The mines keep producing gold, only the profit margin changes, and even this does not change as much as the price of gold would suggest. This is because, as rational people, gold mine managers want to keep their jobs. They do this by mining lower quality ore when prices are high, keeping the higher quality ore for when prices of gold are lower. This allows the managers to show a continuing profitability to the mine owners and keep their jobs.

These types of mutual funds necessarily have to have higher than average ERs. Gold mine fraud goes back to ancient Egypt. A fund rep has to travel to a third world country, make sure that there is an actual hole in the ground, from which gold ore is emerging, and that the mining company owns or has the right to mine said ore, and that there is evidence that the ore, as evidenced by test cores, has a certain probability of being of a certain extent. A fund rep also has to evaluate the political risk of the country that the mine is located in. Will the country decide to nationalize the mine? This type of mutual fund due diligence costs more than an order of magnitude more than what is warranted for a S&P 500 fund.

I put money into these funds from 1990 thru 1995. Starting in 2000, I started harvesting gains. Every time the fund total hit a new $10,000 benchmark, I pulled out $5,000. Up to 2007, which was the last time this happened, I pulled out almost twice my investment, and I still have more than three times my investment in the funds. I also have the dividends and capital gains declared, because I chose not to reinvest them.

Ralph

acanthurus
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Re: Gold ETF

Post by acanthurus » Sat Oct 07, 2017 1:42 am

Are you in a taxable or tax advantaged account? GLD and IAU are taxed differently than most ETFs and there are some workarounds for tax issues if you want gold exposure in a taxable account.

JBTX
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Re: Gold ETF

Post by JBTX » Sat Oct 07, 2017 1:56 am

cantos wrote:
Fri Oct 06, 2017 2:08 pm
Jack FFR1846 wrote:
Fri Oct 06, 2017 2:05 pm
I have a simpler way of holding gold. I have a big pile of $100 bills and I light one on fire every month. Cheaper that way.
Love this. I invested some money in a gold ETF and watched it go up and ultimately down over 5+ years. I keep it in my portfolio to remind myself not to do stupid things.
This. I bought some GLD a few years ago, but not material enough to really affect my portfolio at all. Not too long after it tanked. It is still sitting there at a significant loss (in a retirement account, so I can't even tax loss harvest it) :annoyed

When I was in college, silver went up to $50/oz. Then it went down to $20. I was convinced at $20 price was a lock for appreciation. Got my dad to buy a nominal amount. It eventually went to $10 and stayed that way for about 25 years. :oops:

It seems I have to re-learn this lesson every 30 years or so. Whether I'll be alive when that next 30 year interval comes up remains to be seen.

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nisiprius
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Re: Gold ETF

Post by nisiprius » Sat Oct 07, 2017 5:52 am

mikeguima wrote:
Fri Oct 06, 2017 2:02 pm
...After having finally decided that Gold as an asset does belong into my portfolio (took me a while to make this decision), I'm now considering how I can hold it...
As a non-expert who does not hold gold... I can still say that the answer to that question is going to depend on your reason for holding gold.

If you believe that it is just a fluctuating asset no different in kind from any other--silver, real estate, peer-to-peer lending contracts--but that you are convinced that you like the past, and what you see as the future fluctuations, than an ETF is reasonable. The problem is that most people who think that gold is just a fluctuating asset like any other, don't usually end up choosing gold, they are more likely to end up with something like a commodities fund such as PCRIX, or an asset that has earnings.

