Gyroscopic Investing

Hi kids!  Long time no post.  Saw this and wanted to share:

Gold Funds Compared By Efficiency, Physical Redemption And Audit Policy

Executive summary:

"GLD is the best choice for short term traders but has a high decay rate, IAU for long-term holders, and PHYS has the best redemption and auditing policies."

Oh, and those of us who believe in the potential (if not imminent) implosion of the fiat monetary system are either "crazies" or "Armageddonists".  Hmm.

Full disclosure: I happen to hold IAU (due to its lower ER than GLD), and SGOL (due to it being commision-free at Schwab).

Unfortunately, they all have the same thing in common...NAV continues to decline  just had to throw that in there on a Friday afternoon.

buddtholomew wrote: Unfortunately, they all have the same thing in common...NAV continues to decline  just had to throw that in there on a Friday afternoon.

Nice!

Anyways, not sure how GLD has a "decay."  Do they mean the ER?

dragoncar wrote: Anyways, not sure how GLD has a "decay."  Do they mean the ER?

That's my guess.  At .4%/yr if you hold it for 20 years you give up nearly 8% (about 7.7% because the total is dwindling).  And, if you're holding it in a taxable account you have to pay taxes along the way as well (they sell gold to pay the ER and if there was a profit involved this profit is passed along to you).

The article says that GLD and IAU offer physical redemption (in basket sized lots).  This is not true, at least for GLD.  Per GLD's FAQ, shares can be redeemed for gold (in basket sized lots) only by Authorized Participants.  If you're not an AP then the only thing you can do with your shares is sell them to someone else (as shares).  Perhaps if you're sufficiently "whale-ish" you can make a deal with an AP.  Curiously, GLD lists "who are the APs" as one of their FAQs but doesn't answer this question (they're all the usual suspects, e.g. JP Morgan, Goldman Sachs, HSBC, etc.).  I did track down who they were at one point and as I recollect it wasn't very easy.