How important is it for gold ETF to be denominated in my local currency?

[catacomb]

I'm having trouble with the gold portion of the portfolio.
I would really like to buy physical gold but this is very hard to do in my country due to the high VAT (17%) on imported coins. I can buy bullion coins from shady local dealers but the premium is around 10% over spot! 

So I think that as a start I'll go with ETFs. The problem here is that there are no physically backed gold ETFs denominated in my local currency (Israeli Sheqel). The closest thing is an ETN that tracks the spot price of gold traded in the London Fix and this ETN is backed by gold futures. Not only that, it has an expense ratio of 1%

I figured the next best thing would be to buy IAU, PHYS, SGOL, maybe even ZGLD. But they are all denominated in USD, thereby exposing the entire gold portion of my portfolio to currency risk!

What is your take on this subject?

Thank you in advance and sorry for my English.

[dualstow]

I believe Craig already recommended ZGLD to you in this thread (as a second option after checking out overseas accounts). And he knows you're in Israel, not Switzerland, so...

Meanwhile, you never did answer about the Jerusalem of Gold series of coins. Are those the ones with the 10% premium that you can buy locally, or is that a different set of coins? Thanks.

[catacomb]

You're right, I apologize

The Jerusalem of Gold series produced by the Israeli Mint (israelmint.com) has some stunningly beautiful coins but unfortunately they are not "true" bullion coins.


First, the premium is 20% above spot, which is indeed lower than the price on most gold coins produced by the Israel mint, but still higher than most modern bullion coins. Add to this the VAT of 17%. A bullion coin with the premium of 37%? I don't think so ...

Secondly, there are only 3,600 units available, and demand is so high they limited sales for 2 items in single purchase.  Israel is extremely small (slightly smaller than NJ) and there's obviously no need to produce hundreds of thousands of coins unlike other odern coins. Because of this small supply they cannot be seen as true bullions.

So these coins are more of a collectors' item really, which I don't think PP recommends. The value of the coin is numismatic, not spot price.

[dualstow]

Ah, that's everything I wanted to know. Thanks, much appreciated!
And of course, you're right: the pp strategy is all about holding bullion, not numismatic coins.

[number5858]

What about doing something like taking a short flight to Austria and getting a safe deposit box at Das Safe http://www.dassafe.com/. You can then buy Austrian Philharmonic gold coins at nearly any bank to store in them.

[Thomas Hoog]

Maybe, it seems second best to physical gold at home,
however it is in $ en cost a bit more then ETF

commission rate of 0.8% and a custody charge of 0.12% per annum for gold

http://www.bullionvault.com/

In europa we have the seems problem, only ZGLD is in €
so I have some physical, 2 ETF en in the above vault

[bronsuchecki]

catacomb,

Please see this response to someone asking about currency exposure regarding PMGOLD http://gyroscopicinvesting.com/forum/ht ... 655#p60655

The fact is that it doesn't matter where the ETF is located, you have currency exposure to USD as that is the dominant currency gold is traded in. Even if there was a local Israeli gold ETF, its local price would be determined by the ETF's market makers by converting the USD gold price at the Israeli/USD exchange rate.

[catacomb]

catacomb,

Please see this response to someone asking about currency exposure regarding PMGOLD http://gyroscopicinvesting.com/forum/ht ... 655#p60655

The fact is that it doesn't matter where the ETF is located, you have currency exposure to USD as that is the dominant currency gold is traded in. Even if there was a local Israeli gold ETF, its local price would be determined by the ETF's market makers by converting the USD gold price at the Israeli/USD exchange rate.

Thank you bronsuchecki! This is a very important point I missed.