A Gold fund trough.......... How to use it.

Comments

• Pangolin

  July 2013

  If you don't want to store physical on your own premises, take a look at the CEFs that just hold bullion: GTU (gold) and CEF (gold & silver).
  
  Both currently are trading at a discount of over 3% to NAV.
• Ted

  July 2013 edited July 2013

  Dear prinx: I'd hold off, gold still has a big down-side risk. I can see gold below $1,000 in the next six months.
  Regards,
  Ted
  http://www.indexuniverse.com/sections/features/19428-roubini-sees-1000-gold-stronger-us-growth.html?fullart=1&start=3
• scott

  July 2013 edited July 2013

  I'd agree with Pangolin. I'd rather suggest buying CEF at a discount of around 3.25% to NAV.
  
  If you must invest in miners, I'd say either go with one of the etfs (GDX, etc) as a trade, or the best fund in the sector is Tocqueville Gold (which has around 11.5% in physical.)
  
• Pangolin

  August 2013

  Josh Brown {The Reformed Broker} had an interesting take on portfolio construction and gold:

  In my opinion, there is only one answer to the question of gold in a portfolio: You should either hold a lot of gold (25- 50% of total assets) or none at all. "A little" is a waste of time.
  ...
  What Mankiw, Bartels and many others don't appear to grasp about portfolio construction is that a "small sliver" of two percent weighted toward any asset class, sector or geography is a waste of time in actual practice. It's not ever going to have a large enough impact on a portfolio to matter, up or down. It looks good printed on a page and makes you feel diversified, but in real life, it does no such thing.
  ...
  Bottom line: When building a portfolio, don't think that a sliver of gold at two percent is going to do you any favors in either the hyper-inflationary scenario or in the event of total collapse. Either bet big and load up on precious metals for the worst case you foresee or just skip it entirely.
  
  But don't think that "the sliver" will help you because it will be meaningless in the context of either an inflationary dystopia or worse.
• bee

  August 2013 edited August 2013

  Reply to @Pangolin: For new investor PRPFX gives you a 25% position in metals and gold backed currencies blended with other assets creating a conservative allocation all in one fund. It might be a good place to start. What seems interesting to me is the historical chart of PM funds like USAGX. It seems pretty oversold to me. If it breaks below this trend line than I'll back away, but so far it hasn't.
  
  
  
  Going "out on the limb" doesn't need to mean taking a 50% stake in one investment. I agree that if you have a small portfolio slicing and dicing isn't really neccessary or productive. But if say 2-5% of your portfolio equates to thousands of dollars that become a significant number of dollars. For example, a $10,000 investment would equate to 10% of a $100K portfolio. If you invested in USAGX in June, a month later in July you would have gain $2,000 on that $10,000 investment. That's a 20% gain on the investment and impacts your overall portfolio positively by 2%. I would say that is significant. Also, your initial 10% PM allocation is now 12% of your overall portfolio. Rebalancing might be in order.
  
  Successful investing is a process of buying low, dollar cost averaging over time, taking profits, rebalancing long term investments, reducing costs, along with hundreds of other good financial habits. No one thing willl make you wealthy...incorporating most of these habits into your busy life will.
  
  
  
• Pangolin

  August 2013

  Reply to @scott:
  
  The discount is gone: CEF closed today with a premium of 0.2%
  
  However, GTU's discount is still well over 3%.