Gyroscopic Investing

GLD works better for traders who don't care about the expense for holding it, they are about order execution. For buy and hold, avoid it. Go for a lower expense ratio

I use none of them as my PP is really a VP consisting of 3xETFs. I post performance from time to time in the VP section. However, I have looked at them and for a small investor I like SGOL. There is also GLDM you may want to check out.

ochotona wrote: ↑Fri Oct 18, 2019 9:30 pm I've looked at the buy / sell prices over a number of years over a number of dealers, and the Eagles are always the round-trip losers. That said, I probably will never buy another coin, and will be buying ETF AAAU in the future, now that there is no longer any commission to buy it.

Speaking of buy /sell prices got me thinking about bid/ask spreads for gold etfs.

Look at bid/ask spreads listed on morningstar for the gold etfs. GLD doesn't look like such a bad deal with only 0.72% vs IAU at 2.42% and AAAU at 3.60%. I wonder if those are accurate.

With those numbers, it would take over 10 years of holding before IAU became a better buy. The spread would almost be like a back-end load fee

I have only done IAU in the past but I will have to check bid/ask spreads next time I buy gold.

Am I seeing this wrong or are those bid/ask spreads just completely wrong?

Bid ask spreads vary with time of day. Outside of normal trading hours they balloon. When the market is open and calm, they are most often just a penny. I have no earthy idea what the stat you mentioned means. Just when you get ready to trade, make sure they are tight at that moment, no tweets from Tweeter In Chief.

If you use a Market On Close MOC order, you don't get exposed to this spread... You just exactly get the closing price, like a mutual fund. Thanks to my friend Paul Novell for edumicating me on that.

There is something weird with those numbers, they are all excessively high. You can calculate it yourself and all of them are probably a penny divided by the bid price.

Quick note about AAAU - this is also my ETF of choice, because its backed up by a mint whose job it is to hold gold, rather than an investment corporation who is probably loaning it out behind the scenes, and thus may not be able to come up with it in a "black swan" scenario.

However - I only use it in tax-advantaged accounts. If your plan is to hold gold long-term, it makes no sense to use it in taxable, because you can simply invest with the mint directly for a ZERO ER (unallocated) plus buy and sell fees. For a portion of your gold holdings, this should be a big win as it's unlikely you'll be selling it often enough for the buy/sell fees to outweigh the ER of an ETF.

KodoCastle wrote: ↑Wed Sep 11, 2019 1:34 am

vnatale wrote: ↑Tue Sep 10, 2019 8:05 pm The book advises that the best way to invest in gold is to own it. However, initially, that would take some time to fully implement.

Sorry to be a nag, but can I ask why?

Are there no gold dealers around you? Because there are some good online sellers as well. And if you're worried about storage, setting up a secure deposit box (and some insurance for it) only takes a bit of a day and probably costs less than $200 a year (unless you're planning on insuring a lot of gold).

Your $200 is the total cost for BOTH paying the yearly fee for a bank security deposit box AND the insurance on its contents? If so, what are you estimating as the cost for each? And, what is your definition of "a lot"? I always evaluate any investment costs as its percentage of the total investment. So, $200 on a $10,000 would be 0.2%. Not a high percentage but not tiny either. $200 on $100,000 would be 0.02%. That'd be fairly tiny.

Vinny

ochotona wrote: ↑Tue Oct 08, 2019 2:50 pm 25% of my gold is ETF. Now that Schwab is fee-free, if I buy more it will likely be AAAU.

75% is physical
half of that in a Roth IRA with Goldstar Trust Co; the bullion is with Delaware Depository
other half in an insured safe deposit box somewhere in rural Texas where they encourage concealed carry into the bank (but not open)

How exactly do they "encourage"? Living in a state like Massachusetts with so many gun restrictions I'm fairly oblivious to all things gun (even though I go to two "Rod & Gun" clubs to hear live music (one of them just 2 miles away on my street) and an EMT once told me that my town has the highest rate of gun ownership in the state).

Vinnny

So the bulk of our (wife and I) 401k funds are with employer-associated 401k accounts that, obviously (?), don't offer Gold options.

