Great British Invest off or Passive V Active Updates

DiggerUK

TBC15 wrote: »

Any contributors have any problems with including DiggerUKs portfolio ?

No, none at all.
But would I be rebasing against this lower valuation, or the original one ounce valuation.

It would either be an encouragement to include gold in a portfolio, avoid it like the plague, or not be quite as daft as Digger Mansions and put all eggs in the one basket..._

aroominyork

I'm a bit late (nearly a year late) to this thread. I started DIYing last summer and after a couple of months was fully invested and had stopped (most of) my initial meddling and switching, so a start date of end Sep 2017 works well for me. But I check my numbers on the last Tuesday of each month (don't ask) so I'll be a bit out of kilter. If that makes me ineligible let me know and I'll opt out, but otherwise end Sep 2017 to end Aug 2018 I am +13.39%.

TBC15

DiggerUK wrote: »

No, none at all.
But would I be rebasing against this lower valuation, or the original one ounce valuation.

It would either be an encouragement to include gold in a portfolio, avoid it like the plague, or not be quite as daft as Digger Mansions and put all eggs in the one basket..._

Nice to have you on board.

If you had started 29 Sep 17 onwards your £100.000 would have consisted of $ 133960 (https://www.poundsterlinglive.com/best-exchange-rates/british-pound-to-us-dollar-exchange-rate-on-2017-09-29 same source I use for Bostoner£) worth of gold. Gold being $1283.10 an ounce (http://onlygold.com/Info/Search-Gold-Prices.asp) you would have had 104.4 oz of gold.

Based on 104.4 oz of gold and using the mentioned sources your returns up to 31 Aug 2018 would have been.

£97,218 -2.8%

If you are happy with the above methodology based on 104.4 oz and no other participants cry foul, I'll include you and fill in the gaps when I have time.

TBC15

TBC15

aroominyork wrote: »

I'm a bit late (nearly a year late) to this thread. I started DIYing last summer and after a couple of months was fully invested and had stopped (most of) my initial meddling and switching, so a start date of end Sep 2017 works well for me. But I check my numbers on the last Tuesday of each month (don't ask) so I'll be a bit out of kilter. If that makes me ineligible let me know and I'll opt out, but otherwise end Sep 2017 to end Aug 2018 I am +13.39%.

11 months late is probably a little late for the 2017 start, however there were a number of people who wanted to contribute throughout the year. The anniversary of the initial thread will be up at the end of this month and I hope the original contributors will carry on.

If yourself and anyone else that has been following the thread wants to submit there portfolios https://forums.moneysavingexpert.com/discussion/comment/73192270#Comment_73192270 at the end of September I'll include their progress. The next 12 months will probably be of great interest.

DiggerUK

TBC15 wrote: »

Nice to have you on board.If you had started 29 Sep 17 onwards your £100.000 would have consisted of $ 133960 (https://www.poundsterlinglive.com/best-exchange-rates/british-pound-to-us-dollar-exchange-rate-on-2017-09-29 same source I use for Bostoner£) worth of gold. Gold being $1283.10 an ounce (http://onlygold.com/Info/Search-Gold-Prices.asp) you would have had 104.4 oz of gold. Based on 104.4 oz of gold and using the mentioned sources your returns up to 31 Aug 2018 would have been. £97,218 -2.8% If you are happy with the above methodology based on 104.4 oz and no other participants cry foul, I'll include you and fill in the gaps when I have time.
TBC15

Your method for finding out the price of gold at a point in time is over complicated. The price of gold in the uk is in pounds sterling when buying and selling.

The London Bullion Market Association publishes the price twice a day during normal business hours at the a.m. and p.m. "fix" Those prices are published in $US, Euros, and £GBP.

My prices posted have been calculated by taking a half ounce at the a.m. fix, and then a half ounce at the p.m. fix, and adding them together......simples..._

http://www.lbma.org.uk/precious-metal-prices (You will need to click from chart to table in the link)

bowlhead99

DiggerUK wrote: »

Your method for finding out the price of gold at a point in time is over complicated. The price of gold in the uk is in pounds sterling when buying and selling.

The London Bullion Market Association publishes the price twice a day during normal business hours at the a.m. and p.m. "fix" Those prices are published in $US, Euros, and £GBP.

My prices posted have been calculated by taking a half ounce at the a.m. fix, and then a half ounce at the p.m. fix, and adding them together......simples..._

http://www.lbma.org.uk/precious-metal-prices (You will need to click from chart to table in the link)

I agree it makes sense to use sterling prices rather than a headline dollar price and convert.

However, as a retail customer, you can't buy your virtual portfolio of physical precious metal at the London fix. When you buy your coins, you have to pay a few percent more to a dealer, and if you are selling back to him he will pay you less than what he can sell it for. There is effectively a spread between the bid price and the offer price which depends on liquidity and demand etc etc but is always more than 0%. So looking at how many ounces of gold you got on day one and what you could sell them for now is something that needs consideration of the bid-offer spread from the typical dealer you would use to acquire or sell that quantity of gold.

