Alternatives to Physical Gold

Discussion of the Gold portion of the Permanent Portfolio

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cnh
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Alternatives to Physical Gold

Post by cnh » Thu Feb 18, 2016 6:41 pm

I'm interested in recent thinking about gold holdings. I've read the book: "The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy" by Craig Rowland and J. M. Lawson, and I'd like to hear the forum's latest views on the subject. Assuming it is very impractical for someone to hold physical gold--and, as a result, they're unwilling to do so--what is a second-best alternative? An ETF (e.g. SGOL, IAU, or GLD) or a CEF (e.g. PHYS, CEF) or something else? The book convinced me that gold miners aren't a great option. Better to hold one of these in a taxable account or standard IRA or ROTH IRA?
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Re: Alternatives to Physical Gold

Post by Libertarian666 » Thu Feb 18, 2016 7:04 pm

cnh wrote: I'm interested in recent thinking about gold holdings. I've read the book: "The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy" by Craig Rowland and J. M. Lawson, and I'd like to hear the forum's latest views on the subject. Assuming it is very impractical for someone to hold physical gold--and, as a result, they're unwilling to do so--what is a second-best alternative? An ETF (e.g. SGOL, IAU, or GLD) or a CEF (e.g. PHYS, CEF) or something else? The book convinced me that gold miners aren't a great option. Better to hold one of these in a taxable account or standard IRA or ROTH IRA?
It depends on what you mean by "impractical to hold physical gold". In your personal possession, or in any place at all? The answers to your questions depend on the answer to this question.
cnh
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Re: Alternatives to Physical Gold

Post by cnh » Thu Feb 18, 2016 9:44 pm

Libertarian666 wrote: It depends on what you mean by "impractical to hold physical gold". In your personal possession, or in any place at all? The answers to your questions depend on the answer to this question.
Both. Not physical gold in one's possession and not stored in some other location (e.g. safe deposit box, allocated storage, or other). I'm wondering what is the least bad of remaining alternatives.
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Re: Alternatives to Physical Gold

Post by Libertarian666 » Fri Feb 19, 2016 8:14 am

cnh wrote:
Libertarian666 wrote: It depends on what you mean by "impractical to hold physical gold". In your personal possession, or in any place at all? The answers to your questions depend on the answer to this question.
Both. Not physical gold in one's possession and not stored in some other location (e.g. safe deposit box, allocated storage, or other). I'm wondering what is the least bad of remaining alternatives.
Well, in that case I would have recommended GTU but we know what happened to that. :-(

So at this point the best alternative for me would be CEF, even though it is only about 1/2 gold. However, it is much less complicated than ETFs or the other trusts, as far as I can tell, and therefore there are fewer things that can go wrong. It also appears to allow normal capital gains treatment for US citizens if the proper paperwork is filed

Assuming of course that there are ever any capital gains to worry about. :P
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BearBones
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Re: Alternatives to Physical Gold

Post by BearBones » Fri Feb 19, 2016 8:29 am

IAU large and lowest of ERs.

PHYS (formerly GTU) for some in taxable account so can harvest gains with least taxes.
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KevinW
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Re: Alternatives to Physical Gold

Post by KevinW » Fri Feb 19, 2016 11:28 am

IMO, in this scenario IAU is the lesser of evils. But physical gold is better.
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Re: Alternatives to Physical Gold

Post by Libertarian666 » Fri Feb 19, 2016 11:31 am

Really the first question to answer is "why is physical gold unacceptable?"
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Re: Alternatives to Physical Gold

Post by ochotona » Fri Feb 19, 2016 12:34 pm

Libertarian666 wrote: Really the first question to answer is "why is physical gold unacceptable?"
I am not a gold owner now, but I did shop allocated storage options, the prices got ETF competitive above a certain account size, like $100k, for less risk of a swindle.
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Re: Alternatives to Physical Gold

Post by cnh » Fri Feb 19, 2016 4:29 pm

Libertarian666 wrote: Really the first question to answer is "why is physical gold unacceptable?"
The individual on whose behalf I am seeking second opinions is elderly and not interested in having to hold the physical gold directly, nor in having a custodian hold physical on their behalf. They understand the issue of counter-party risk that comes with CEFs and ETFs.
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Re: Alternatives to Physical Gold

Post by BearBones » Fri Feb 19, 2016 4:47 pm

Libertarian666 wrote: Really the first question to answer is "why is physical gold unacceptable?"
The same reason that buying 30 year bonds and administering a 1-5 year treasury ladder is unacceptable to many. Just harder, and at some point we all sin  :)
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Re: Alternatives to Physical Gold

Post by Libertarian666 » Fri Feb 19, 2016 6:14 pm

cnh wrote:
Libertarian666 wrote: Really the first question to answer is "why is physical gold unacceptable?"
The individual on whose behalf I am seeking second opinions is elderly and not interested in having to hold the physical gold directly, nor in having a custodian hold physical on their behalf. They understand the issue of counter-party risk that comes with CEFs and ETFs.
Ok, then just pick the least horrid of the ETFs, which may be IAU, although I'm not an expert on ETFs.
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Re: Alternatives to Physical Gold

Post by cnh » Fri Feb 19, 2016 9:08 pm

Thanks for the comments. I appreciate it.
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