If you believe that gold is a fundamentally unique asset, different from all others, the true source and measure of financial value, and that it will protect you in a large-scale financial and societal collapse, then I would seriously question whether anything you can buy and hold in an online brokerage will do what you want. Today, everything is "normal," I can click a mouse, sell an ETF, move the proceeds to my checking account, and buy groceries with the money by swiping my ATM card, within a few days. During 2008-2009 things were still "normal" enough to do that. But in a large-scale national financial collapse--not like 2008-2009, but a true collapse, like Venezuela or Zimbabwe or Weimer Germany?
I was thinking of doing so through an ETF, but I have one question: does the ETF provider actually own the gold (so that my participation in the fund is actually backed by real, physical gold that I'm entitled to) or just tracks it?
---> This is where you read the prospectus. Seriously. <---

Since I don't own gold I haven't paid a lot of attention, but the GLD Gold Trust says that it owns physical gold:
As at March 31, 2017, the Custodian held 26,798,117 ounces of gold on behalf of the Trust in its vault, 100% of which is allocated gold in the form of London Good Delivery gold bars including gold payable with a market value of $33,359,636,006... The Custodian is HSBC Bank plc... The Custodian’s office is located at 8 Canada Square, London, E14 5HQ, United Kingdom.
That is to say, the gold is in London. Quite apart from the question of how you know it's really there, the fact that it is overseas should give one pause. In a genuine systemic collapse, one of the things governments do is to put restrictions on trans-border exchanges of currency, gold, etc. (A good example right now would be Venezuela, which has currency controls and four different exchange rates). One might imagine a situation in which the U.S. government declares that the official price of gold is, again, $35 per ounce, so that a fair market rate could be obtained only on the black market. That would be an avenue possibly open to an individual holding physical gold locally, but probably not to the ETF managers! Even if they can sell the gold in London for fair market value, there is nothing that says the United States has to allow the exchange of pounds for dollars at a fair rate, nor that they have to allow you to move money that you own overseas in unlimited amounts.

A Forbes article, Is GLD Really as Good as Gold?
HSBC, the custodian, is very secretive regarding its vault. Earlier this year, CNBC’s Bob Pisani was allowed to see the vault only after surrendering his cell phone and taken in a van with blacked out windows to an undisclosed location. Once in the vault, Pisani held up a gold bar and explained they were all numbered and registered. Astutely, the [conspiracy-minded financial blog] ZeroHedge noted the bar Pisani held up was missing from the current bar list.
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Watty
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Re: Gold ETF

Post by Watty » Sat Oct 07, 2017 6:40 am

In addition to the taxes be sure to understand impact of the expense ratios which is especially important since the gold does not generate any earnings to cover the expenses.

If the expense ratio is 0.5% then if you buy an ETF that is equivalent to virtual stack of 200 gold coins then you basically give a gold coin to someone every year to manage the ETF for you. If you do that for a few decades then your virtual stack of gold coins will be noticeably smaller.

If you are thinking of buying physical gold be sure to Google "counterfeit gold coins" and spend some time researching the counterfeiting problem. This seems to be a growing problem and there are a LOT of counterfeit gold coins out there, and not just on eBay.

If you bought physical gold coins then you would be wise to insure them so that cost would add up too. In addition to theft you also have to be concerned about thing like fire and tornadoes since if you house is destroyed you might not get your safe back.

I don't own any gold but like most people I considered it a few years ago and just for brainstorming two things I remembered that you might want to look into are;

1) CEF looked like an interesting alternative that did not have some of the concerns that GLD has, but you will need to do your own research.

2) Silver looked more interesting to me than gold because it also has a lot of industrial uses. Counterfeit silver coins are out there too but may not be as big a problem as counterfeit gold coins.

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raven15
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Re: Gold ETF

Post by raven15 » Sat Oct 07, 2017 1:24 pm

Check out the Permanent Portfolio book and forum for discussion. The book lists several methods to invest in gold with discussion of each. ETF's are the better than nothing but not ideal solution. I agree with above that CEF may be the best choice. After that is physical ownership at a hidden location or safe deposit box, either of which has its own risks. Then allocated storage overseas is listed as the best solution. The costs, security, and complexity of ownership seem like the big hurdle to owning gold.
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technovelist
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Re: Gold ETF

Post by technovelist » Sat Oct 07, 2017 10:25 pm

raven15 wrote:
Sat Oct 07, 2017 1:24 pm
Check out the Permanent Portfolio book and forum for discussion. The book lists several methods to invest in gold with discussion of each. ETF's are the better than nothing but not ideal solution. I agree with above that CEF may be the best choice. After that is physical ownership at a hidden location or safe deposit box, either of which has its own risks. Then allocated storage overseas is listed as the best solution. The costs, security, and complexity of ownership seem like the big hurdle to owning gold.
I have owned CEF in the past, so I know a bit about this.

