Investing in Gold

bungleberg

I am thinking about investing in some gold to diversify my portfolio a little, I don’t really wish to physically hold it for security reasons. After some research I have come across SGLN ishares physical gold which invests in the spot price of gold, this seems like a good way to invest.

Do many other forum members invest in gold, if so what are your preferred methods??
Thanks in Advance

EdGasketTheSecond

Be advised that due to Brexit, iShares will soon not be settling through Crest for UK investors. The effect of this is that you will own CDI's instead of shares which imho, is less desirable. As an alternative can I suggest WisdomTree GBSS or PHGP; you can look up the differences on their website. They are Jersey-based ETFs and will not need to convert to  using CDIs.

If you are just looking to invest cash rather than money already in a SIPP or ISA, you might like to take a look at BullionVault, no FSCA protection but no ETF counterparty risk either; the choice is yours.

BTW gold is a very good choice right now as I'm sure other forum members will agree

MarkCarnage

Yes, agree with that. I use the WisdomTree Jersey based fund fully backed by physical gold. 

bungleberg

Please excuse my lack of knowledge, could you explain a CDI and why it’s less desirable??

DiggerUK

Holding physical gold is not as dangerous as you seem to believe it is. A gold Sovereign is smaller than a 10p coin, and a one ounce gold Britannia is the size of a slice of cucumber. A decent home safe is about £150/200. Household insurance cover isn't as expensive as you might imagine.
Failing that you can buy allocated or unallocated gold from most of the UK dealers who will hold for a fee.

Here is a good guide on owning gold, you can switch off the cookies..._

EdGasketTheSecond

bungleberg said:

Please excuse my lack of knowledge, could you explain a CDI and why it’s less desirable??

See my thread here which has some more information:

https://forums.moneysavingexpert.com/discussion/6145741/ishares-to-settle-through-euroclear-instead-of-crest-leaving-uk-shareholders-with-cdis#latest

In summary with a CDI you are one further step removed from your gold than owning a share in an ETF. CDI' s are not traded on the LSE so may or may not be tradeable with a live quote; I have got conflicting information from two brokers. Maybe someone who has actually traded CDI's can tell us how buying and selling works; like whether you have to leave a limit order.

So if there is a choice of buying something else that isn't using CDIs then I'd do that; examples suggested above.

Skininthegame

Hi!
I've always preferred ETCs to physical gold myself, but last month I read an article on forbes about GLD that got me thinking.
Basically they say that: 

..unlike physical gold, ETCs to physical gold are a financial product that has a counterparty risk.  Counterparty risk is present when there is a possibility that the counterparty in an agreement may be in default or not live up to its obligations.

One of the primary benefits of gold is that it is the only financial asset that is not simultaneously the liability of someone else. Therefore, these ETFs are a bad substitute.

Are we sure this does not apply to Wisdom Tree Phau (my ETC)?
I also read a recent review of Bullionvault on Revenueland and it made me curious to invest more in physical gold. My final goal is to find a way to invest in gold also going beyond ETFs /ETCs and doing it safely and cheaply through a safe and reliable platform (if there is one).

EdGasketTheSecond

All ETF'c/C's have counterparty risk. I am not sure if that is a huge risk or a miniscule risk. The proponents of 'physical only' claim it to be a huge risk and once gold starts to move big time you'd find the physical gold was not in the vaults; at least not in enough quantity to satisfy all demand. However ETFs did fine during the gold rise 2009-11.

As always I would recommend diversification and BullionVault would seem a good way to do that being outside of the banking system but with no FSCS protection. It claims the gold is insured and that they follow the London Bullion Market rules etc. etc.

As for actual physical holdings, I find the buy/sell too expensive and then there;s the storage/insurance issues and the fact that I can't just sell it in a few seconds as with ETFs and BullionVault.

aroominyork

I have never owned gold but wonder if now is a time to consider it as a diversifier from equities. Bonds seem more closely correlated with equities than in the past and, with interest rates at rock bottom, you are relying on market movements rather than income to gain from holding bonds. And cash of course earns close to nothing. This is the first time I have gone near the subject of gold so some pointers would be welcome.

markj113

aroominyork said:

I have never owned gold but wonder if now is a time to consider it as a diversifier from equities. Bonds seem more closely correlated with equities than in the past and, with interest rates at rock bottom, you are relying on market movements rather than income to gain from holding bonds. And cash of course earns close to nothing. This is the first time I have gone near the subject of gold so some pointers would be welcome.

If you want physical gold and live in the UK you cant beat sovereigns.

highly liquid, close to spot price, capital gains tax free and fractional so easy to cash in small amounts.

atkinsons, hatton garden metals, chards are well priced. 

Also worth double checking the postage as some quote with the price included and others add the price at the cart.

aroominyork

I'd buy an ETC. I have no interest in storing gold. But that raises a question of whether gold should only ever be bought to "never sell... hand it down the generations", or do people sensibly hold it as a diversifier which they might change to different asset types depending on how the economy looks, ie if bonds become better value or equities don't have Covid hanging over them?