How do you invest the gold portion?

Discussion of the Gold portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
vnatale
Executive Member
Executive Member
Posts: 430
Joined: Fri Apr 12, 2019 8:56 pm

How do you invest the gold portion?

Post by vnatale » Tue Sep 10, 2019 8:05 pm

I am soon to be a Level 4 investor.

The book advises that the best way to invest in gold is to own it. However, initially, that would take some time to fully implement.

Therefore, to get started I am strongly thinking of the book's alternative gold recommendation...

The following exchange-traded funds and closed-end funds are popular options for this type of gold ownership.
1. iShares Gold ETF (Ticker: IAU)
2. StreetTracks Gold ETF (Ticker: GLD)
3. Physical Swiss Gold ETF (Ticker: SGOL)
4. Sprott Physical Gold Trust (Ticker: PHYS)
5. Central Fund of Canada (Ticker: CEF)
6. Central Gold Trust of Canada (Ticker: GTU)
7. Canton Bank of Zürich ETF (Ticker: ZGLD)

Does anyone have any experience / recommendations regarding any of the above? Also, since the book was written over seven years ago, have there been superior new products introduced?

Thanks

Vinny
boglerdude
Executive Member
Executive Member
Posts: 408
Joined: Wed Aug 10, 2016 1:40 am

Re: How do you invest the gold portion?

Post by boglerdude » Tue Sep 10, 2019 8:45 pm

Perth mint ETF is new
pmward
Executive Member
Executive Member
Posts: 458
Joined: Thu Jan 24, 2019 4:39 pm

Re: How do you invest the gold portion?

Post by pmward » Tue Sep 10, 2019 8:50 pm

Yes, AAAU (Perth Mint) is my ETF of choice these days. Lower ER than IAU, and shares are redeemable for physical gold shipped to the U.S. for a $30 shipping fee. So these shares are basically "as good as gold".
KodoCastle
Junior Member
Junior Member
Posts: 21
Joined: Tue Jan 15, 2019 1:26 am

Re: How do you invest the gold portion?

Post by KodoCastle » Wed Sep 11, 2019 1:34 am

vnatale wrote:
Tue Sep 10, 2019 8:05 pm
The book advises that the best way to invest in gold is to own it. However, initially, that would take some time to fully implement.
Sorry to be a nag, but can I ask why?

Are there no gold dealers around you? Because there are some good online sellers as well. And if you're worried about storage, setting up a secure deposit box (and some insurance for it) only takes a bit of a day and probably costs less than $200 a year (unless you're planning on insuring a lot of gold).
User avatar
vnatale
Executive Member
Executive Member
Posts: 430
Joined: Fri Apr 12, 2019 8:56 pm

Re: How do you invest the gold portion?

Post by vnatale » Mon Oct 07, 2019 9:10 pm

One fixed $30 fee no matter how much $/weight of gold involved?

Vinny
pmward wrote:
Tue Sep 10, 2019 8:50 pm
Yes, AAAU (Perth Mint) is my ETF of choice these days. Lower ER than IAU, and shares are redeemable for physical gold shipped to the U.S. for a $30 shipping fee. So these shares are basically "as good as gold".
User avatar
vnatale
Executive Member
Executive Member
Posts: 430
Joined: Fri Apr 12, 2019 8:56 pm

Re: How do you invest the gold portion?

Post by vnatale » Mon Oct 07, 2019 9:19 pm

I actually finally addressed your question earlier tonight in my post asking gold dealers that one uses.

In it I described how I found a list of all the gold dealers within an hour's drive of me. I investigated each one of their online presences and I was unimpressed with each of them. They seemed to be low level, tiny operations. Have no problem with dealing online, though, with someone clear across the country from me. And, finally, I prefer to accomplish as much as I can via sitting in front of this computer as opposed to time that is wasted in travel.

I am still collecting information to decide what I am going to buy for all four investments of the Permanent Portfolio and then making a list of all the steps that will be necessary to do it all. And, as I earlier stated tonight, one of my tasks is consolidating six of my retirement accounts at Vanguard into just two retirement accounts. Then I need to sell ALL in ALL my Vanguard accounts to do the grand repositioning into being a Permanent Portfolio.

There is going to be a lot I'm going to want to accomplish in a short period of time therefore I need to come up with a plan that can be accomplished in a short period of time. Once the Permanent Portfolio is established I can refine certain aspects of it. I know for certain that I'll be implementing the Gold investment via ETFs. I feel fine about owning gold coins. The question is whether I do some gold coin purchases at the part of the initial Permanent Portfolio implementation. Or, whether that becomes a later refinement.

Vinny
KodoCastle wrote:
Wed Sep 11, 2019 1:34 am
vnatale wrote:
Tue Sep 10, 2019 8:05 pm
The book advises that the best way to invest in gold is to own it. However, initially, that would take some time to fully implement.
Sorry to be a nag, but can I ask why?

Are there no gold dealers around you? Because there are some good online sellers as well. And if you're worried about storage, setting up a secure deposit box (and some insurance for it) only takes a bit of a day and probably costs less than $200 a year (unless you're planning on insuring a lot of gold).
User avatar
Kbg
Executive Member
Executive Member
Posts: 1368
Joined: Fri May 23, 2014 4:18 pm

Re: How do you invest the gold portion?

