Choosing a Gold ETF

[Sirius]

If you want a "geared" gold ETF use the miners, eg 3GDX. MIne has doubled in 10 days or so. Jumped/ing out now.

But I expect you all know that
What I really really want to know , is
HOW DO MAKE A NEW POST ON THIS SITE!!!???

I don't see a "New POST" button anywhere at all!

[vand]

If you want a "geared" gold ETF use the miners, eg 3GDX. MIne has doubled in 10 days or so. Jumped/ing out now.

But I expect you all know that
What I really really want to know , is
HOW DO MAKE A NEW POST ON THIS SITE!!!???

I don't see a "New POST" button anywhere at all!

Yeah.. don't do that unless you really understand what those leveraged funds are designed for - DAILY holding periods or shorter. You think you've been clever, wait until you get caught on the wrong side of the trade.

The title of this forum section is "How Do I Invest" not "How Do I Daytrade"

[Urbandreamer]

What I really really want to know , is
HOW DO MAKE A NEW POST ON THIS SITE!!!???

I don't see a "New POST" button anywhere at all!

If you visit the board, ie.
viewforum.php?f=88
rather than a thread.
You will find a New TOPIC button.

The idea is that if you are commenting or debating a current topic that you have no need for a new POST button, while if you do want to raise a new topic then you will do so in the board appropriate to that Topic.

The post Reply button on a thread simply adds to the thread, while the " box reply's to a specific comment in the thread and informs the author that you have done so.

[jaizan]

I look for:
1 Physically backed
2 Traded in Sterling
3 Low costs

I hold iShares Physical Gold ETC & WisdomTree Physical Swiss Gold. For all I know, there may be better options as it's a while since I compared.

Most is in ISAs & a SIPP, but I have some in a taxed account. I usually sell some to utilise my CGT allowance and immediately buy back the other etf.

[1nvest]

Disclosure: I haven't read the whole thread.

As the late great Gengulphus once alluded to: if you (intend to) spend your proceeds in Sterling then buying anything that sells to another currency has attached to it the currency risk of which you speak. It could go either way. Personally I find the direction of travel of currency exchange more opaque than the fortunes of any given share. So your choice either includes that added risk or it doesn't. Your choice. If the underlying hoped-for return of a dollar denominated investment is much more favourable that a Sterling one and you believe therefore it mitigates the currency risk then fill your boots; otherwise just cut out that particular risk. C.

Disagree.

Most of your portfolio should not be hedged to the local currency, even if you intend to only buy local goods and services.

The tail-end risk of a dying currency is not zero or anywhere near zero, and cannot be ignored here.

While "normal" currency gyrations are not perceiveable on a day to day basis in the price of goods and services, your experience and opinon on this matter will very clear if you have ever lived through a rapidly depreciating currency - ask someone from Turkey or Argentina if they should get their money out of the local currency and their opinion will be clearly yes.

If you go back to first principles, gold is first and foremost just gold - it's a lump of metal that acts as a long term store of value, not a financial product created through currency. If you acquire gold on this basis then currency is irrelevant because it can be and indeed is priced in any and all currencies. As with all real assets, it's a hedge against currency craziness. Evaluate it on that basis, not from the other end of a financialized product that moves in line with the spot price of the metal.

Lastly, it is also worth pointing out that if you look at the main go-to asset for defense and diversification - ie, bonds - they are nearly always packaged up in a GBP-hedged fund. The idea, I'd imagine, being that people buying the bond funds want just the interest rate risk but not currency risk. That does them a great disservice as they can't benefit from the usual weakening in GBP that often happens when there is a flight to safety. If you hold both bonds and gold then having your gold allocation non-hedged is a sensible move that will compensate for your bond holdings also being hedged.

Silver might be considered as a form of poor mans gold, given that for periods gold was constricted. For a British investor (RPI inflation rate) who held thirds each Pounds, silver, US dollars (hard in-hand currencies) since 1896 annualised inflation of 4.4% reduced to 1.6%. In other words if the Pounds and Dollars were deposited/invested and yielded a 2.4% nominal annualised return then that negated inflation. In practice cash deposits yielded a similar return to that of the 4.4% RPI rate. Indicative that FX 'risk' can be a broad reward/benefit. Another indicator is that whilst the US dollar has broadly declined relative to gold, so also has the Pound declined relative to the US dollar. Back in 1896 you got $4.87 for each £1. Recently you get around $1.30 per £1.

Invest the Pounds in cash deposits, the US dollars into US stocks, along with the third in silver and that always returned your inflation adjusted money (purchase power) - measured as a 3.33% 30 year SWR (3.33% of the portfolio value drawn at the start, where that £££ amount was uplifted by inflation as the amount drawn in subsequent years). The median case outcome from a 3.33% 30 year SWR for all start years since 1896 was that you ended with 110% of your inflation adjusted start date portfolio value still available at the end of the 30 years (have cake and eat it). Three way currency diversification (Dollars/Gold/Pounds), three way asset diversification (stocks/commodity/bonds (counting cash as 'bonds')). Fundamentally the individual volatilities of each currency/asset alone were diluted down/averaged-out. The investment reward premium for taking on volatility risk had the volatility risk cancel out.

[Spet0789]

A lot of interesting commentary here. I am about 15% invested in financial gold and am considering adding some sovereigns or perhaps some exposure to silver.

A few points I would make.

First, there are no gold-linked ETFs available in the U.K.. All of the investment products mentioned are ETCs. In theory this introduces credit risk to the issuer, but as the issuers are all special purpose vehicles with no liabilities and no business activity other than owning gold, it doesn’t matter. All of my gold exposure is via these vehicles.