But we also have Roth IRA accounts with Vanguard, and older (associated with my side-business - haven't had new contributions in a long time) 401k accounts administered by TD Ameritrade. So if we want to purchase some paper gold, it looks like I can buy AAAU in either of those accounts. Am I missing anything important?

CT-Scott wrote: ↑Tue Mar 24, 2020 5:31 pm So the bulk of our (wife and I) 401k funds are with employer-associated 401k accounts that, obviously (?), don't offer Gold options.

But we also have Roth IRA accounts with Vanguard, and older (associated with my side-business - haven't had new contributions in a long time) 401k accounts administered by TD Ameritrade. So if we want to purchase some paper gold, it looks like I can buy AAAU in either of those accounts. Am I missing anything important?

Since I started this topic and then participated in it extensively and did get a fair amount of response, there is a fair amount of information contained in this topic.

I see that I wrote (in part this):

Of the four I've most seen mentioned either in the Craig / Tex book and in this forum - GLD, IAU, SGOL, and AAAU - GLD has far and away the most assets - nearly triple what the second IAU has. And, IAU is almost 16 times what the 3rd place one is - SGOL. Finally, AAAU is only 1/10 SGOL.

IAU and SGOL have the highest returns, with AAAU next, and GLD last.

The Expense Ratios are as follows:

GLD-0.40%
IAU-0.25%
SGOL-0.17%
AAAU-0.18%

Assuming that the returns are AFTER the Expense Ratios that would mostly explain the difference in returns.

Going by your criteria below it seems like IAU would be the winner?


I've still not done anything yet in purchasing gold in any form.

Vinny

Hi Vinny,

I did read your earlier post, but I also read some recommendations of AAAU from 2-3 others. Vinny, you cite the fact that GLD has "far and away the most assets." I apologize for being so ignorant, but what does that really mean, and why might that be a major reason for choosing GLD over the other options?

CT-Scott wrote: ↑Tue Mar 24, 2020 9:53 pm Hi Vinny,

I did read your earlier post, but I also read some recommendations of AAAU from 2-3 others. Vinny, you cite the fact that GLD has "far and away the most assets." I apologize for being so ignorant, but what does that really mean, and why might that be a major reason for choosing GLD over the other options?

I believe one aspect of more assets is that there will be more liquidity when you go to buy and sell.

My very limited one data point of experience bore this out - I wanted to purchase several thousand shares of SGOL a while back with a buy limit order. I tried several times unsuccessfully. I decided to try with IAU, and click it was done.

ochotona wrote: ↑Sat Oct 19, 2019 7:49 am ...

If you use a Market On Close MOC order, you don't get exposed to this spread... You just exactly get the closing price, like a mutual fund. Thanks to my friend Paul Novell for edumicating me on that.

FYI, You may want to reconsider that. Or maybe you are right...

I'm not going to attempt to explain why, because I can't, but I will quote a guy who seems like an authority, as he wrote this "War and Peace" on ETF costs http://www.etfconsultants.com/Reducing_ ... _Costs.pdf

"Using MOC Orders Routinely to Buy or Sell ETFs Looks Like a Terrible Idea
The majority of investor ETF market-on-close orders are not likely to be executed at or
“better” than NAV, and many MOC executions will not even be close to NAV. MOC orders can
be executed at a much greater distance from the NAV than the reported premium and discount
data indicate to investors. Anyone trading ETFs should understand how these orders work and
how ETF MOC orders differ from stock MOC orders. If you compare a fund’s NAV and closing
price for a few days, you will probably conclude that you do not want to use an MOC order –
unless your comparisons suggest that, for some reason, other investors are predominantly selling
when you buy or buying when you sell. At the least, you will conclude that the cost to trade
most index ETFs is more than a few basis points."

CT-Scott wrote: ↑Tue Mar 24, 2020 9:53 pm Hi Vinny,

I did read your earlier post, but I also read some recommendations of AAAU from 2-3 others. Vinny, you cite the fact that GLD has "far and away the most assets." I apologize for being so ignorant, but what does that really mean, and why might that be a major reason for choosing GLD over the other options?