For those quoting the values of their portfolios of active or passive financial assets each month end, they will be using the latest NAV of their fund (only if the investment is an open ended investment fund which can be redeemed at NAV), or its bid price (if it is a fund with bid-offer pricing or an Investment Trust or ETF which has to be sold on a stock exchange).

TBC15

DiggerUK wrote: »

Your method for finding out the price of gold at a point in time is over complicated. The price of gold in the uk is in pounds sterling when buying and selling.

The London Bullion Market Association publishes the price twice a day during normal business hours at the a.m. and p.m. "fix" Those prices are published in $US, Euros, and £GBP.

My prices posted have been calculated by taking a half ounce at the a.m. fix, and then a half ounce at the p.m. fix, and adding them together......simples..._

http://www.lbma.org.uk/precious-metal-prices (You will need to click from chart to table in the link)

The table certainly simplify things.

So, based on the PM fix 29 September 2017 you had a re-based holding of 104.16 Oz of gold.

And bearing in mind the caveats mentioned by bowlhead99 realizing the value may be more costly than a conventional portfolio are you happy for me to include you in the table.

DiggerUK

TBC15 wrote: »

......So, based on the PM fix 29 September 2017 you had a re-based holding of 104.16 Oz of gold.

And bearing in mind the caveats mentioned by bowlhead99.......

Not much different to your original calculation, but certainly simpler.

Re bowlhead99. As the £100,000 is an abstract figure, it won't affect my base value.
The 'fix' price is fixed, different dealers have different premiums, there is no universal %ge to that. Even when the fix is in, the spot price varies 24/7.
I usually expect a spread of 5-6%, this varies according to the demand from sellers and buyers. If sellers are predominant, then the premium works against them, and vice versa........but the 'fix' is always the starting point for reputable dealers.

http://www.elminvestments.co.uk/gold-coins.html
As you can see here at Elm, they will buy 1oz coins at -2.0%, and sell at +3.5%..._

bowlhead99

DiggerUK wrote: »

Re bowlhead99. As the £100,000 is an abstract figure, it won't affect my base value.

The point of assuming an abstract start point on day one of £100k invested is so we can see from month to month or year to year what that £100k in your chosen asset mix has turned into, as a point of comparison, whether in the real world I actually only had £50,000 to invest and you had £500,000 and TBC15 had £123,456 to invest etc, or vice versa.

If we are saying that the Digger UK portfolio would be deployed 100% physical gold and 0% of shares funds and 0% of bond funds, then whether the price of gold is £1000/Oz or £990/Oz or £1200/Oz, your starting value for comparison with everyone else is still of course going to be £100k at the end of September 2017 (or whatever arbitrary start date), because everyone's starting value is £100k.

However, when you get to month two, you have to know what it is that you're valuing, so you need to know how many ounces you actually acquired for that £100k on day one.

You can't buy at spot rate because as you mention, there is a spread of 5-6% to buy reasonable amounts of physical.

So if the 'London fix' was (say as an example) £961/oz, you can't actually have a starting portfolio of 104 ounces for £100,000 because the acquisition cost to a retail investor is not £961 it is £961+(e.g., 3.5% of £961] which is more like £995 total for an ounce. So you only get just over 100 ounces with your £100k, not as many as 104 ounces.

Then in all subsequent months when you are trying to look at what those 100.5 ounces are worth, you will have to use the bid price (what a dealer would pay a UK retail investor to buy his coins) which is going to be gold fix price less (say, assuming you are selling to Elm), 2.5%, because dealers don't buy 100oz quantities of bullion coins from UK retail investors at the full London Fix.

Instead in this example if the price remained at £961 and you had 100.5 ounces, you could sell them for (100.5 x (961-2.5%)) which is only about £94k, causing you to lose that 6% of spread.

I know that the 2.5 and 3.5% figures adding up to the approx 5-6% total spread are going to vary over time and are just an example.

But the point is, you can't realistically say "spread doesn't affect me as I still start with an abstract £100k". As ok, yes you do start with that number, just like everyone else starts with £100k whatever the prices of the funds they happen to choose might be; but that doesn't insulate you from the spread. You have bought something that's instantly worth 5-6% less after five minutes, and that loss will hurt the 'inception-to-date performance' compared to people who aren't choosing investments with 5-6% spreads.

TBC15

DiggerUK wrote: »

Not much different to your original calculation, but certainly simpler.

Re bowlhead99. As the £100,000 is an abstract figure, it won't affect my base value.
The 'fix' price is fixed, different dealers have different premiums, there is no universal %ge to that. Even when the fix is in, the spot price varies 24/7.
I usually expect a spread of 5-6%, this varies according to the demand from sellers and buyers. If sellers are predominant, then the premium works against them, and vice versa........but the 'fix' is always the starting point for reputable dealers.

http://www.elminvestments.co.uk/gold-coins.html
As you can see here at Elm, they will buy 1oz coins at -2.0%, and sell at +3.5%..._

I’ve updated the results with the performance info