There are a couple of wrinkles that anyone considering owning it should know.

1. Its holdings are part silver and part gold, not all gold.
2. You have to file form 8621 every year if you want to avoid collectible tax rates (assuming you make money, of course).
3. Sprott Asset Management has been trying to take it over via a hostile takeover, as they did with the similar gold fund (GTU).
4. The market price drifts above (and often below) NAV because it is a closed-end fund, not a mutual fund where you cash out at NAV. This is good if you buy at a discount and sell at a lesser discount or a premium, but you can't know that will happen in advance.

However, if those issues don't bother you, then I see nothing wrong with it. It seems to have the fewest intermediaries between you and your metal, and the expenses are very low. In fact, there is no explicit charge for management, unlike GLD and the other ETFs that slice off a piece every month (on which you pay taxes if they have a gain). Their expenses are met from the proceeds of sales of new shares that they undertake every few years when the market price is below NAV, so they don't dilute the existing shareholders.
In theory, theory and practice are identical. In practice, they often differ.

mikeguima
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Re: Gold ETF

Post by mikeguima » Wed Oct 11, 2017 4:35 am

You'e all made excellent points! Than you for that.
If you believe that it is just a fluctuating asset no different in kind from any other--silver, real estate, peer-to-peer lending contracts--but that you are convinced that you like the past, and what you see as the future fluctuations, than an ETF is reasonable. The problem is that most people who think that gold is just a fluctuating asset like any other, don't usually end up choosing gold, they are more likely to end up with something like a commodities fund such as PCRIX, or an asset that has earnings.

If you believe that gold is a fundamentally unique asset, different from all others, the true source and measure of financial value, and that it will protect you in a large-scale financial and societal collapse, then I would seriously question whether anything you can buy and hold in an online brokerage will do what you want. Today, everything is "normal," I can click a mouse, sell an ETF, move the proceeds to my checking account, and buy groceries with the money by swiping my ATM card, within a few days. During 2008-2009 things were still "normal" enough to do that. But in a large-scale national financial collapse--not like 2008-2009, but a true collapse, like Venezuela or Zimbabwe or Weimer Germany?
I believe it's both... Gold attracts me not only for the potential for diversification (for instance, the tendency for people to flock to gold during uncertain times where other assets may be suffering), but also because of the potential "financial and societal collapse" you mention: not a huge one, such as the ones you mention, but definitely one such as the crisis of 2008, a potential very large lost of trust in any major fiat currency (given their tendency to devalue continously devalue over time as countries try to beat the others in "artifical competitiveness"), ...
In essence, I'd be holding it as a protection asset. I don't expect it to treat me well return wise.

I forgot to mention that I'm European. I did some digging and apparently in Europe only certificates for gold held physically are available (ETFs with just one constituent aren't allowed: https://www.justetf.com/de-en/how-to/gold-etfs.html).
Therefore, it appears that all certificates listed there are backed by physical gold: "These products are certificates issued by a financial institution collateralized with physical gold."
Some of them have ERs under 0.4% and AUM of around €6Bn, so I'll probably check those.

The largest one, held by the Deutsche Borse (Germany's stock exchange), says this:

"Xetra-Gold (EUR) is an Exchange Traded Commodity incorporated in Germany. One single certificate grants the investor the right to demand the delivery of one gram of gold from the issues. The physical gold is held in an allocated vault with the custodian. The investor's right to receive delivery of the certified amount of gold is not reduced by management cost or other fees."