I'll make an analogy. When I was in the process of choosing a SIMPLE IRA for my organization I had someone assisting me.

Vanguard was one of the other choices. I was favoring someone else. But it made both of us nervous that the someone else was so tiny compared to Vanguard. Did we want to trust our retirement plan to an organization that was just so tiny compared to Vanguard and only had 63 employees? Tiny organizations compared to their much larger counterparts may not be there when you need them to be.

Vinny

Well, I briefly talked to my wife last night about shifting some of our retirement funds over to gold and she was on-board. So, final call for anyone who wants to make a case for which digital/paper gold fund I should choose? I know where Vinny stands.

I'll also try to determine whether I can adjust my Vanguard Roth IRA to accommodate this, or if I'm going to just be able to do it inside of our [side-business] TD Ameritrade 401k accounts.

mdwilson1991 wrote: ↑Tue Mar 24, 2020 11:32 pm FYI, You may want to reconsider that. Or maybe you are right...

I'm not going to attempt to explain why, because I can't, but I will quote a guy who seems like an authority, as he wrote this "War and Peace" on ETF costs http://www.etfconsultants.com/Reducing_ ... _Costs.pdf

"Using MOC Orders Routinely to Buy or Sell ETFs Looks Like a Terrible Idea
The majority of investor ETF market-on-close orders are not likely to be executed at or
“better” than NAV, and many MOC executions will not even be close to NAV. MOC orders can
be executed at a much greater distance from the NAV than the reported premium and discount
data indicate to investors. Anyone trading ETFs should understand how these orders work and
how ETF MOC orders differ from stock MOC orders. If you compare a fund’s NAV and closing
price for a few days, you will probably conclude that you do not want to use an MOC order –
unless your comparisons suggest that, for some reason, other investors are predominantly selling
when you buy or buying when you sell. At the least, you will conclude that the cost to trade
most index ETFs is more than a few basis points."

Thanks, I'll let Novell have his say about that. I'm not sure what the alternatives are, though... you still have to trade.

If NAVs are off from ETF share prices at the close, they'll be off all day long, which leads you to the conclusion - don't trade unless it's going in your favor? But if it's going in your favor, from a momentum signal point of view, you probably don't need to trade!

Sort of like - sell your car before just before you have a major mechanical issue, but no sooner. Nice idea - impossible to implement.

Does it mean that trading friction is more than anticipated? Surely. But backtests use ETF share prices, so the NAV to share price slop is already cooked into the backtest.

Nothing is free - ETF market makers do a valuable service. I don't want to trade 100s of shares at a time.

ochotona wrote: ↑Wed Mar 25, 2020 8:20 am [... I'm not sure what the alternatives are, though... you still have to trade.

I believe, according to that guy and some others I have seen, limit orders are the way to go.

That doesn't guarantee NAV but it guarantees you get the price you want ( I think!) But I am hardly an authority on this.

CT-Scott wrote: ↑Wed Mar 25, 2020 7:38 am Well, I briefly talked to my wife last night about shifting some of our retirement funds over to gold and she was on-board. So, final call for anyone who wants to make a case for which digital/paper gold fund I should choose? I know where Vinny stands.

I'll also try to determine whether I can adjust my Vanguard Roth IRA to accommodate this, or if I'm going to just be able to do it inside of our [side-business] TD Ameritrade 401k accounts.

Not yet. I've still yet to make my gold investment so what you read previously is where I had been with my research to that point. The gold investment is the most difficult of the three as the other three seem far more clear-cut what to do.

Vinny

I've decide to increase my strategic gold allocation up from 10% (Desert Portfolio levels) to 15%, because of all of the money-printing taking place and what that will do to fiat currencies eventually. My allocation had already naturally drifted up to 13%, so I pushed some funds into AAAU today.

Sprott - 10%-15% bullion exposure for family offices under normal circumstances, 20% for "sophisticated investors" (how do you define "sophisticated?". Isn't it already sophisticated by the time you have your own family office?)

