GLDM - 0.18 exp. ratio 'Gold minishares'

Discussion of the Gold portion of the Permanent Portfolio

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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Sat Jul 07, 2018 10:06 pm

Speaking of commission free...M1 Financial is looking very good to me as a brokerage option. Check out their "How We Trade" pdf. Commission free, fractional shares, dividend reinvesting, 1.35 margin if you want it at a very competitive (though not the best) rate and a very cool way to do sub portfolios within larger portfolios.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by whatchamacallit » Sun Jul 08, 2018 3:23 am

Kbg wrote:
Sat Jul 07, 2018 10:06 pm
Speaking of commission free...M1 Financial is looking very good to me as a brokerage option. Check out their "How We Trade" pdf. Commission free, fractional shares, dividend reinvesting, 1.35 margin if you want it at a very competitive (though not the best) rate and a very cool way to do sub portfolios within larger portfolios.
1.35 margin? Isn't it 3.75 ?
https://www.m1finance.com/how-it-works/borrow
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by dualstow » Sun Jul 08, 2018 7:24 am

No mutual funds, though. That’s how I do my fractional shares.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Sun Jul 08, 2018 10:16 am

x1.35 leverage

with regard to Mutual Funds, never ever in a taxable account if there is an equivalent ETF version. MFs can not shelter capital gains due to normal trading/portfolio adjustments etc., ETFs can.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by dualstow » Sun Jul 08, 2018 12:10 pm

Kbg wrote:
Sun Jul 08, 2018 10:16 am
x1.35 leverage

with regard to Mutual Funds, never ever in a taxable account if there is an equivalent ETF version. MFs can not shelter capital gains due to normal trading/portfolio adjustments etc., ETFs can.
You mean capital gains from distributions? I guess mine aren't big enough to generate taxes, b/c I don't pay taxes on those.
And, I'm just asking here- not trying to nitpick - isn't something like M1 for people with smaller accounts? Fractional (individual stock) shares. Accounts that can be started with $500. If you have a large enough account that you have to consider taxes on capital gains, wouldn't you want Vanguard?

Because I don't pay significant taxes on capital gains, I'm not aware of the sheltering via an ETF which you wrote above. Are you sure? I mean all these 10-million-dollar bogleheads are obsessed with taxes, and they own VTSAX, not VTI. That is, admiral shares, not the ETF. Are they missing something?
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Mon Jul 09, 2018 1:52 pm

I'm hurt fella's truly...calling me a bold face liar. :)

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff." 8)

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Cortopassi » Mon Jul 09, 2018 3:49 pm

I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Mon Jul 09, 2018 5:58 pm

MangoMan wrote:
Mon Jul 09, 2018 4:34 pm
Cortopassi wrote:
Mon Jul 09, 2018 3:49 pm
I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.
So you are saying that GLDM is not a good deal, even with the lower expense ratio?
Corto did a nice job of capturing the spread and shares costs. To pile on to his analysis, a brokerage that charges flat fee vs. per share is also going to make a cost difference. However, I wish he would have added the next step: .18% vs. .4% annual management fee holding costs. GLDM $450 vs. GLD $1000...and this is the gift that "keeps on giving" for as long as you hold the fund.

So the real take away is: "it depends."

Assuming our basic context is the PP, which means buy and hold with infrequent rebalancing, GLDM is probably still the better bet in the vast majority of retail circumstances (e.g. us). If one wanted to get fancy schmancy, there may be a split where the bulk is in GLDM with an estimated rebalance element/percentage in GLD, but that would be some very specific individual circumstances math to do.

Speaking of specific circumstances, several have mentioned they are sitting on losses as they've been holding this stinky stuff since 2011. After doing the math (annual fees, commissions, spreads etc.), it may be worth cashing out GLD, take the loss for tax purposes, wait the required time to avoid the wash sale rule and slide in to GLDM.

Having generally spoke the praises of GLDM's lower costs, personally I will be waiting a while and keeping an eye on volume. When it begins to get healthy I'll consider investing then. (Note: I just checked stockcharts.com based on the previous sentence and volume was 1M shares traded today! The thing has only been on the market for 9 days...I'm thinking the ETF is being well received)
Last edited by Kbg on Mon Jul 09, 2018 9:22 pm, edited 1 time in total.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by ochotona » Mon Jul 09, 2018 6:17 pm

And always use limit orders, even more so with thinly traded ETFs with a significant spread. Go fishing for a better price.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Cortopassi » Mon Jul 09, 2018 7:33 pm

MangoMan wrote:
Mon Jul 09, 2018 4:34 pm
Cortopassi wrote:
Mon Jul 09, 2018 3:49 pm
I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.
So you are saying that GLDM is not a good deal, even with the lower expense ratio?
I think kbg sums it up nicely, it depends, but for most ppers, who buy and hold it is better long term.