It sounds fine to me, even though getting my hands on it would probably not be easy in a collapse, as nisiprius mentioned. However, on a second thought, it might! Given Germany is also an EU member (free flow of goods, capital and people through the internal single market), and provided the EU still stands by the time that collapse happens, it may not be that complicated to get the gold to my country... I'll have to look into that!

gougou
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Re: Gold ETF

Post by gougou » Wed Oct 11, 2017 4:33 pm

If you are hedging from a societal collapse, why don't you buy actual gold coins and bullion? I've seen some online stores such as APMEX and JMBullion that sell gold coin for about 3% over spot price. It's not that expensive vs a 0.4% ER per year. And you get to keep these physical coins in a safe in your own home.

kosomoto
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Re: Gold ETF

Post by kosomoto » Wed Oct 11, 2017 5:18 pm

gougou wrote:
Wed Oct 11, 2017 4:33 pm
If you are hedging from a societal collapse, why don't you buy actual gold coins and bullion? I've seen some online stores such as APMEX and JMBullion that sell gold coin for about 3% over spot price. It's not that expensive vs a 0.4% ER per year. And you get to keep these physical coins in a safe in your own home.
And you get to look at them and hold them.

I can't hold my index funds, they are numbers on a screen. Sometimes it's nice to feel your wealth. That sounds weird.

I only own one gold bar, so contrary to my post, I'm not a gold nut.

Swelfie
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Re: Gold ETF

Post by Swelfie » Fri Oct 13, 2017 3:55 am

kosomoto wrote:
Wed Oct 11, 2017 5:18 pm
gougou wrote:
Wed Oct 11, 2017 4:33 pm
If you are hedging from a societal collapse, why don't you buy actual gold coins and bullion? I've seen some online stores such as APMEX and JMBullion that sell gold coin for about 3% over spot price. It's not that expensive vs a 0.4% ER per year. And you get to keep these physical coins in a safe in your own home.
And you get to look at them and hold them.

I can't hold my index funds, they are numbers on a screen. Sometimes it's nice to feel your wealth. That sounds weird.

I only own one gold bar, so contrary to my post, I'm not a gold nut.
I've got a bit (and silver). Enough that in the event of something like WWII I could probably get myself and immediate family to some jungle by boat if I was lucky. It's not a real big part of my AA, and I figure it diversifies a bit.

I have it in coin so there is a perpetual put option.

I have it in a small pirate's chest so I can look at it and go "Arrrgh. Me booty!" In all honesty, this is the most compelling reason by far. I really love doing that.

mikeguima
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Re: Gold ETF

Post by mikeguima » Fri Oct 13, 2017 4:11 am

I have it in coin so there is a perpetual put option.
Why a perpetual put option?

Regarding buying the gold itself, I reckon that 1) from 0.4% to 3% it's a very big difference and 2) storage costs and inconveniences wouldn't be great.
But I might very well buy a little physically and put the rest in the fund :)

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Re: Gold ETF

Post by technovelist » Fri Oct 13, 2017 5:32 am

mikeguima wrote:
Fri Oct 13, 2017 4:11 am
I have it in coin so there is a perpetual put option.
Why a perpetual put option?

Regarding buying the gold itself, I reckon that 1) from 0.4% to 3% it's a very big difference and 2) storage costs and inconveniences wouldn't be great.
But I might very well buy a little physically and put the rest in the fund :)
But the 0.4% is annual, whereas the 3% is one-time.

So after 8 years you are ahead on the physical metal.

You also don't have much in the way of custodial risk, which can be serious when dealing with physical assets.
In theory, theory and practice are identical. In practice, they often differ.

