Gold (for diversification and balance)

Another_Saver

itwasntme001 said:

Another_Saver said:

aekostas said:

Another_Saver said:

aekostas said:

Another_Saver said:

As least they are productive assets that pay me dividends to hold them rather than needing constant storage and security.

Bullion companies can take care of that and, if part of a SIPP, one buys gold with tax top-up. 

... If you own gold in any manner other than literally owning physical gold in your house you have to pay security and storage, doesn't matter whether its a broker, ETC or whatever. Stocks, bonds, cash and property pay you to hold them.
The SIPP point is moot - all assets get the tax top up.

I will try to understand what you mean by "pay you": if for example cash pays me through interest rates I am not sure it's interesting just now; if property pays through increase in value it is not guaranteed and maintenance is not free. But you may mean soomething else.

My (perhaps limited) view of the pension world is funds; I pay fees. I checked online the cost to buy, store and sell in 10 years £10k of gold; it is 4.6% in total. My current, suboptimal private pension is 1% pa; VLS would be 0.42% pa which I think is 4.28% in the 10-year period, which is much of a muchness. If one (who is not me :-)) went for £100k over the same period it is 1.86% in total.

(All my figures should be taken with a sizeable pinch of salt.)

As for SIPP as a moot point, I was comparing that against just buying gold. Of course it has the drawback that it's the SIPP that owns the gold and one cannot access it (its value in this instance) unless able to draw down, while they would with coins in a safe (mad risk with insurance costs, as far as I am concerned) or in a vault as usual.

...
Gold is a non productive asset that you have to pay to own.
Cash, bonds, stocks and rental property are productive assets that pay you to own them. They pay you an income. With gold you have to always judge when to buy and sell.
How much you pay for dealing, platform, letting agent's fees etc is upto you.
I don't know how to phrase this more simply, it's one of those things so obvious people sometimes miss it.

Technically, given real yields/savings rates are negative, holders of bonds and cash savings are paying this fee (in terms of real rates) to hold these "assets".  Rental property and stocks generally have a positive real yield (although certainly some stocks/properties won't).

In a world where real rates are negative and thus there is no opportunity cost of holding, gold does seem attractive (in fact it is strongly correlated with real interest rates).  Although, since it does not produce any cash flows, it is impossible to place a meaningful value on it and thus it can be thought of as pure speculation, something that needs to be carefully traded in and out of rather than a pure buy and hold approach (except for insurance purposes).

Agreed, such low, even negative rates skew the rest of the capital markets making it impossible to value anything the conventional discounted cash flow way. Also, since the US only came off the gold standard in 1973, and rates have been more or less falling since then, I am sceptical about seeing correlation as indicative of a relationship - gold has never been a free floating commodity before in a world of such low rates, slushing with more capital in relative terms than any economy in history as far as I'm aware.

itwasntme001

Another_Saver said:

itwasntme001 said:

Another_Saver said:

aekostas said:

Another_Saver said:

aekostas said:

Another_Saver said:

As least they are productive assets that pay me dividends to hold them rather than needing constant storage and security.

Bullion companies can take care of that and, if part of a SIPP, one buys gold with tax top-up. 

... If you own gold in any manner other than literally owning physical gold in your house you have to pay security and storage, doesn't matter whether its a broker, ETC or whatever. Stocks, bonds, cash and property pay you to hold them.
The SIPP point is moot - all assets get the tax top up.

I will try to understand what you mean by "pay you": if for example cash pays me through interest rates I am not sure it's interesting just now; if property pays through increase in value it is not guaranteed and maintenance is not free. But you may mean soomething else.

My (perhaps limited) view of the pension world is funds; I pay fees. I checked online the cost to buy, store and sell in 10 years £10k of gold; it is 4.6% in total. My current, suboptimal private pension is 1% pa; VLS would be 0.42% pa which I think is 4.28% in the 10-year period, which is much of a muchness. If one (who is not me :-)) went for £100k over the same period it is 1.86% in total.

(All my figures should be taken with a sizeable pinch of salt.)

As for SIPP as a moot point, I was comparing that against just buying gold. Of course it has the drawback that it's the SIPP that owns the gold and one cannot access it (its value in this instance) unless able to draw down, while they would with coins in a safe (mad risk with insurance costs, as far as I am concerned) or in a vault as usual.

...
Gold is a non productive asset that you have to pay to own.
Cash, bonds, stocks and rental property are productive assets that pay you to own them. They pay you an income. With gold you have to always judge when to buy and sell.
How much you pay for dealing, platform, letting agent's fees etc is upto you.
I don't know how to phrase this more simply, it's one of those things so obvious people sometimes miss it.