If anyone buys into it, I would be interested to know what the spread is when you bought.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by dualstow » Mon Jul 09, 2018 9:16 pm

Kbg wrote:
Mon Jul 09, 2018 1:52 pm
I'm hurt fella's truly...calling me a bold face liar. :)

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff." 8)

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.
Huh. I learned something new today.
I wonder if the tax-managed version of mutual funds has yet another strategy.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Mon Jul 09, 2018 9:21 pm

Desert wrote:
Mon Jul 09, 2018 6:52 pm
Kbg wrote:
Mon Jul 09, 2018 5:58 pm
Speaking of specific circumstances, several have mentioned they are sitting on losses as they've been holding this stinky stuff since 2011. After doing the math (annual fees, commissions, spreads etc.), it may be worth cashing out GLD, take the loss for tax purpose, wait the required time to avoid the wash sale rule and slide in to GLD.
Did you mean "slide in to GLDM?"
Yes, sorry for the typo.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Mon Jul 09, 2018 9:39 pm

dualstow wrote:
Mon Jul 09, 2018 9:16 pm
Kbg wrote:
Mon Jul 09, 2018 1:52 pm
I'm hurt fella's truly...calling me a bold face liar. :)

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff." 8)

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.
Huh. I learned something new today.
I wonder if the tax-managed version of mutual funds has yet another strategy.
No. Tax managed MFs are actually tax managed in that they tweak their bond allocations toward munis or other tax advantaged bonds and engage in tax loss harvesting and other stock trading strategies to minimize gains distributions. By contrast, the ETF advantage is structural. Side note...I believe the SEC has or is very close to approving a change to the ETF rules that opens up what can be ETF’d and there are many predictions that MF outflows will increase even more.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by dualstow » Tue Jul 10, 2018 5:54 am

I mean Vanguard’s tax-managed stock funds. See VTMSX, for example.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Tue Jul 10, 2018 10:51 am

dualstow wrote:
Tue Jul 10, 2018 5:54 am
I mean Vanguard’s tax-managed stock funds. See VTMSX, for example.
I assume this is directed to me...yes, Vanguard will be using various stock trading/management strategies to minimize taxes. There are quite a few strategies fund managers can use to manage taxes/distributions...I know some and I'm sure there are many I'm not aware of. For example, if you had company A that is a dividend producer vs. a like and kind (sort of) company B that does not issue dividends the manager would select B over A. Another method you are probably familiar with is tax loss harvesting.

I'm guessing you could read the prospectus and get a pretty good rundown on what they are doing specifically with regard to the fund noted.

If I misunderstood your intent, my apologies.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Tue Jul 10, 2018 12:49 pm

Desert wrote:
Tue Jul 10, 2018 10:56 am
Kbg is correct that ETF's have a structural advantage regarding tax efficiency. Vanguard is an exception, however. They have a structure (patent protected until 2023) that allows the mutual fund to be as tax efficient as the ETF.

https://www.bogleheads.org/wiki/ETFs_vs ... uard_funds
Learned something new today...explains why ETF and Admiral share mngt fees are always the same.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by dualstow » Tue Jul 10, 2018 2:54 pm

Aha. And it explains why so many B’Hds stick with fund shares.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by ochotona » Tue Aug 07, 2018 12:50 pm

Desert wrote:
Tue Aug 07, 2018 10:56 am
Well, the time has come for me to buy some additional gold. It appears that GLDM is the best option, due to the ER. Does anyone disagree?
The spread is larger, the volumes are much less, trade carefully with limit orders. Go fishing for the price.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by KevinW » Fri Aug 17, 2018 5:49 pm

GLDM and AAAU are tied with respect to expense ratio, at 0.18%. Does anyone have an argument for why one is better than the other?
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by Kbg » Fri Aug 17, 2018 5:57 pm

Too early to say...need a quarter's worth of trading to see what happens.

If the first three days' trading for both is any indication clearly the early nod goes to GLDM.
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by boglerdude » Sun Aug 19, 2018 12:44 am

AAAU is backed by the Perth Mint. But one might prefer their online depository so everything isnt vulnerable to a failure of your brokerage
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Re: GLDM - 0.18 exp. ratio 'Gold minishares'

Post by eufo » Sun Aug 19, 2018 8:49 am

boglerdude wrote:
Sun Aug 19, 2018 12:44 am
AAAU is backed by the Perth Mint. But one might prefer their online depository so everything isnt vulnerable to a failure of your brokerage
This. If you want it backed by the Perth Mint, you can do so directly without adding more counterparty risk with not only your brokerage, but also the fund family.

GLDM has the same risks, as does any paper gold option.
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