Commission Free Gold ETFs and CEF

[goldiebrawn]

Is there any broker, whether in taxable or tax-sheltered accounts, that offer commission free trades for any of the gold ETFs (IAU, GLD, SGOL, etc...) and/or CEF's (GTU, PHYS, CEF, etc...).

The only one I could find is Charles Schwab, offering SGOL commission free, as well as a handful of non-gold precious metal ETFs.

http://www.schwab.com/public/schwab/inv ... ceETFs.asp

Really I am trying to find a broker that will let me trade GTU and IAU commission free, preferably in a solo 401k and/or ROTH IRA.

Thanks!

[escafandro]

What is lower at Schwab, free trade SGOL (high expense ratio) or low expense ratio IAU but commission trade?

[ochotona]

For small little trades, SGOL makes sense, like payroll deduction otherwise IAU which has lower expense ratio.

[Pet Hog]

What is lower at Schwab, free trade SGOL (high expense ratio) or low expense ratio IAU but commission trade?

The trading fee at Schwab is $8.95 and the expense ratios of IAU and SGOL are 0.25 and 0.39%, respectively.  That means you would pay 0.14% more to hold SGOL that you would IAU -- each year.  That's $14 every year for every $10,000 you have in your gold investment.  Most of us PPers will hold gold until we need to rebalance out of it.  Perhaps we will sell once every second rebalance event, or about every 8-10 years.  For a $10,000 holding, with one buy and one sell over 10 years, you'd pay about $18 in commissions to buy IAU, but save about $140 in fees.  Clearly IAU would be the better investment in that case.  The break-even point would be ($8.95 x 2)/(0.0014 x 10), which is about $1280.

That example was for a one-off buy-and-hold.  As ochotono said, if you are buying regular small amounts, SGOL might be better.  Consider a portfolio where you add $1000 a year for 10 years, making a single purchase each year, then liquidating.  That's 10 commissions for buying IAU and one for selling, or about $99.  The first $1000 invested in IAU would have a saving in fees of $1.40 each year, or $14 over the decade.  The last $1000 would just have the saving of $1.40.  The average of those two, $7.70, over 10 years is $77 saved in fees when buying IAU over SGOL -- thus, the savings don't make up for the commissions.  In this case, SGOL is the better investment.  Here, the break-even point is ($8.95 x 11)/{[(10 + 1)/2] x 0.0014 x 10}, which is the same number: about $1280!  I wasn't expecting that -- how cool is mathematics?

(Note: These calculations assume that the price of gold stays static over 10 years, but you get the gist.)

[goodasgold]

In discussing gold funds, what about the SWAN factor (Sleep Well At Night?)

SGOL's physical gold is locked up in Swiss vaults.  IAU's physical gold is held in U.S. vaults.
In the future, when a broke and desperate U.S. government demands that IAU hand over its krugerrands, IAU will have little choice but to surrender YOUR gold in exchange for nearly worthless, depreciated paper money.

Swiss bankers and investment companies, in contrast, would have more backbone if demands for a gold surrender are made by a foreign government. The Swiss were #@%^*! SOBs when confronting demands that they compensate the heirs of Holocaust victims whose bank accounts were seized by Swiss bankers after World War II, but I believe they would be in a better moral, legal and political position when they (hopefully) reject future demands by the U.S. for a handover of gold assets held by U.S. citizens in Switzerland.

[Tyler]

IAU has three vaults -- New York, Toronto, and London.  And even if the US government can't access the vaults in Switzerland, I wager they keep you from accessing them as well.  It's not like there aren't several companies they can touch in between you and your gold coins. 

Personally, I like SGOL from a fund diversity standpoint but I think the "it's safe in Switzerland" argument is likely oversold.  If you're really worried about that kind of thing, physical coins in-hand or allocated storage in some place like Australia are probably a better bets. 

BTW, Fidelity offers free trades for iShares, but for some reason IAU still isn't on the list.  Maybe in time. 

[MediumTex]

IAU has three vaults -- New York, Toronto, and London.  And even if the US government can't access the vaults in Switzerland, I wager they keep you from accessing them as well.  It's not like there aren't several companies they can touch in between you and your gold coins. 

Personally, I like SGOL from a fund diversity standpoint but I think the "it's safe in Switzerland" argument is likely oversold.  If you're really worried about that kind of thing, physical coins in-hand or allocated storage in some place like Australia are probably a better bets. 

BTW, Fidelity offers free trades for iShares, but for some reason IAU still isn't on the list.  Maybe in time.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

[Greg]

IAU has three vaults -- New York, Toronto, and London.  And even if the US government can't access the vaults in Switzerland, I wager they keep you from accessing them as well.  It's not like there aren't several companies they can touch in between you and your gold coins. 

Personally, I like SGOL from a fund diversity standpoint but I think the "it's safe in Switzerland" argument is likely oversold.  If you're really worried about that kind of thing, physical coins in-hand or allocated storage in some place like Australia are probably a better bets. 

BTW, Fidelity offers free trades for iShares, but for some reason IAU still isn't on the list.  Maybe in time.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

That acronym makes this place seem less enjoyable to eat at, even though in reality it is quite good.

[Libertarian666]

IAU has three vaults -- New York, Toronto, and London.  And even if the US government can't access the vaults in Switzerland, I wager they keep you from accessing them as well.  It's not like there aren't several companies they can touch in between you and your gold coins. 

Personally, I like SGOL from a fund diversity standpoint but I think the "it's safe in Switzerland" argument is likely oversold.  If you're really worried about that kind of thing, physical coins in-hand or allocated storage in some place like Australia are probably a better bets. 

BTW, Fidelity offers free trades for iShares, but for some reason IAU still isn't on the list.  Maybe in time.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

I believe there's at least one Swiss bank that is doing new business with US citizens but they have a pretty high minimum account size, like $750K - $1 million.

[USSFI]

You may want to look at using robinhood. They allow for free trades of most stocks and etf's.

I was thinking with them you could buy daily, weekly, monthly, quarterly and then sell once a year and buy in your main brokerage. Would save you a good chunk on commissions.

[dualstow]

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

http://momfabfun.com/wp-content/uploads ... egular.jpg

That acronym makes this place seem less enjoyable to eat at, even though in reality it is quite good.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA
Tiringly Ass-Cumbersome & Onerous.

[Greg]

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

http://momfabfun.com/wp-content/uploads ... egular.jpg

That acronym makes this place seem less enjoyable to eat at, even though in reality it is quite good.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA
Tiringly Ass-Cumbersome & Onerous.

Thank you. PITA > TACO.

[Libertarian666]

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA.

http://momfabfun.com/wp-content/uploads ... egular.jpg

That acronym makes this place seem less enjoyable to eat at, even though in reality it is quite good.

My understanding is that many Swiss banks are no longer doing any new business with U.S. citizens.  It's too much of a PITA
Tiringly Ass-Cumbersome & Onerous.

Yes, many aren't, but some are. However, you need a lot of money to open an account.