Gold ETFs in a balanced 10 year portfolio

wombat42_2

I think i go back to a point I made a long time ago. It would be good if there was an fund actively managing a basket of commodities rather than ETFs which are like passive index trackers.

cloud_dog

jon3001 wrote: »

Huh? Real return = return - inflation.

jon, there have been many disccussions on this board regarding 'returns', and usually start with gold as an investment.

your post and my reply - specifically - revolves around value of a return.

If you accept that returns are erroded by inflation it stands to reason that something that actually has a value - gold - and acts as a hedge against inflation must provide a positive 'real' return.

cloud_dog

wombat, just as a point of reference i've used central fund of canada which physically hold gold and silver - approx 50/50 split.

there are pros and cons to it. it can trade at premium to its nav, but it can actually be held in an isa

jon3001

cloud_dog wrote: »

If you accept that returns are erroded by inflation it stands to reason that something that actually has a value - gold - and acts as a hedge against inflation must provide a positive 'real' return.

Why can't it have a zero real return? My assertion is that over long time scales it neither adds nor loses real value.

If owning gold is not someone elses liability (like cash deposits, shares, etc) then where does this return come from?

purch

it can trade at premium to its nav

currently over 5% I think

jon3001

Recent article on FT may be of interest

Bullish on bullion: Investors seeking safety push gold ever higher
http://www.ft.com/cms/s/0/4276a8e2-ba28-11dc-abcb-0000779fd2ac.html

[Deleted User]

On a 100k portfolio id have 1K in gold 1K in silver and 18K in oil/mining right now. The problem is the world is run by resources, oil, raw materials, coffee, even gold and silver. Getting countrys like china economically developed means then consuming what the yanks do in oil and resources 10 times over. If you own the world now you enslave tomorows people to the price you want. Look at all the oldies that got their houses for 50p from the council making the youngies pay 500k for them and then living it large.

Gold might have gone up a lot recently because they have been printing the money to save the banks which creates inflation, but its hard to tell what its natural price may be now. Id estimate between 700-1000 dollars ish, I think if it does hit 2K which i think is very unlikely it wont be for long. At a rough guess over 100 billion sterling has been created in the last year. But this isnt my field youd need to give a gold futures analyst a ring at a top bank.

But wombat, you like changing your mind every 5 mins so id expect youd prob lose money betting on gold, its very long term ie retirement type term, 40 years+

purch

It's way to simplistic to try and pin the rise in Gold over the past 7 years to 'demand' from China etc etc, (mainly due IMO to the usual p@*s poor reporting we get from TV and Newspaper 'Business' news), and I would say that is certainly a very bad reason to buy Gold or Gold related securities at it's current price level. While this demand should put a floor under the price of Gold, it in no way explains the real fundamental reasons behind the surge.........the '627 tonnes of Gold Bullion held by StreetTracks Gold Shares' or the ETF's 'more than 865 tonnes of the metal' are not held for that reason.

It's far more to do with out of control the Money Supply in the U.S. and UK. ( as well as other parts of the Industrialised world ) running at potentially catastrophic double digit % yearly increases, when 15/20 years ago M2 increasing at over 2% was considered Inflationary

My own opinion on Gold is that now every 'Tom !!!!!! n Harry' is jumping on the bandwagon for reasons they don't fully understand, we are probably close to a near term top, and the price could retrace back below $750

wombat42_2

Yant1 wrote: »

On a 100k portfolio id have 1K in gold 1K in silver and 18K in oil/mining right now. The problem is the world is run by resources, oil, raw materials, coffee, even gold and silver. Getting countrys like china economically developed means then consuming what the yanks do in oil and resources 10 times over. If you own the world now you enslave tomorows people to the price you want. Look at all the oldies that got their houses for 50p from the council making the youngies pay 500k for them and then living it large.

Gold might have gone up a lot recently because they have been printing the money to save the banks which creates inflation, but its hard to tell what its natural price may be now. Id estimate between 700-1000 dollars ish, I think if it does hit 2K which i think is very unlikely it wont be for long. At a rough guess over 100 billion sterling has been created in the last year. But this isnt my field youd need to give a gold futures analyst a ring at a top bank.

But wombat, you like changing your mind every 5 mins so id expect youd prob lose money betting on gold, its very long term ie retirement type term, 40 years+

Well I had all my dosh in China and natural resources for a period last year but took fright in short periods of downwards volatility. With hindsight i should have held my nerve a bit longer as i missed out of later big gains.

Now my portfolio is:
35% Neptune Global Equity
35% Artemis Global Growth
15% Gartmore Global Focus
15% Jupiter Global Managed

I have had enough of chopping and changing and will most likely stick to those funds for a 10 year stretch. The only thing is that the Gartmore and Juoiter dosh is in a protected rights policy and i plan to shift it to an H&L SIPP in October so I have the opportunity to select new funds then. I might have been tempted to stick about 5% in gold or commodities but I may just stick to the Gartmore and Juoiter funds to reduce any requirements to do any more fund swtiching.

cloud_dog

purch,

excellent post, l agree with everything except.......

purch wrote: »

My own opinion on Gold is that now every 'Tom !!!!!! n Harry' is jumping on the bandwagon for reasons they don't fully understand, we are probably close to a near term top, and the price could retrace back below $750

l don't think we are there yet. when gold gets to the tech bubble area with everyone talking about it and tv reporting on it we will be there.

do agree gold will be very volatile going forward.