How do I ought to allocate my gold?

[lordmetroid]

I have been thinking about a good tactics to acquire gold.

Of course bullion is the best form comes the apocalypse such as for example in an event of war. A percentage of ones gold should probably be in physical bullion so one can grab it and get the hell out. Bullion is nice but the fees and practicality are terrible! Spread, premium, shipping, etc. and then when one decides to liquidating the bullion the market is very limited to the businesses that trade in gold bullion and dependent on their pricing and they are probably not very keen on paying a high price for gold when it shoots through the roof.

So I was thinking of getting some paper gold, I have no idea what kind of paper I should purchase or how much though.
Their seems to a range of Trust Funds( PHYS, GTU and CEF ) and a bunch of ETFs( GLD, IAU ). What is the difference of these?
What ratio of paper to bullion would you recommend?

[Libertarian666]

I can't tell you how much paper gold to have, but I can explain the differences between the trusts and the ETFs.

A trust has the gold in storage and is much less complicated than the ETFs, whose prospectuses scare the &(*) out of me.

CEF is not suitable as paper gold, as it has a fair amount of silver in it as well.
GTU tends to sell at a discount during gold bear markets (like now) and at a premium during gold bull markets (before and maybe in the future?).
PHYS is the Sprott trust. Normally I would say it's fine, but I don't like the tactics they have been using to try to take over GTU, so I wouldn't do business with them.

[AnotherSwede]

Libertarian666,

BullionVault?

[AnotherSwede]

I am also curious about how to do this

A percentage of ones gold should probably be in physical bullion so one can grab it and get the hell out. Bullion is nice but the fees and practicality are terrible! Spread, premium, shipping, etc. and then when one decides to liquidating the bullion the market is very limited to the businesses that trade in gold bullion and dependent on their pricing and they are probably not very keen on paying a high price for gold when it shoots through the roof.

Tavex over desk in scandinavia/baltics? What bad I  have read of them was one person who sold them a coin and only got spot because of a scratch, they don't pay much more than spot anyway.

Less than 5% spread. Sounds obscene, but when I ran scenarios I found someone who started a PP in 70s should have an average aquistion year of -93 by now. If that's the norm a 5% spread isn't bad.

[Libertarian666]

Libertarian666,

BullionVault?

I like GlobalGold, which stores bars of 100g and up. I don't know much about BullionVault, but I'd rather have full ownership of a reasonably-sized bar than fractional ownership of a good delivery bar.

[AnotherSwede]

I'm worried to find out there's no bar at all, fractional or full.

[Libertarian666]

I'm worried to find out there's no bar at all, fractional or full.

Of course that is always a risk, but there is no such thing as absolute safety.

[ochotona]

Texas Precious Metals has a storage arrangement with CNT Depository in Massachusetts USA, for up to $100,000 in metals the fee is 0.62% per year, and it gets lower as you send them more metal.

APMEX has a storage arrangement with it's wholly-owned subsidiary Citadel in the Midwest USA, the fee is 0.55% (but, APMEX's metals prices are not as good as Texas Precious Metals; it takes a long time to make up the price difference).

These are both segregated storage. In both cases, you can take possession if you want (I would not want to, expect in a grave national / international emergency). If I get home invaded, they can take my few silver coins on-site and leave happy.

The ETF SGOL, trading "free" at Schwab, has an expense ratio of 0.39%, and it's paper promises. Seems to me the 0.07% - 0.23% annual price difference for segregated storage over paper gold is a small price to pay.

CNT and Citadel are both commercial vaults and everything is insured. I hope that helps.

[Pointedstick]

These are both segregated storage. In both cases, you can take possession if you want (I would not want to, expect in a grave national / international emergency). If I get home invaded, they can take my few silver coins on-site and leave happy.

The only metal I advise giving home invaders is lead.

[bedraggled]

In bulk form, lead is not a precious metal.

The delivery fees are probably a lot.  Try to pay less than 5% premium.

[lordmetroid]

I am also curious about how to do this

A percentage of ones gold should probably be in physical bullion so one can grab it and get the hell out. Bullion is nice but the fees and practicality are terrible! Spread, premium, shipping, etc. and then when one decides to liquidating the bullion the market is very limited to the businesses that trade in gold bullion and dependent on their pricing and they are probably not very keen on paying a high price for gold when it shoots through the roof.

Tavex over desk in scandinavia/baltics? What bad I  have read of them was one person who sold them a coin and only got spot because of a scratch, they don't pay much more than spot anyway.

Less than 5% spread. Sounds obscene, but when I ran scenarios I found someone who started a PP in 70s should have an average aquistion year of -93 by now. If that's the norm a 5% spread isn't bad.

Tavex seems fine to me. What do you mean by an average acquisition year of -93?

[LC475]

The ETF SGOL, trading "free" at Schwab, has an expense ratio of 0.39%, and it's paper promises.

Why do you say that?  There is an annual inspection.

http://www.etfsecurities.com/Documents/ ... .01.15.pdf

It would seem that the gold bars are all there, safe and sound and counted.  Are you saying ETF Securities USA LLC is being massively dishonest and that Inspectorate International Limited is corrupt and also being blatantly dishonest?

[AnotherSwede]

Tavex seems fine to me. What do you mean by an average acquisition year of -93?

Using data fr�n Simbas spreadsheet. And gold.org (I believe) for gold prices.

Buy and hold $1M 1971-12-31. Check yearly and rebalance if outside 15/35.
Initial buy end of -71.
Sold some end of 1974, some more end of 1975.
Bought end of 1977.
Sold -79, -80 @$685 (annualized return 32%),
Then loooong bear market, bought -84, -90, -96, -98.
Held, held, held.
Sold -09 at $1123, the gold has at this point been held in average since -91 which means annualized 7%.
Bought more -14, which puts average aquisition year at -93 and price at $404/oz.

(Big fat disclaimer for having done this in excel ...)

I feel quite confident gold will have a real return in a PP context and that you wont trade it a lot.

[lordmetroid]

Tavex seems fine to me. What do you mean by an average acquisition year of -93?

Using data fr�n Simbas spreadsheet. And gold.org (I believe) for gold prices.

Buy and hold $1M 1971-12-31. Check yearly and rebalance if outside 15/35.
Initial buy end of -71.
Sold some end of 1974, some more end of 1975.
Bought end of 1977.
Sold -79, -80 @$685 (annualized return 32%),
Then loooong bear market, bought -84, -90, -96, -98.
Held, held, held.
Sold -09 at $1123, the gold has at this point been held in average since -91 which means annualized 7%.
Bought more -14, which puts average aquisition year at -93 and price at $404/oz.

(Big fat disclaimer for having done this in excel ...)

I feel quite confident gold will have a real return in a PP context and that you wont trade it a lot.

By wont do you mean won't as in will not or is it a type of want?

[AnotherSwede]

Won't trade it a lot if using rebalance bands.