Re: Ready to make switch but not sure where to begin...
Posted: Sat Sep 01, 2012 8:18 pm
Unless you are extremely wealthy with most of your assets in taxable accounts, the PP is incredibly tax efficient.
Permanent Portfolio Forum
https://www.gyroscopicinvesting.com/forum/
https://www.gyroscopicinvesting.com/forum/viewtopic.php?t=3040
In my experience, it's not been as bad as I'd feared. In my taxable (TDAmeritrade) and Roth IRA (Vanguard) PPs, the only asset that isn't commission-free is gold, and if you were 100% physical bullion in taxable, it could be an entirely commission-free PP. My 401k PP (Schwab) has only two commission-free assets but I'm just happy to have been blessed with a 401k that I could make a PP out of at all!Storm wrote: Another thing that should be taken into account is trading fees. It's
less expensive to keep one giant sprawling PP than to keep lots of smaller ones.
You are of course correct. I think the general idea is that although you pay commission (mark-up) up front, you're done after that. You don't have the expense ratios of ETFs or other gold funds. Then again, if you can sell GTU and have gains taxed at a max of 15% instead of 28% or any gold holding in tax-deferred, you might save big-time. The debate continues...MangoMan wrote:I have seen this statement in several posts, and I do not understand the logic: If you buy physical gold, there is always a markup over spot, is there not? What is that, if not an effective commission?Pointedstick wrote: In my experience, it's not been as bad as I'd feared. In my taxable (TDAmeritrade) and Roth IRA (Vanguard) PPs, the only asset that isn't commission-free is gold, and if you were 100% physical bullion in taxable, it could be an entirely commission-free PP.
It is probably more accurate to consider that markup (and the discount on sale) as part of the bid/ask spread just like for any asset.MangoMan wrote:If you buy physical gold, there is always a markup over spot, is there not? What is that, if not an effective commission?
To my mind the argument for physical gold has never been based on either cost or convenience. The argument for physical comes down to insurance. Gold is financial disaster insurance and it is one of the last forms of portable wealth that's still out there. In a pinch you could probably smuggle it across the border if you ever had to make a run for it. No, I'm not one of those people who thinks we are on the verge of some great catastrophe. But I am a student of history. Sometimes really bad things do happen, and they rarely make appointments beforehand.MangoMan wrote:Even on a smallish $10,000 purchase of a gold ETF with a typical discount broker commission of $8, you are talking about .08% of the purchase price with a negligible bid/ask spread on GLD/IAU/GTU. The costs of the purchase and sale of the physical gold are substantially higher. Why does everyone continue to ignore [or downplay] this issue?AgAuMoney wrote:It is probably more accurate to consider that markup (and the discount on sale) as part of the bid/ask spread just like for any asset.MangoMan wrote:If you buy physical gold, there is always a markup over spot, is there not? What is that, if not an effective commission?
If you have a handful of gold in your hand, there is no nightmare scenario where you end up with a handful of worthless paper instead.MangoMan wrote: Even on a smallish $10,000 purchase of a gold ETF with a typical discount broker commission of $8, you are talking about .08% of the purchase price with a negligible bid/ask spread on GLD/IAU/GTU. The costs of the purchase and sale of the physical gold are substantially higher. Why does everyone continue to ignore [or downplay] this issue?
Implied but not yet explicitly stated: we get your point, MangoMan. Yes, true, it is better to use ETF or CEF if you are doing a lot of buying/selling. One should not downplay this issue.MangoMan wrote: Even on a smallish $10,000 purchase of a gold ETF with a typical discount broker commission of $8, you are talking about .08% of the purchase price with a negligible bid/ask spread on GLD/IAU/GTU. The costs of the purchase and sale of the physical gold are substantially higher. Why does everyone continue to ignore [or downplay] this issue?
I'm sure the spread of the Good Delivery Bars is built-into the ETF expenses.BearBones wrote: Implied but not yet explicitly stated: we get your point, MangoMan. Yes, true, it is better to use ETF or CEF if you are doing a lot of buying/selling. One should not downplay this issue.
Cannot lump GLD/IAU with GTU. Ever paid attention to the premiums on GTU? I don't consider 7% to be "negligible." But unlike a bid/ask spread (which also exists) the premium varies drastically and sometimes can be to your advantage.MangoMan wrote: Even on a smallish $10,000 purchase of a gold ETF with a typical discount broker commission of $8, you are talking about .08% of the purchase price with a negligible bid/ask spread on GLD/IAU/GTU. The costs of the purchase and sale of the physical gold are substantially higher. Why does everyone continue to ignore [or downplay] this issue?
Uh, just how big a pile do you have?MangoMan wrote:Even a safe deposit box large enough to hold a pile of coins will probably set you back a few hundred $ /year.
Storage costs for physical will generally be lower, especially over the long term, than using ETFs as long as you are using safe deposit boxes. Rent for SDBs is surprisingly cheap. Is there a point where an ETF might make more sense? Sure. If you are very wealthy and your gold holdings would go beyond convenient storage in say two or at most three SDBs then you might want to start thinking about things like allocated gold accounts or an ETF. Storage fees for allocated bullion accounts can can get pretty stiff. So if I had two SDBs (at different banks) that were filled with coins or small bars then yes, I might start thinking about IAU from the perspective of convenience and cost for everything that didn't fit in the two boxes.AgAuMoney wrote:Uh, just how big a pile do you have?MangoMan wrote:Even a safe deposit box large enough to hold a pile of coins will probably set you back a few hundred $ /year.