Second, one of the beauties of gold is that it’s great for managing CGT. Often gold is up when stocks are down and vice versa. And you can easily crystallise a CGT gain or loss without being out of the market just by flipping between gold ETCs (I use iShares Physical Gold ETC and WisdomTree Physical Swiss Gold)- which are materially identical.

Finally, I fully agree with Lootman’s comments re Gold being a currency. It’s utterly irrelevant to its long term returns that gold is by convention quoted in USD. Its investment performance would be the same if it were quoted in GBP, barrels of oil or magic beans. Just buy whichever is easiest and cheapest for you to hold.

[Urbandreamer]

Finally, I fully agree with Lootman’s comments re Gold being a currency. It’s utterly irrelevant to its long term returns that gold is by convention quoted in USD. Its investment performance would be the same if it were quoted in GBP, barrels of oil or magic beans. Just buy whichever is easiest and cheapest for you to hold.

I recently mentioned on another board that debit cards are available linked to gold held in a vault, allowing you to easily use gold as a currency any place that takes the likes of VISA.

As for it being quoted in USD or GBP, it's a red herring. I would expect that there has been a bit of a spike in the price of gold in USD this week, as I've seen the same in something else. It's meaningless to us as all it's showing is a fall in the value of USD. USD has been falling in value this last month for some reason.

FWIW I have a small holding in Invesco Gold SGPL.

[Lootman]

First, there are no gold-linked ETFs available in the U.K.. All of the investment products mentioned are ETCs. In theory this introduces credit risk to the issuer, but as the issuers are all special purpose vehicles with no liabilities and no business activity other than owning gold, it doesn’t matter. All of my gold exposure is via these vehicles.

Second, one of the beauties of gold is that it’s great for managing CGT. Often gold is up when stocks are down and vice versa. And you can easily crystallise a CGT gain or loss without being out of the market just by flipping between gold ETCs (I use iShares Physical Gold ETC and WisdomTree Physical Swiss Gold)- which are materially identical.

Finally, I fully agree with Lootman’s comments re Gold being a currency. It’s utterly irrelevant to its long term returns that gold is by convention quoted in USD. Its investment performance would be the same if it were quoted in GBP, barrels of oil or magic beans. Just buy whichever is easiest and cheapest for you to hold.

I have not looked in detail at every Gold ETF available but I am surprised if none are physically backed. And especially the WisdomTree Physical Swiss Gold, judging my the name.

There are repositories of gold in London, Zurich and New York that hold large amounts of physical gold and iShares etc. often claim to have segregated stockpiles in such places underlying their gold ETFs.

The use of derivatives to run ETCs and ETNs is of course widespread, particularly for commodities that operate mostly off the futures market. You do not want a warehouse full of wheat or cast iron. But for precious metals it is considered better to hold the physical asset itself, and use the spot price.

"Physical gold ETFs like SPDR Gold Trust's SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) own gold bullion stored in vaults in London, New York, Canada, and other "safe" jurisdictions. Each ETF share represents a beneficial interest in the gold held by the trusts."

https://www.investopedia.com/gold-and-g ... 0contracts.

[Spet0789]

First, there are no gold-linked ETFs available in the U.K.. All of the investment products mentioned are ETCs. In theory this introduces credit risk to the issuer, but as the issuers are all special purpose vehicles with no liabilities and no business activity other than owning gold, it doesn’t matter. All of my gold exposure is via these vehicles.

Second, one of the beauties of gold is that it’s great for managing CGT. Often gold is up when stocks are down and vice versa. And you can easily crystallise a CGT gain or loss without being out of the market just by flipping between gold ETCs (I use iShares Physical Gold ETC and WisdomTree Physical Swiss Gold)- which are materially identical.

Finally, I fully agree with Lootman’s comments re Gold being a currency. It’s utterly irrelevant to its long term returns that gold is by convention quoted in USD. Its investment performance would be the same if it were quoted in GBP, barrels of oil or magic beans. Just buy whichever is easiest and cheapest for you to hold.

I have not looked in detail at every Gold ETF available but I am surprised if none are physically backed. And especially the WisdomTree Physical Swiss Gold, judging my the name.

There are repositories of gold in London, Zurich and New York that hold large amounts of physical gold and iShares etc. often claim to have segregated stockpiles in such places underlying their gold ETFs.

The use of derivatives to run ETCs and ETNs is of course widespread, particularly for commodities that operate mostly off the futures market. You do not want a warehouse full of wheat or cast iron. But for precious metals it is considered better to hold the physical asset itself, and use the spot price.

"Physical gold ETFs like SPDR Gold Trust's SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) own gold bullion stored in vaults in London, New York, Canada, and other "safe" jurisdictions. Each ETF share represents a beneficial interest in the gold held by the trusts."

https://www.investopedia.com/gold-and-g ... 0contracts.

To be clear, I have no concerns about the safety of any of these products and as you say they are almost all physically backed. But as a matter of legal format, none are ETFs. They are all ETCs.

Ironically a fund investing only in gold cannot legally be sold to U.K. retail investors (or EU retail investors given the rules are still the same post Brexit) as it is not sufficiently diversified - as it is 100% invested in gold.

https://www.ishares.com/uk/individual/e ... d-etc-fund

Note ETC not ETF. It’s a pedantic point, but you have never looked at a gold ETF in your life. For U.K. investors at least, there is no such thing.

[CliffEdge]

USD has been falling in value this last month for some reason.

It may be something to do with Trump's tariffs.