Technically, given real yields/savings rates are negative, holders of bonds and cash savings are paying this fee (in terms of real rates) to hold these "assets".  Rental property and stocks generally have a positive real yield (although certainly some stocks/properties won't).

In a world where real rates are negative and thus there is no opportunity cost of holding, gold does seem attractive (in fact it is strongly correlated with real interest rates).  Although, since it does not produce any cash flows, it is impossible to place a meaningful value on it and thus it can be thought of as pure speculation, something that needs to be carefully traded in and out of rather than a pure buy and hold approach (except for insurance purposes).

Agreed, such low, even negative rates skew the rest of the capital markets making it impossible to value anything the conventional discounted cash flow way. Also, since the US only came off the gold standard in 1973, and rates have been more or less falling since then, I am sceptical about seeing correlation as indicative of a relationship - gold has never been a free floating commodity before in a world of such low rates, slushing with more capital in relative terms than any economy in history as far as I'm aware.

Yes when you have discount rates this low, it does not take a genius (although probably your average joe won't get it either) to see that even the slightest changes in interest rates can move valuations around a lot.  Asset prices, particularly long duration, become very sensitive to rates as rates become so low as they are now.

Yes correlation does not mean causation so of course the correlation may not end up so strong in the future.  Certainly makes things like investing very difficult.  I am more convinced than ever that the passive approach is the only sensible way long term.

bowlhead99

Peter.Siffredi said:

Does anyone have experience in buying physical gold online from the well known sellers?
Holding physical gold doesn't incur ETF fees. I am confident in storing a small amount of gold securely, but I have some reluctance in trusting an online dealer and being sure that any purchase is 100% genuine. 

DiddyDavies said:

Provided that you stick to one of the main bullion dealers in the UK, you won't have any problems with the gold not being genuine.
I've purchased from ATS bullion in London (face to face purchase) and online from Elm investments for gold and from Coin Invest direct for silver and like thousands of other customers, never had a problem.

I'd agree if you stick to big names in gold dealers you will be OK as their reputations are founded on buying and selling actual real gold - and not screwing people over or accidentally buying nongenuine gold and selling it on obliviously.

Some of the well known ones are mentioned above and you can add others like Atkinsons, Hatton Garden Metals, Chard, BullionByPost.  A few will have alternate named website front ends just to increase market presence (e.g. chards.co.uk is also taxfreegold.co.uk, and Jewellery Quarter Bullion Ltd. is both bullionbypost.co.uk and gold.co.uk). Really the differential will be how competitive they are on the spread for the specific type of coin you are looking to buy or sell, and even for a given  % spread, whether their pricing is more 'on the bid' or 'on the offer' while you're buying or selling with them. 

For example the bullionbypost crew are probably not going to top the current league table for general pricing but when I was buying a coin earlier this year (a specific size, country and vintage, as a gift) and flicking through the various websites, it so happened that gold.co.uk had stock at a better price than a couple of rivals so I just went with them to buy it and it arrived quickly and safely in the post, so no complaints.

Peter.Siffredi

DiddyDavies said:

Provided that you stick to one of the main bullion dealers in the UK, you won't have any problems with the gold not being genuine.
I've purchased from ATS bullion in London (face to face purchase) and online from Elm investments for gold and from Coin Invest direct for silver and like thousands of other customers, never had a problem.

Diddy, 
 Have you ever tried either of the companies below?

https://www.bullionbypost.co.uk/
https://atkinsonsbullion.com/

DiddyDavies

Peter.Siffredi said:

DiddyDavies said:

Provided that you stick to one of the main bullion dealers in the UK, you won't have any problems with the gold not being genuine.
I've purchased from ATS bullion in London (face to face purchase) and online from Elm investments for gold and from Coin Invest direct for silver and like thousands of other customers, never had a problem.

Diddy, 
 Have you ever tried either of the companies below?

https://www.bullionbypost.co.uk/
https://atkinsonsbullion.com/

Afraid not but as Bowlhead99 stated, they are both well established bullion dealers so I can't imagine you would have a problems buying from either of them.

markj113

Peter.Siffredi said:

DiddyDavies said:

Provided that you stick to one of the main bullion dealers in the UK, you won't have any problems with the gold not being genuine.
I've purchased from ATS bullion in London (face to face purchase) and online from Elm investments for gold and from Coin Invest direct for silver and like thousands of other customers, never had a problem.

Diddy, 
 Have you ever tried either of the companies below?

https://www.bullionbypost.co.uk/
https://atkinsonsbullion.com/

Iv'e used both and they are well established and trustworthy.

Also worth checking:

https://www.bairdmint.com/

https://www.hattongardenmetals.com/buy/

https://www.chards.co.uk/