Gold ETF

joecc

with 2,500 euro...

any ideas?

Isoaxe

If you would like to invest in Gold, your best option would be through SPDR Gold Trust (NYSE:GLD). They charge a 0.4% annual management fee, and have more than half of all ETF-held gold globally (Market Cap: $48 billion). This means that there is ample liquidity, and spreads will be minuscule. Shares in the ETF are backed by physical gold bullion, therefore you have no equity-like risk (of course the price of gold can always drop). If you look at the spot price of gold since the foundation of the ETF, you will notice that it tracks the price very accurately.

However, there is a exchange rate risk when investing in USD denominated securities. If the dollar falls between the time you open and the time you close your positions, your profit won't be as great as the rate indicated by the ETF. The reverse also applys. This, of course, is the case with all non-euro denominated securities.

http://finance.yahoo.com/q/bc?s=GLD&t=5y&l=off&z=l&q=l&c=
http://finance.yahoo.com/q/bc?s=EURUSD=X&t=1y&l=off&z=l&q=l&c=

I hope this helps!

Jesus Wept

I presume there are double gold efts?
Bigger risk obviously but would lessen the currency problems?

silverharp

there isnt a currency problem here as such. As gold itself can be considered a currency, whether you buy a $ based ETF or buy physical gold, you are buying off a quoted price in $. Or put is this way, if you thought the Euro was going to out perform gold you wouldnt buy gold, your implied trade would be to short the $.

Isoaxe

@ The Rigger, by double do you mean leveraged?

Jesus Wept

Yes

Isoaxe

silverharp wrote: »

there isnt a currency problem here as such. As gold itself can be considered a currency, whether you buy a $ based ETF or buy physical gold, you are buying off a quoted price in $. Or put is this way, if you thought the Euro was going to out perform gold you wouldnt buy gold, your implied trade would be to short the $.

@ Silverharp,

Yes gold can be considered an alternative to fiat currencies, but that is beside the point I was trying to make. If you buy gold with euros when the EUR/USD FX rate is 1.20, the price of gold rises 30%, and you sell when the rate is 1.40, your realised gain will be 11.4%, not 30%. However this risk could be hedged against by looking for a European ETF that is quoted in euros but uses currency futures to mitigate FX fluctuations.

Isoaxe

The-Rigger wrote: »

I presume there are double gold efts?
Bigger risk obviously but would lessen the currency problems?

But surely it would exasperate the problem? If it had been a double long ETF in the response I gave to silverharp, the gain would have theoretically been 22.8%- i.e. It magnifies the gains (or losses). This doesn't really impact on the FX rates. Also, the managers of the 'double' funds use derivatives for leverage, and thus the returns won't be exactly double.

the23rdday

I was recently stopped out of a coffee ETF - my dollor profit was 2,700 and I ended up with only €76 . What you have to remember is that if the dollor looses value your initial investment looses as well as your profit . The dollor has been dropping value against the euro now for some time and I am considering going to cash as all my investments are in ETF's at the moment .

pablo_escobar

central banks have been suppressing the price of silver and gold with naked shorts. if you're buying gold, get it physically, forget about ETF's.

if you want to buy bullion / coins, buy from reputable seller and avoid ebay, too many fakes.

lately i've seen a lot of small store units converted into "cash for gold and silver" shops.

1 oz sells for ~€1000 yet these shops are offering as little as €300 per oz.

i don't know about silver but i'd say the offers are worse again.

people should be aware they're getting ripped off.

Jesus Wept

Why buy it physically?

pablo_escobar

because it's real, you own it, you control it..not some third party.
what guarantee is a piece of paper?

i'm not very trustworthy of banks when there's clear evidence of market manipulation through naked short sales.

ETF's are part of price suppression

gold and silver should currently be much higher.

Isoaxe

@pablo_escobar

The costs incurred by buying physical gold are much higher than that of ETF's- you can pay up to a 15% premium on the metal value itself by buying American gold eagle coins. In addition, there is the chance that you might lose it or have it stolen etc.

A 'piece of paper' is a legal contract inferring the right of ownership of the underlying asset. In the case of SPDR gold trust mentioned earlier, this is physical bullion (41,388,837 ounces to be precise). Therefore, unless you are envisioning some kind of social armageddon, your ownership of that ETF (or any other backed by bullion as opposed to derivatives) is safer (and cheaper) than physical gold.

You cannot suppress price by shorting the underlying, it doesn't work like that.

If they were attempting to suppress the price, I would have to point to their incompetence, since they don't seem to be doing a very good job!

pablo_escobar

Isoaxe wrote: »

@pablo_escobar

The costs incurred by buying physical gold are much higher than that of ETF's- you can pay up to a 15% premium on the metal value itself by buying American gold eagle coins. In addition, there is the chance that you might lose it or have it stolen etc.

Your first post and it's promoting ETFs...

There are ways to have physical gold stored securely.safety deposit boxes for example..as long as it's in country it can't be confiscated by the government.

If ETFs are such a great bargain, why are so many shops around ireland trying to buy real physical gold and silver from people?

Trying to cover shorts or know that it's ready to skyrocket?

A 'piece of paper' is a legal contract inferring the right of ownership of the underlying asset. In the case of SPDR gold trust mentioned earlier, this is physical bullion (41,388,837 ounces to be precise). Therefore, unless you are envisioning some kind of social armageddon, your ownership of that ETF (or any other backed by bullion as opposed to derivatives) is safer (and cheaper) than physical gold.