Post by Kbg » Tue Oct 08, 2019 9:05 am

I do have a strong opinion on the gold aspect of the PP. The choice is basic: You are going to go physical or paper gold. I have no opinion on which is the better option as there are strong arguments on both sides that are both good, accurate and compelling (a mix of both is also a good choice, though I think the arguments made for physical gold on serious analysis don't hold up very well unless the holdings are extensive and you have a permanent residency card in the country your gold is being held in. They clearly and objectively don't hold up historically in the US.)

However, if you are going to go with paper gold then ultimately you are relying on someone's accounting and I would go with a firm that is reputable, has large AUM and has the lowest mngt fee. A search using etfdb.com will provide all the information you need to make a good decision. Jack Bogle's advice is good here, costs matter and to me they are the most important factor for paper gold.
User avatar
dualstow
Executive Member
Executive Member
Posts: 8675
Joined: Wed Oct 27, 2010 10:18 am
Location: next to emotional support peacock
Contact:

Re: How do you invest the gold portion?

Post by dualstow » Tue Oct 08, 2019 2:44 pm

vnatale wrote:
Tue Sep 10, 2019 8:05 pm
I am soon to be a Level 4 investor.

The book advises that the best way to invest in gold is to own it.

What is a level 4 investor anyway? Is that a Robert Kiyosaki book?
Vanguard treasury money market now yields 1.72%
compounded (last week, 1.73%)
User avatar
ochotona
Executive Member
Executive Member
Posts: 2834
Joined: Fri Jan 30, 2015 5:54 am

Re: How do you invest the gold portion?

Post by ochotona » Tue Oct 08, 2019 2:50 pm

25% of my gold is ETF. Now that Schwab is fee-free, if I buy more it will likely be AAAU.

75% is physical
half of that in a Roth IRA with Goldstar Trust Co; the bullion is with Delaware Depository
other half in an insured safe deposit box somewhere in rural Texas where they encourage concealed carry into the bank (but not open)
geaux saints
Junior Member
Junior Member
Posts: 22
Joined: Sun Feb 05, 2017 9:35 pm

Re: How do you invest the gold portion?

Post by geaux saints » Tue Oct 08, 2019 4:13 pm

dualstow wrote:
Tue Oct 08, 2019 2:44 pm
vnatale wrote:
Tue Sep 10, 2019 8:05 pm
I am soon to be a Level 4 investor.

The book advises that the best way to invest in gold is to own it.

What is a level 4 investor anyway? Is that a Robert Kiyosaki book?
I think the level 4 investor is a reference to Craig's/MT's book; I want to say that means stocks in via a fund or etf, bonds held directly, cash in a treasury money market fund and someone geographical diversification with the gold.
User avatar
dualstow
Executive Member
Executive Member
Posts: 8675
Joined: Wed Oct 27, 2010 10:18 am
Location: next to emotional support peacock
Contact:

Re: How do you invest the gold portion?

Post by dualstow » Tue Oct 08, 2019 11:29 pm

ah, ok, thank you.
Vanguard treasury money market now yields 1.72%
compounded (last week, 1.73%)
User avatar
vnatale
Executive Member
Executive Member
Posts: 430
Joined: Fri Apr 12, 2019 8:56 pm

Re: How do you invest the gold portion?

Post by vnatale » Wed Oct 09, 2019 11:11 am

This was great!

I totally subscribe to Jack Bogle regarding costs!

And, many thanks for introducing me to eftdb.com.

I've been there and have the following observations:

Of the four I've most seen mentioned either in the Craig / Tex book and in this forum - GLD, IAU, SGOL, and AAAU - GLD has far and away the most assets - nearly triple what the second IAU has. And, IAU is almost 16 times what the 3rd place one is - SGOL. Finally, AAAU is only 1/10 SGOL.

IAU and SGOL have the highest returns, with AAAU next, and GLD last.

The Expense Ratios are as follows:

GLD-0.40%
IAU-0.25%
SGOL-0.17%
AAAU-0.18%

Assuming that the returns are AFTER the Expense Ratios that would mostly explain the difference in returns.

Going by your criteria below it seems like IAU would be the winner?

Question I have is with IAU ALWAYS having the better return for any time period compared to GLD why does GLD have almost 3 times as many assets?

I initially thought it could be because they were the first Gold ETF. But IAU showed up on the scene only two months later.

Finally, I'm also guessing you chose paper gold? If so, which are you using.

Thanks again for pointing me in the right direction, which is greatly simplifying my decision process regarding the gold portion of the Permanent Portfolio.

Vinny
Kbg wrote:
Tue Oct 08, 2019 9:05 am
I do have a strong opinion on the gold aspect of the PP. The choice is basic: You are going to go physical or paper gold. I have no opinion on which is the better option as there are strong arguments on both sides that are both good, accurate and compelling (a mix of both is also a good choice, though I think the arguments made for physical gold on serious analysis don't hold up very well unless the holdings are extensive and you have a permanent residency card in the country your gold is being held in. They clearly and objectively don't hold up historically in the US.)

However, if you are going to go with paper gold then ultimately you are relying on someone's accounting and I would go with a firm that is reputable, has large AUM and has the lowest mngt fee. A search using etfdb.com will provide all the information you need to make a good decision. Jack Bogle's advice is good here, costs matter and to me they are the most important factor for paper gold.
Post Reply