Gold, is anybody holding some gold to diversify their portfolio?


(Kim Ditlefsen) #1

I have heard from multiple different sources (Ray Dalio, Rich dad poor dad, and some others) that having some gold in your portfolio is really smart. What do people here think about that? And anybody looked into the ETF from iShare called “Physical Gold” (SGLN) on the Freetrade platform? I’ am only looking into having a 7.5% asset allocation for this, based on the advice from Ray Dalio all weather portfolio.


(Emma) #2

Yeah I’m looking at Physical Gold as well. Loads of advice to buy gold in uncertain times so I think a tracker might be worth a go.


#3

Waiting for Freetrade to onboard the gold etf in their list then I will be looking at that.


(Kim Ditlefsen) #4

@stephen Freetrade already have the IShare ETF/ETC called Physical Gold that I was talking about.


#5

Woo-hoo!! I’ve been waiting for that and then I missed it’s release, do’h!

Just queued an order :slightly_smiling_face:

If I remember correctly I think you need 50 shares in that etf to equate to 1 Troy ounce.


(Kim Ditlefsen) #6

@stephen since you have been waithing for the Gold ETC (SGLN) have you had a look around and found that this is a good ETC for gold? As far as I understand this one seems to actually store gold and is not just a proxy for the gold price, is that what your research has found as well? And the final question is the 0.25% fee competitive?


#7

Hi, yes that is also my finding. I wanted to hold actual gold and not some derivative or proxy as you mention.

To my knowledge this etc is actual physical gold stored in a London vault by JP Morgan (I think) on behalf of iShares.

They have a gold bar list, so for me that’s proof it is physical (6500-ish bars last time I checked)

Is it competitive? I think so, I used to hold gold with royal mint and I believe they charged me 0.5%


(Kim Ditlefsen) #8

Thanks @stephen for the information, just got my order in as well.


#9

What percentage of your portfolio are you planning to gold-up? I think I might do 5% see how that goes for a while and adjust if needed


#10

Personally no. I’m only interested in income producing assets (ie primarily US shares which pay and increase dividends). I think Warren Buffet used the analogy of a farm. Over the years the amount someone is willing to pay to buy it from you (the share price) will fluctuate as the market moves. Despite that, if the farm (company) is well run it will pay you money which will increase and compound year on year without ever having to sell the farm until you want to. Its performance also gives it intrinsic value which supports its price increases.

With gold, however, you just have a lump of gold. While a company pays dividends and increases its intrinsic value, a lump of gold just sits there doing nothing for you until you decide to sell, meaning you’re entirely at the mercy of the price.


(Kim Ditlefsen) #11

@stephen I am planning to gold-up to 7.5% I think, but need to do some more research before I’m sure. Today I just took it up to 3.3% and I’ll update this in a couple of weeks when I have come to some conclusion about this. (This is my midterm(10years) portfolio)

@Baggyb I do definitely see your point of this not being an income producing assets, but since this is my 10year investment plan portfolio I rather have some kind of instruments that will smoothen the ride for my portfolio. When it comes to my Pension fund I only have shares and bonds. Where the bonds part is less than 10%.

And the gold is not just passive since I will rebalance my portfolio once or twice a year plus when there been a big correction. So it will help me to buy more shares when the price of shares is low, and sell shares when the price is high without having to pump new money into the portfolio.


#12

Diversifying your portfolio is always a good idea. Especially as the total value grows.

Pretty much everyone and their granny is expecting a correction to arrive any time now. So moving into a mix of commodities wouldn’t be an awful plan - careful however not to move into something that is correlated with economic growth!


(Emma) #13

Love the fact it’s called ‘correction’ instead of ‘plunging into oblivion’. Sounds a lot more reassuring


(Ben Baygan) #14

I have been investigating a while for gold holding in the portfolio and its important to choose right ETF. Most ETFs are not backed with gold, but only a promise from their gold supplier that amount that been traded. If you want to have a reliable shares in gold search for Gold backed Exchange Traded Funds (ETFs), securities designed accurately to track the price.


#15

U.K. filter shows these when completing that search:

Freetrade has this one :white_check_mark::


(Ben Baygan) #16

Great list Diversify!
The one that is listed in Freetrade is actually one of the best in the market at this moment. I had two on my list for investment (see attached pic). Priority is a ETF that has physical gold and second is the annual fee.


(Alex Sherwood) #17

It would be useful to hear why the ETF being backed by gold is a priority for you?


(Ben Baygan) #18

Good question Alex. Best way to protect yourself against inflation, stock market and etc has been throuthout history gold. But buying physical gold is expensive, hard and difficult to storage. Then we have companies such as BullionVault or ETFs that promise backed gold.

Found an old news letter from BullionVault, which describe tje reason of gold storage pretty good. :smiley:

”Why does BullionVault make sure you get outright physical ownership of gold? After all, it would be so much easier to offer you a gold account.

The reason is risk of default. One of the patterns which recurs throughout history is that growing financial sophistication leads to widespread expansion of credit and exposure to default, and few people successfully avoid it when it matters.

Banks, pension savings, mortgage guarantors and all the major financial institutions on which we depend are now tied up in a web of undelivered assets. A is the registered owner of a bond payable by B, the principal on which has been credit-swapped out to C. The terms are controlled by a deed drafted by an investment bank D, which itself receives the interest, which has been aggregated with 30 others and sold notionally to E. E is foreign, and flattens the FX risk with a bank F, who sells and rolls a future on his long currency book, which is bought by another bank for an assured profit by running the position against a higher yield bond bought from a junk-status borrowing customer, which has been insured against the risk of default with G, a major insurer, who happens also to be A.

These are the styles of relationship which dominate the world in which ordinary peoples’ savings are bound up, and they are profitable in the short term. This is why financial rather than commercial companies increasingly dominate the list of the top companies in America and Europe. They find it easier to make profits by providing credit and assuming eventual repayment, rather than by actually demanding settlement; a habit which could put off no end of potential customers.

All our common savings products are bound up in these webs. At BullionVault we do not know when and where these webs will break, and, with the greatest possible respect, we don’t think you do either. But it is so certain that they will break, and at an unexpected place and time, that we believe every forward thinking person with a respectable private reserve would do well to opt out with at least part of their savings.
A purchase of gold is a good way to do this.

But gold accounts, indexes, spread bets, and futures all fail to extricate the buyer from the web of dependencies, because they are based on undelivered gold. The only way to opt out of the web is to own physical property outright.”


Are VUSA and VOO essentially the same? What's the difference?
(Ben Baygan) #19

Here you can see how important is to find ETF/bonds that have low annual fee.


(Alex Sherwood) #20

Thanks, that’s really useful!