What Type Of Gold Investment Is Best?

MrAndMrs

I'm hoping to retire in the next few years am looking to invest in a BTL property with the intention of using the income as a little bonus on top of my hard saved pension. I would also like to put 10% of my portfolio into gold. I'm trying to work out all the pros and conns of investing in either gold exchange traded funds or holding physical gold bullion. Or is there a better way than the two ways suggested above? Would really appreciate any comments from anyone who has invested in gold before or even looked into it and may be decided not to. Thank you.

jimjames

What Type Of Gold Investment Is Best?

I could say none but that's just my personal view.

If you're after income why would you buy an asset that pays no income at all?

Even the FTSE100 pays 3.5%

Linton

Why do you want gold?

When all fiat ponzi currencies collapse in universal debt
= gold bars under your bed
Pros: its probably still there when the world collapses. You might be able to exchange it for a can of beans.
Cons: Until the End Time there's no benefit whatsoever. Difficult to sell, especially in less than gold bar amounts.

Pure Diversification
= gold ETF.
Pros: volatile and not strongly correlated with equity so frequent chance to rebalance. Easy to buy and sell
Cons: Probably better places for your money, especially if you want income. No evidence of better than inflation long term return. When the End Time comes your provider has probably disappeared and your ETFs are worthless.,

I think I should hold some
=you already hold gold miners if you have a broadly diversified portfolio.
Pros: You dont need to do anything
Cons: Errr

dunstonh

BTL and gold. Sounds like someone likes out-of-date fashions.

(not rejecting them as part of a balanced spread but the wording in the post does hint at fashion investing)

Ryan_Futuristics

I'd put that 10% into P2P lending - something that should grow the money consistently

Gold is an old fashioned trend to me

MrAndMrs

jimjames wrote: »

What Type Of Gold Investment Is Best?

I could say none but that's just my personal view.

If you're after income why would you buy an asset that pays no income at all?

Even the FTSE100 pays 3.5%

Thank you jimjames. I hope to get my extra income from the BTL property. The gold is intended to be a hedge against inflation. It seems like a pretty sound hedge...?!

MrAndMrs

Linton wrote: »

Why do you want gold?

Pure Diversification
= gold ETF.
Pros: volatile and not strongly correlated with equity so frequent chance to rebalance. Easy to buy and sell
Cons: Probably better places for your money, especially if you want income. No evidence of better than inflation long term return. When the End Time comes your provider has probably disappeared and your ETFs are worthless.

I don't want lots of the stuff, only 10% as a hedge against inflation. I hear it's a good hedge...?!


I'm glad that you agree (in a round about way) that ETFs are worthless. I completely agree with your points so was trying to wrap my head around why people still suggest it over holding physical gold.

gizmorat

ETFs are very convenient way of holding gold but have a yearly cost associated with them (typically around 0.4%) and have counter-party risk.

Bullion in the form of Sovereign and Britannia coins is fairly easy to buy and sell (with a spread of about 4%), clearly it has no counter-party risk and is free from CGT.

A sensible way to hold gold for the long term is 3/4 physical and 1/4 ETF. That way you get the convenience of rebalancing quickly, easily and cheaply within your brokerage but the security of holding some assets outside of the financial services system.

Before you do anything you need to be sure that you have a place for gold as a diversifier in your overall portfolio i.e. have a sound asset allocation, rebalancing plan and also have some awareness of it's longer term behaviour.

MrAndMrs

Ryan_Futuristics wrote: »

I'd put that 10% into P2P lending - something that should grow the money consistently

How would you go about P2P lending? I always considered it to be pretty risky if it went wrong. Have you done P2P before? How did you do it?

MrAndMrs

gizmorat wrote: »

Bullion in the form of Sovereign and Britannia coins is fairly easy to buy and sell (with a spread of about 4%), clearly it has no counter-party risk and is free from CGT.

Before you do anything you need to be sure that you have a place for gold as a diversifier in your overall portfolio i.e. have a sound asset allocation, rebalancing plan and also have some awareness of it's longer term behaviour.

Thanks for the advice. I don't think I'll ever be 100% sure. I've never really managed a portfolio before which is why I'm grabbing suggestions and tips where I can.


I'm thinking about dipping my toe into gold (but not 10% all at once). I've been looking to buy gold sovereign coins from a dealer. The two best priced dealers I've found are Hatton Garden Metals and Sovereign Investments. I can see there's a feedback thread for Hatton. But has anyone ever dealt with Sovereign Investments before...?

mike88

Why do you think gold is a hedge against inflation? If you look at a chart showing the historical price of gold up to the present you will see just how much the price fluctuates. Gold is only any use if you think the World is coming to an end in which case you won't be around to spend it. Gold is a commodity like anything else. If you wish to trade it then fair enough but as an investment it sucks.