ETF Why GOLD ETF?

Discussion in 'Shares & Funds' started by oddshapes, 18th Dec, 2018.

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  1. oddshapes

    oddshapes Well-Known Member

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    I know its been discussed, but as a novice in this area (hence why I'm hanging out it the ETF thread and reading books on the subject), I just don't understand holding Gold, to me it looks like dead weight in the portfolio.

    THE CASE AGAINST GOLD
    https://seekingalpha.com/article/4118104-case-gold?page=3

    [​IMG]

    Perhaps it's time I crack open Tony Robbins book
     
    Last edited by a moderator: 22nd Dec, 2018
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  2. PKFFW

    PKFFW Well-Known Member

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    But gold is shiny and apparently in the Zombie apocolypse everyone will want to trade with you for gold instead of food! :D
     
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  3. oddshapes

    oddshapes Well-Known Member

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    I already feel as though I'm overweight in gold every time I look at my wife's fingers......:rolleyes:
     
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  4. Redwing

    Redwing Well-Known Member

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    Why is Gold Valuable?

    For millennia gold has played a significant role in human society. From ancient civilizations to modern times, it has been used to showcase status among neighbors, to display power among rulers, and to facilitate trade among nations.

    Yet, despite its shiny exterior, it is intrinsically worthless. Outside of its limited uses in electronics and dentistry, gold only has value in human society because it is gold and not something else. This explains why over 80% of annual global gold demand is for jewelry and investment purposes and not for industrial use. We spend most of our time using gold as gold and not as a conductor of electricity or as a replacement for your pearly whites.

    But why gold? Why not aluminum? Or iron? Or something else entirely?

    And, more importantly, should you be investing in gold? Why or why not?

    While most investors, myself included, have been scared away from gold because of its high risk-low reward track record, there are arguments to be made for owning gold due to its ability to add value at the portfolio level.

    For example, imagine a portfolio with an equal split into three asset classes: the S&P 500 (33.3%), long-term U.S. bonds (33.3%), and emerging market stocks (33.3%). Now imagine taking that portfolio and adding in gold so that the split went to 25% each, such as: S&P 500 (25%), long-term U.S. bonds (25%), emerging market stocks (25%), and gold (25%).

    If you were to compare the growth of these two portfolios, the one with gold would have outperformed:

    [​IMG]
    And it would have done so while, generally, having less overall portfolio risk (standard deviation):


     
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  5. The Y-man

    The Y-man Moderator Staff Member

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    It's the only ETF I hold.

    While I have traded a lot of it out, I still have a stash I bought in January 2008 for $99.35 per unit.

    The Y-man
     
  6. ChrisP73

    ChrisP73 Well-Known Member

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    yes there's definitely been periods where gold/silver have outperformed the US total return index (in USD) - 2001-2012 and 1972-1980

    if you invested a lump sum 1972, you'd be ahead in with equities only after 1991

    if you invested a lump sum in 2001, you'd still be behind with equities in 2020

    The bull run in gold through to 2012 was pretty compelling (as it was from '72-'80)

    Over the last 50 years however, equities are the clear winner.

    [​IMG]

    Who knows what happens next. However if if it was a choice of cash bonds or gold, I'd probably go with gold today.
     
    Last edited: 10th Jul, 2020
  7. Redwing

    Redwing Well-Known Member

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  8. ChrisP73

    ChrisP73 Well-Known Member

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    Gold continuing to pull ahead even in AUD. Last 2 years have been very strong

    upload_2020-7-28_7-7-44.png
     
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  9. Ouga

    Ouga Well-Known Member

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    Interested in knowing more about what is shaping this choice if you don't mind sharing?
     
  10. ChrisP73

    ChrisP73 Well-Known Member

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    Hi @Ouga this probably does a better job than I could of explaining some of the rationale and which resonates with my thinking US dollar breaking down, gold and the $A breaking up I will point out though that for me personally it isn't a choice I need to make as I don't hold any cash as an investment class and prefer stocks and real estate as a store of wealth
     
  11. Omnidragon

    Omnidragon Well-Known Member

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    Gold very good. Took some TSO, BDC, RML, OBM lately.
     
  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    And dont forget that Gold is a commodity that is generally priced in USD so you must consider the metal commodity and the USD. They can move independently eg physical gold can be stable in AUD terms but the USD moves adversely. . Even if the GOLD ETF is priced on the ASX in AUD its value is determined by the USD.
     
  13. Redwing

    Redwing Well-Known Member

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    https://markets.businessinsider.com...cl2dwm3uquaescmi5bgne4l1mxbgrutlcmv7auxfiumy#

    Warren Buffett cut his JPMorgan and Wells Fargo stakes and invested in Barrick Gold last quarter, according to a regulatory filing on Thursday.

    The famed investor and Berkshire Hathaway CEO slashed his company's JPMorgan stake by more than 60% to about 22 million shares, and its Wells Fargo position by more than 25% to about 238 million shares.

    Those two holdings, which ranked among Berkshire's 10 largest positions at the end of the first quarter, were worth about $2.1 billion and $6 billion respectively as of June 30.


    Buffett and his team also bought about 21 million shares of Barrick Gold, a gold-and-copper miner. The position was valued at about $560 million at the end of the second quarter.