Valuethinker
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Re: Gold ETF

Post by Valuethinker » Fri Oct 13, 2017 6:15 am

Swelfie wrote:
Fri Oct 13, 2017 3:55 am
kosomoto wrote:
Wed Oct 11, 2017 5:18 pm
gougou wrote:
Wed Oct 11, 2017 4:33 pm
If you are hedging from a societal collapse, why don't you buy actual gold coins and bullion? I've seen some online stores such as APMEX and JMBullion that sell gold coin for about 3% over spot price. It's not that expensive vs a 0.4% ER per year. And you get to keep these physical coins in a safe in your own home.
And you get to look at them and hold them.

I can't hold my index funds, they are numbers on a screen. Sometimes it's nice to feel your wealth. That sounds weird.

I only own one gold bar, so contrary to my post, I'm not a gold nut.
I've got a bit (and silver). Enough that in the event of something like WWII I could probably get myself and immediate family to some jungle by boat if I was lucky. It's not a real big part of my AA, and I figure it diversifies a bit.

I have it in coin so there is a perpetual put option.

I have it in a small pirate's chest so I can look at it and go "Arrrgh. Me booty!" In all honesty, this is the most compelling reason by far. I really love doing that.
I would really read "Mosquito Coast" by Paul Theron's and "the Poisonwood Bible" by Barbara Kingsolver and "Collapse" by Jared Diamond. A jungle is the last place on the planet almost that a member of urbanized western society should try to flee to. You would most probably die. "Lucifer's Hammer" is more like it but beware the anti nuclear cannibal US army veterans.

Most survivalists have no clue. You want to somewhere in the Great Plains and be a member of the state police or some equivalent voluntary local police force.

Btw Ww2 was fought w tanks and planes. Ww3 will be fought w nuclear tipped missiles. Ww4 will be fought w rocks.

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Re: Gold ETF

Post by Swelfie » Fri Oct 13, 2017 3:51 pm

mikeguima wrote:
Fri Oct 13, 2017 4:11 am
I have it in coin so there is a perpetual put option.
Why a perpetual put option?
If a coin is issued from a country as legal tender and still honored then it can be used as cash at it's face value regardless of what metal prices do.

So, a 40% silver Kennedy half dollar is about $2.50 in silver with a $0.50 put option that never expires and is backed by the US gov. In all likelihood, tinfoil hats aside, the silver will pass on in my estate having risen in value with inflation to some extent. If the US defaults, I have silver. If the price of silver tanks hard and the US survives I have cash with a $0.50 floor per coin. That's equivalent to a perpetual put option on that silver at a $0.50 strike price from a counterparty with excellent credit. It's not quite a cheap as bullion but if you stay away from coins with high collectible values it helps and the point of my physical holdings isn't to earn a profit anyway.... It's to get the heck out of Dodge in the event of government collapse through fascism or invasion where I have a high likelihood of being killed for being a rich white guy. Very unlikely but we saw it happen in the collapse of Soviet Union, Japanese invasion of China and Nazi Germany so a bit of cash to get you to a nation not involved seems reasonable if it's play money and will retain some value in retirement for extra pudding in the home when I'm too old to care.
Most survivalists have no clue. You want to somewhere in the Great Plains and be a member of the state police or some equivalent voluntary local police force.
I wouldn't be headed up the blue Nile in such a situation. I'd be buying a ticket on a boat to get to a neutral nation not involved in the collapse as a refugee where my lost retirement would have to be made up for with sweat equity. Im not going to even pretend be okay by myself in the jungles of the south pacific or playing mad Max post apocalypse. I might make friends and a meager living brewing good beer and setting up WiFi for people in a Bolivian town though in the event the US goes to hell.