John Hathaway, Tocqueville Asset Management - at least 5%, but you could go up to 10% or 15%

Jim Rickards - 10% for most investors, 15%-20% if you're more aggressive

ochotona wrote: ↑Wed Mar 25, 2020 10:15 am I've decide to increase my strategic gold allocation...so I pushed some funds into AAAU today.

Is that because it’s hard to get physical coins right now, or you wanted AAAU anyway?

dualstow wrote: ↑Wed Mar 25, 2020 10:21 am

ochotona wrote: ↑Wed Mar 25, 2020 10:15 am I've decide to increase my strategic gold allocation...so I pushed some funds into AAAU today.

Is that because it’s hard to get physical coins right now, or you wanted AAAU anyway?

75% of mine is physical, I did want more AAAU anyway.

ochotona wrote: ↑Tue Oct 08, 2019 2:50 pm 25% of my gold is ETF. Now that Schwab is fee-free, if I buy more it will likely be AAAU.

75% is physical
half of that in a Roth IRA with Goldstar Trust Co; the bullion is with Delaware Depository
other half in an insured safe deposit box somewhere in rural Texas where they encourage concealed carry into the bank (but not open)

Who is "they"? The bank or the nature of rural Texas? And, how is the encouragement conveyed to you?

Vinny

pmward wrote: ↑Tue Sep 10, 2019 8:50 pm Yes, AAAU (Perth Mint) is my ETF of choice these days. Lower ER than IAU, and shares are redeemable for physical gold shipped to the U.S. for a $30 shipping fee. So these shares are basically "as good as gold".

In this Topic I later wrote: Of the four I've most seen mentioned either in the Craig / Tex book and in this forum - GLD, IAU, SGOL, and AAAU - GLD has far and away the most assets - nearly triple what the second IAU has. And, IAU is almost 16 times what the 3rd place one is - SGOL. Finally, AAAU is only 1/10 SGOL.

You are not bothered by AAAU's relative tiny size compared to the three ahead of it? From what I wrote above AAAU is about 1/500th of GLD's size.

Vinny

vnatale wrote: ↑Wed Apr 22, 2020 9:02 pm

pmward wrote: ↑Tue Sep 10, 2019 8:50 pm Yes, AAAU (Perth Mint) is my ETF of choice these days. Lower ER than IAU, and shares are redeemable for physical gold shipped to the U.S. for a $30 shipping fee. So these shares are basically "as good as gold".

In this Topic I later wrote: Of the four I've most seen mentioned either in the Craig / Tex book and in this forum - GLD, IAU, SGOL, and AAAU - GLD has far and away the most assets - nearly triple what the second IAU has. And, IAU is almost 16 times what the 3rd place one is - SGOL. Finally, AAAU is only 1/10 SGOL.

You are not bothered by AAAU's relative tiny size compared to the three ahead of it? From what I wrote above AAAU is about 1/500th of GLD's size.

Vinny

Size and liquidity don't matter as much for a long term hold. For a long term hold ER is the most expensive factor. If you're going to hold something for years or even decades, getting that ER as low as possible is key.

For a short term trader, who is going to hold a position for hours, days, or weeks... ER doesn't matter and liquidity is king. The spread is going to cost them much more than they will ever pay in ER. GLD is the vehicle meant for short term traders. It's not a coincidence that it has the highest ER since traders don't care about ER.

AAAU is perfectly fine for a long term hold. I have both AAAU and IAU.

CT-Scott wrote: ↑Wed Mar 25, 2020 7:38 am Well, I briefly talked to my wife last night about shifting some of our retirement funds over to gold and she was on-board. So, final call for anyone who wants to make a case for which digital/paper gold fund I should choose? I know where Vinny stands.

I'll also try to determine whether I can adjust my Vanguard Roth IRA to accommodate this, or if I'm going to just be able to do it inside of our [side-business] TD Ameritrade 401k accounts.

Where do I stand!!!??? I'm still trying to determine that myself!

The only thing I've stated is that I'm wary of AAAU's relative tiny size. At this point if I had to answer now SGOL might be my choice - based upon size, return, expense ratio.

Vinny