The Boring Bit of the Portfolio

darkidoe

ROFL. 

DiggerUK said: It's of limited use considering what suitable 'non equity' items are needed when the roof is leaking. It has been pointed out that gold is a high price atm, and historically it remains so. But it is £200 an ounce down off its all time high and looks likely to fall more. Gold is an all weather defensive 'non equity' item only when obtained with forethought, not as an afterthought..._

That's why I think there is opportunity to buy as gold price downtrends. It might be worth consider it as part of a portfolio and to learn more about it now and find a opportune entry point.

As our MSE resident gold proponent, what are your thoughts on gold mining companies vs a physical gold ETC?

bowlhead99

darkidoe said:

As our MSE resident gold proponent, what are your thoughts on gold mining companies vs a physical gold ETC?

DiggerUK has explained to us before that Digger Mansions is (metaphorically) supported by foundations of actual pieces of gold, rather than something so impure as tradeable loan note certificates representing entitlement to some other entity's legal holding of gold, nor by ownership shares of mining businesses whose financial performance is determined by the success of failure of their business plan which happens to be geared to the price of gold.

Practically, you can hold an ETC in a pension or ISA (so being able to fund it with long term capital from those sources without giving up the opportunity to use the tax wrapper) or a general investment account; it allows you to buy or sell it with a much lower price spread than you would get on a piece of CGT-exempt bullion via a gold dealer, with minimal 'storage costs' though some contractual / counterparty risk.   

Gold mining equities are a whole different barrel of laughs as their performance is not just heavily geared to the price of gold but also to things like energy costs and finance costs and the various risks at a company or regional level (labour disputes, pandemics, success or failure to find more exploitable resources, etc), and their share prices will still have a link to equity market sentiment which captures some of those other factors and may differ drastically from commodity market sentiment.

So you would expect mining companies to give a quite different type of exposure to what you get in a commodities ETF or ETC.

NottinghamKnight

To be fair gold has many characteristics in common with lead and it's malleabilty could be used in roof repairs in the same manner; also you don't often hear of people dying of gold poisoning.

Aceace

NottinghamKnight said:

To be fair gold has many characteristics in common with lead and it's malleabilty could be used in roof repairs in the same manner; also you don't often hear of people dying of gold poisoning.

Have you seen Goldfinger? 

DiggerUK

darkidoe said:

ROFL. 

DiggerUK said: It's of limited use considering what suitable 'non equity' items are needed when the roof is leaking. It has been pointed out that gold is a high price atm, and historically it remains so. But it is £200 an ounce down off its all time high and looks likely to fall more. Gold is an all weather defensive 'non equity' item only when obtained with forethought, not as an afterthought..._

That's why I think there is opportunity to buy as gold price downtrends. It might be worth consider it as part of a portfolio and to learn more about it now and find a opportune entry point. As our MSE resident gold proponent, what are your thoughts on gold mining companies vs a physical gold ETC?

If we were starting out again I suspect gold backed ETF's/ETC's might feature in our holdings. At the time we started stacking they weren't  so easily available. Gold held in tax wrappers should be considered now, just not my field of expertise however.  Miners have never appealed.

The only substantial decision to be made at the time we started was going with gold or silver. The stupidity of holding silver didn't take long to figure out. Gold was compact, VAT free and UK legal tender was CGT free. 

You also have to take on board we were closing in on retirement when our decision was made, the appeal of wealth preservation was a major consideration for us. It was no different really to how pension pots go on "glidepaths" and "lifestyle" routes as people reach the end of their working lives. Gold really has docked us in a safe haven.

That physical gold was 'off the radar' never made any difference to us of course.

As to buying now? well, the Tao of String principles apply. Rounded off, gold was £1000 a year ago, hit £1550 two months back and has fallen to £1350 today, which is kinda mid point. Crystal ball/judgement call time. 

I'm more for calling a falling gold price in the near future, but don't quote me..._

NottinghamKnight

Aceace said:

NottinghamKnight said:

To be fair gold has many characteristics in common with lead and it's malleabilty could be used in roof repairs in the same manner; also you don't often hear of people dying of gold poisoning.

Have you seen Goldfinger? 

True, and Croesus, I  was totally wrong.