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Re: Gold ETF

Post by halfnine » Fri Oct 13, 2017 4:23 pm

Valuethinker wrote:
Most survivalists have no clue. You want to somewhere in the Great Plains and be a member of the state police or some equivalent voluntary local police force.
Swelfie wrote:
Fri Oct 13, 2017 3:51 pm
I wouldn't be headed up the blue Nile in such a situation. I'd be buying a ticket on a boat to get to a neutral nation not involved in the collapse as a refugee where my lost retirement would have to be made up for with sweat equity. Im not going to even pretend be okay by myself in the jungles of the south pacific or playing mad Max post apocalypse. I might make friends and a meager living brewing good beer and setting up WiFi for people in a Bolivian town though in the event the US goes to hell.
I am in agreement with Valuethinker on this one. One will be best off as part of some police, emergency response or other type local force in a less populated area.

If you don't have a foreign passport and foreign assets, I would treat a plan to relocate abroad as an exercise with a low probability of success with great risk. And the greater the crisis the lower the probability of it working out.

Swelfie
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Re: Gold ETF

Post by Swelfie » Fri Oct 13, 2017 4:34 pm

halfnine wrote:
Fri Oct 13, 2017 4:23 pm
If you don't have a foreign passport and foreign assets, I would treat a plan to relocate abroad as an exercise with a low probability of success with great risk. And the greater the crisis the lower the probability of it working out.
Oh yeah. When your backup plan hits the point of "maybe there's a refugee camp somewhere.." I think low probability of success is a given.

Which is why being able to look at it and say "Arghh! Me booty!" Is the most compelling reason. :sharebeer

halfnine
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Re: Gold ETF

Post by halfnine » Fri Oct 13, 2017 4:44 pm

Swelfie wrote:
Fri Oct 13, 2017 4:34 pm
halfnine wrote:
Fri Oct 13, 2017 4:23 pm
If you don't have a foreign passport and foreign assets, I would treat a plan to relocate abroad as an exercise with a low probability of success with great risk. And the greater the crisis the lower the probability of it working out.
Oh yeah. When your backup plan hits the point of "maybe there's a refugee camp somewhere.." I think low probability of success is a given.

Which is why being able to look at it and say "Arghh! Me booty!" Is the most compelling reason. :sharebeer
Well, I am not entirely discounting gold/silver. I do believe there are some compelling reasons to own precious metals. But once we are talking relocating countries in a major crisis there are probably better options.

taguscove
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Re: Gold ETF

Post by taguscove » Fri Oct 13, 2017 5:40 pm

Gold should be thought of as a currency that does particularly well during a market flight from risk. I find it amusing how most Bogleheads swear by diversifying their market risk position, yet keep their cash position completely undiversified in US dollars or dollar denominated instruments.

GLD and IAU ETFs are by far the easiest and most liquid way to gain gold exposure. If you have to ask which one to buy, choose IAU. It has a lower expense ratio.

For sophisticated traders where frequent transactions or spread liquidity is an issue, GLD is undoubtedly the better choice. The daily GLD trade book is very deep. For 99.9% of household investors, this feature is not relevant.

I personally own IAU.

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Portfolio7
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Re: Gold ETF

Post by Portfolio7 » Fri Oct 13, 2017 7:03 pm

JBTX wrote:
Sat Oct 07, 2017 1:56 am
cantos wrote:
Fri Oct 06, 2017 2:08 pm
Jack FFR1846 wrote:
Fri Oct 06, 2017 2:05 pm
I have a simpler way of holding gold. I have a big pile of $100 bills and I light one on fire every month. Cheaper that way.
Love this. I invested some money in a gold ETF and watched it go up and ultimately down over 5+ years. I keep it in my portfolio to remind myself not to do stupid things.
This. I bought some GLD a few years ago, but not material enough to really affect my portfolio at all. Not too long after it tanked. It is still sitting there at a significant loss (in a retirement account, so I can't even tax loss harvest it) :annoyed

When I was in college, silver went up to $50/oz. Then it went down to $20. I was convinced at $20 price was a lock for appreciation. Got my dad to buy a nominal amount. It eventually went to $10 and stayed that way for about 25 years. :oops:

It seems I have to re-learn this lesson every 30 years or so. Whether I'll be alive when that next 30 year interval comes up remains to be seen.
Did the same thing. Was in High School. Valuable lesson. Also, I've owned some commodity funds..and done terribly. I blame it in part on the financialization of commodities, you have people in the market who don't actually want the commodity, they just want to manipulate it or make a profit off of it or both. Plus Gold... I distrust it, but even if I didn't... it kind of acts like bonds do. You could put either Gold or Bonds in your portfolio for the FI percentage and get similar results over the past 40-50 years or so, as i remember (don't take my word for it, but I remember looking at this in portfolio visualizer.) But adding both doesn't seem to do anything for portfolio returns, it's more pick one. I have a lot more faith in US Treasuries delivering returns than I do in Gold, but that's just, like, my opinion, man.
An investment in knowledge pays the best interest.

JBTX
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Re: Gold ETF

Post by JBTX » Fri Oct 13, 2017 8:01 pm

Portfolio7 wrote:
Fri Oct 13, 2017 7:03 pm
JBTX wrote:
Sat Oct 07, 2017 1:56 am
cantos wrote:
Fri Oct 06, 2017 2:08 pm
Jack FFR1846 wrote:
Fri Oct 06, 2017 2:05 pm
I have a simpler way of holding gold. I have a big pile of $100 bills and I light one on fire every month. Cheaper that way.
Love this. I invested some money in a gold ETF and watched it go up and ultimately down over 5+ years. I keep it in my portfolio to remind myself not to do stupid things.
This. I bought some GLD a few years ago, but not material enough to really affect my portfolio at all. Not too long after it tanked. It is still sitting there at a significant loss (in a retirement account, so I can't even tax loss harvest it) :annoyed

When I was in college, silver went up to $50/oz. Then it went down to $20. I was convinced at $20 price was a lock for appreciation. Got my dad to buy a nominal amount. It eventually went to $10 and stayed that way for about 25 years. :oops:

It seems I have to re-learn this lesson every 30 years or so. Whether I'll be alive when that next 30 year interval comes up remains to be seen.
Did the same thing. Was in High School. Valuable lesson. Also, I've owned some commodity funds..and done terribly. I blame it in part on the financialization of commodities, you have people in the market who don't actually want the commodity, they just want to manipulate it or make a profit off of it or both. Plus Gold... I distrust it, but even if I didn't... it kind of acts like bonds do. You could put either Gold or Bonds in your portfolio for the FI percentage and get similar results over the past 40-50 years or so, as i remember (don't take my word for it, but I remember looking at this in portfolio visualizer.) But adding both doesn't seem to do anything for portfolio returns, it's more pick one. I have a lot more faith in US Treasuries delivering returns than I do in Gold, but that's just, like, my opinion, man.
I have a couple of PIMCO commodity funds and they have done crap since about 2007. Investing in perishable and consumable commodities is pretty dangerous because you can get killed
Even if spot commodity prices increase. Look up contango. Basically traders eating the lunch of
Long futures holders who have no intention of taking deliver of oil or corn etc.

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arcticpineapplecorp.
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Re: Gold ETF

Post by arcticpineapplecorp. » Fri Oct 13, 2017 9:30 pm

sounds like you've made your mind up and done some research and thinking to make your decision. Hopefully, you've already read this link (below) but in case you haven't, it might be worth reading. It's Ben Carlson's "A History of Gold Returns". A short read. Enjoy.

P.S. I don't own Gold and don't find it a persuasive diversifier. If it's safety you want when the economy struggles, usually short to intermediate bonds help there. They certainly did during the last financial crisis. Yes gold went up pretty spectacularly, but as the article shows, they go down again after the dust settles. Meanwhile your bonds keep paying you interest all the while in good and bad times and act as the stabilizer you desire. Best of luck.

http://awealthofcommonsense.com/2015/07 ... d-returns/
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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