Gold

Secret2ndAccount

I have never invested in gold. Any reason to add gold to my portfolio at this time?
If so, should I buy a gold ETF, Krugerrands (or similar), or gold miner stocks?

tacpot12

It depends on whether you have any cash savings that you could use in times of crisis. Gold tends to be held as an asset that maintains its value, or even increases in value, at times of crisis. If you need an asset that you can always sell for money, gold could be a good option. I have some cash as part of my retirement savings, so I don't hold any gold. 

Are you confident you would sell your gold if the world was in econmic turmoil, or would you hang onto it just in case? No point having it, if you are not prepared to sell when you need to. 

gm0

If you look at the tail risk thinking which informs portfolios like the "permanent portfolio" then the gold features for its (usual) contrary behaviour when all else is on fire.

You will discover quickly that despite it's modest portability once held if you have to run off as a refugee away from civil unrest  that neither jewelry nor krugerrands are particuarly helpful as investments due to the massive spreads and transaction costs of buying and selling. Further the people selling the idea of physical gold (actual bullion in a custody facility or worse still in terms of trading costs bars/coins held by you) don't generally like digital electronic pseudo-gold i.e. synthetic etfs which track the gold price but are dependent on the financial system not gumming up and the provider of them not going bust.

So it starts with "why" you want gold as to whether fund/etf or physical held centrally or krugerrands under the bed makes sense to you.  What risks you are trying to address by having it in the first place and the type of risks you are prepared to tolerate

Secret2ndAccount

Thanks for your replies. Some more info.
I have no love for gold.
If I invest in the stock of a company, and I choose wisely, there are many opportunities for growth. The company can use my investment to build a new factory, or hire better designers or marketing people. They can find efficiencies and make their widgets more cheaply. They can acquire more users of their product, or increase what they charge for it.
If I buy a piece of gold, I won't find one year later that it has increased in weight, or become more shiny, or turned into new improved gold. I just hope that someone wants that same old piece of gold more than they did a year ago.
If a comet hits us and wipes out the company's new factory, and 10% of its customers, I don't think the small amount of gold I am looking at is going to save me from financial ruin. I am looking at putting a few % into gold, not half of my wealth.
So maybe I should reword my question:
Is gold going to provide a good hedge against inflation over the next 2-3 years?

tacpot12

No, in my opinion, gold is likely to go down in value over the next few year as the world recovers from the global pandemic. 

QrizB

gm0 said:

neither jewelry nor krugerrands are particuarly helpful as investments due to the massive spreads and transaction costs of buying and selling.

I don't own any precious metals (other than my wedding ring) and don't plan to but the current price for a freshly-minted Krugerrand at eg. Chards is £1389.90 while their listed buy-back price is £1300.78. That's a spread of 6.5% which might be more than an ETF but is hardly "massive" in the context of your scenario of having:

run off as a refugee away from civil unrest

And Chards and their ilk have physical premises you can walk into to trade, so transaction costs are potentially limited to travelling there and back.

MX5huggy

Capital Gains Tax is not due on UK legal tender so only buy Sovereigns etc. If you look at a gold price chart I can’t how it protects from inflation over any term but certainly not 2 to 3 years. 

RoadToRiches

Secret2ndAccount said:

I have never invested in gold. Any reason to add gold to my portfolio at this time?
If so, should I buy a gold ETF, Krugerrands (or similar), or gold miner stocks?

If you expect hyperinflation then expect gold prices to rise. :-)

davemere

This is all really interesting.

What's the best place to a actually buy gold? Is it the mint? And how is that done, do you travel to London or can the gold be couriered?

Also coins are exempt from Capital Gains right - but bars and bullion are not?

thank you!

MX5huggy

There’s several reputable online sellers of gold, yes they can courier it to you, but then you need to store it securely. So you might choose to leave it stored with them (there’s a fee for this). Only UK legal tender coins are free from CGT. Royal Mint sell bullion coins don’t go to London they are in Llantrisant near Cardiff. 

Sandtree

Secret2ndAccount said:

If I invest in the stock of a company, and I choose wisely, there are many opportunities for growth. The company can use my investment to build a new factory, or hire better designers or marketing people. They can find efficiencies and make their widgets more cheaply. They can acquire more users of their product, or increase what they charge for it.

That depends on the origin of the shares you are buying, in most cases the shares will be being sold by the current holder and not the company itself so buying £10,000 of shares in a water company could well mean that £10k goes to an insurance company thats selling off some of its holdings to adjust its portfolio. 

That £10k will just be a liquidity consideration though as the £10k would have already been on its balance sheet at fair market value and so its not actually gained anything other than possibly releasing a small amount of market risk capital it was holding.

If you want the idea of helping out the company itself then only consider new issue shares or bonds