You can easily fit at least one hundred thousand dollars worth of gold coins into a toilet tissue tube. You had better not be paying $100+ to store a toilet tissue tube. But you will be paying $400 per year if you have it in GLD.
Me too.Ad Orientem wrote:Storage costs for physical will generally be lower, especially over the long term, than using ETFs as long as you are using safe deposit boxes. Rent for SDBs is surprisingly cheap. Is there a point where an ETF might make more sense? Sure. If you are very wealthy and your gold holdings would go beyond convenient storage in say two or at most three SDBs then you might want to start thinking about things like allocated gold accounts or an ETF. Storage fees for allocated bullion accounts can can get pretty stiff. So if I had two SDBs (at different banks) that were filled with coins or small bars then yes, I might start thinking about IAU from the perspective of convenience and cost for everything that didn't fit in the two boxes.
Would that I had that problem.
Which is EXACTLY why I am scouring these old Topics for any information I've not previously acquired. The people in this forum do have intelligence, knowledge, and, most importantly, EXTREME motivation to minutely analyze all things Permanent Portfolio! Of course, in the process, I'm continuing to allow myself to get sidetracked by all the other interesting Topics that have been discussed.Pointedstick wrote: ↑Sat Sep 01, 2012 12:58 pmThat's the biggest reason I love hanging out here. I feel like I gain a few fractions of an IQ point every time I read the wisdom regularly handed out for free by MT, craigr, Gumby, stone, moda, MG, and many others. The concentration of intelligence and knowledge here is staggering.BearBones wrote: This is more than a tax issue, of course. I bet that the discussions on this forum are more helpful than 99% of most "professionals."
Ad Orientem wrote: ↑Mon Sep 03, 2012 10:27 pm
AgAuMoney wrote:
MangoMan wrote:Even a safe deposit box large enough to hold a pile of coins will probably set you back a few hundred $ /year.
Uh, just how big a pile do you have?
You can easily fit at least one hundred thousand dollars worth of gold coins into a toilet tissue tube. You had better not be paying $100+ to store a toilet tissue tube. But you will be paying $400 per year if you have it in GLD.
Storage costs for physical will generally be lower, especially over the long term, than using ETFs as long as you are using safe deposit boxes. Rent for SDBs is surprisingly cheap. Is there a point where an ETF might make more sense? Sure. If you are very wealthy and your gold holdings would go beyond convenient storage in say two or at most three SDBs then you might want to start thinking about things like allocated gold accounts or an ETF. Storage fees for allocated bullion accounts can can get pretty stiff. So if I had two SDBs (at different banks) that were filled with coins or small bars then yes, I might start thinking about IAU from the perspective of convenience and cost for everything that didn't fit in the two boxes.
Would that I had that problem.
BearBones wrote: ↑Sat Sep 01, 2012 10:36 am
Storm wrote:
Personally I prefer the giant sprawling one. I can buy the tax advantaged asset in each account and eventually end up with a little in all of my accounts for rebalancing purposes. I think the PP works best in this manner, with tax heavy assets like Treasury bonds doing best in your 401k, while tax deferred assets like gold doing best in your taxable accounts.
I have a feeling that this consistent recommendation is because so many of us are new to the PP. I have a feeling that having unbalanced assets between taxable and tax deferred acts will eventually lead to difficulties, as discussed before. This might occur, for example, in the event of LTTs taking a long term dive in a tax deferred act, and there is eventually little else to rebalance from (i.e., you cannot just move some cash or stocks in from your taxable space). In this scenario, your "little in all accounts" gets used up, you end up with a shrinking 401k, and you are forced to buy LTTs in your taxable act.
I have a feeling that 10 years from now the recommendation will be just to keep a PP in each act. Think I am off base?
MangoMan wrote: ↑Mon Sep 03, 2012 4:48 pm
MachineGhost wrote:
BearBones wrote:
Implied but not yet explicitly stated: we get your point, MangoMan. Yes, true, it is better to use ETF or CEF if you are doing a lot of buying/selling. One should not downplay this issue.
I'm sure the spread of the Good Delivery Bars is built-into the ETF expenses.
Perhaps. But I'm guessing they get a much better deal due to the huge volume than a retail investor can get buying coins.
Also, there are ongoing storage costs, unless you are hiding it under your floorboards. Even a safe deposit box large enough to hold a pile of coins will probably set you back a few hundred $ /year. My point is: contrary to the persistent implications in many of the threads, buying and holding physical gold is not free, initially or over time. It certainly may be preferable for true protection, but there are still costs involved.
If dollar cost averaging worked better we would all reach our desired allocation , sell everything And start buying in from zero again …you can see over time that would not have worked well with most assets.
Wow, that's a really excellent logical breakdown and an excellent way to illustrate lump sum vs. DCA.mathjak107 wrote: ↑Thu Nov 04, 2021 1:56 amIf dollar cost averaging worked better we would all reach our desired allocation , sell everything And start buying in from zero again …you can see over time that would not have worked well with most assets.
We dollar cost average in when we have no choice and accumulate money over time to invest but as far as performance you need to be a great market timer to have dollar cost averaging do better then just lump sum