If tomorrow everyone with ETFs demanded their silver and gold in physical bullion, what would happen?

I'd like an answer to that, assuming you realise demand for both silver and gold exponentially exceeds physical supply.

You cannot suppress price by shorting the underlying, it doesn't work like that.

You can when the markets are rigged, which they have been for decades.
Pump and Dump / High Frequency Trading..the markets are completely rigged.

If they were attempting to suppress the price, I would have to point to their incompetence, since they don't seem to be doing a very good job!

they've done a good job so far but as more and more people realise that ETFs are nothing but a scam, sensible investors will demand the gold/silver physically, then the price will explode.

Isoaxe

I'm not sure what your beef is with ETFs- maybe you know something I don't. I would like to categorically state that I don't currently own ETFs of any description, nor have any vested interests in them.

There are ways to have physical gold stored securely.safety deposit boxes for example

Storing gold physically can be quite expensive and not very cost-effective for the retail investor.

If ETFs are such a great bargain, why are so many shops around ireland trying to buy real physical gold and silver from people?

Because, as you said in an earlier post:

1 oz sells for ~€1000 yet these shops are offering as little as €300 per oz.

These shops are in the business of buying gold for less than the spot price and then selling at a higher price in and around the spot. ETFs are for speculating on the price of gold- a different business altogether.

If tomorrow everyone with ETFs demanded their silver and gold in physical bullion, what would happen?

I'd like an answer to that, assuming you realise demand for both silver and gold exponentially exceeds physical supply.

If the ETF's were to be liquidated, each investor would be entitled to the amount of gold his/her shareholding represents. In the case of SPDR, this would be 1/10 Oz per share. I'm not sure which part of this you don't understand.

If demand exceeds supply, prices go up, as they have been for the past while. When supply equals demand, prices are in equilibrium. When supply exceeds demand, prices drop. Basic economics, and one of the fundamental tenets of the free market/stock market.

You can when the markets are rigged, which they have been for decades.
Pump and Dump / High Frequency Trading..the markets are completely rigged.

Please start another thread on this kind of thing- I think the presumption here is that markets are not in fact rigged. Remember that you are posting in 'Investments and Markets' forum. Most people here are engaged in the buying and selling of securities in the stock market. You might be in the wrong place.

Your first post and it's promoting ETFs...

As for your obvious dismay in my 'promotion' of ETFs, you would do well to look at the title of this thread. I didn't come up with the topic.

Jesus Wept

pablo_escobar wrote: »

If ETFs are such a great bargain, why are so many shops around ireland trying to buy real physical gold and silver from people?

Because they are offering people $300 an oz and they can sell it far higher.
If they could buy into the GLD eft for 25% they would do it also. So would I.

pablo_escobar

There's no need to get uppity, Isoaxe.
Pump and Dump is just a way of dissociating with High Frequency Trading but they're both the same thing.

Storing €2500 of physical gold isn't expensive, i'd buy 2 oz gold maple coins from a reputable seller.

If I buy 1 oz at €1023 today, a company will pay me €982 today.
I've no plans of selling it because I know the price is depressed and will eventually go much higher.

Isoaxe wrote:

These shops are in the business of buying gold for less than the spot price and then selling at a higher price in and around the spot. ETFs are for speculating on the price of gold- a different business altogether.

I was expecting that answer and while it may be true, there are other possibilities too.

But the fact of the matter is that more gold and silver contracts are sold than what's physically available and there's perfectly good evidence to show this.

My problem with ETFs are explained on the GATA website

Gold suppression is public policy and public record, not 'conspiracy theory'

ETFs are guarantee of absolutely nothing except your money back.

If everyone who owns the contracts demanded physical gold and silver today, there wouldn't be enough to go around.

But that's how the scam works. As long as all the contract owners don't demand it physically, there's no problem and the price remains low because we all believe there is enough available.

I suspect you know this already.

Isoaxe

You got me.

There's no fooling you.

pablo_escobar

Sarcasm noted, but unfortunately for you, it's an absolute truth.

If everyone that owned GLD and SLV contracts demanded to receive the gold and silver physically, there would not be enough physical metal to meet demand.

so, for that reason, yes, the price is certainly rigged and thank you for acknowledging this important point.

Personally, I think there should be a separate market, 1 for "imaginary gold" where you pretend you own it by holding a piece of paper and then "real gold" where you actually have it... oh wait. :pac:

I am buying physical gold because the fiat currencies are being devalued right now and I don't want anymore of my savings stolen by crooks in the financial system.

Gold is money, has been for thousands of years.

Isoaxe

Well good for you, we can at least agree to disagree.

I don't plan on buying any gold- real, imaginary or otherwise.

Jesus Wept

pablo_escobar wrote: »

If everyone that owned GLD and SLV contracts demanded to receive the gold and silver physically, there would not be enough physical metal to meet demand.

But they won't so it's a moot point.

pablo_escobar

Well, it's up $20 an Oz so far today and since the FED will almost certainly commit to buying US bonds, further devaluing the USD, Gold will inevitably continue to go higher.

I've already considered a possible scenario where the dollar collapses.. what will all those people holding ETFs get in return?

Would people want dollars in return for their SLV and GLD contracts?

I think they'd want physical Gold and Silver since those metals will still be exchangeable for other foreign currencies...but as we know, there won't be enough to go around.

IMHO, I've little faith in the whole financial system at this point and would like to store some of my savings in a way that can't be manipulated or stolen through QE.

The only way I can see this done today is buying physical gold or silver.