Investing in Gold

J

jebediah33

Guest
was thinking of investing in the Eagle Star Gold Fund through Zurich life. Hoping to invest about 5,000 Euro (which i believe is the minimum amount possible). This fund tracks the price of Gold. However as it deals in US dollars i am a bit worried about currency fluctuations euro v us $.

Was also looking at purchasing physical gold. However, the charges involved in purchase price versus selling price seems prohibitive. Also storage costs add to overall costs.

Would appreciate any advice here in relation to gaining low cost exposure to Gold for about Euro 5,000 or so.
 
Rabo Direct offer the BGF World Gold fund, which includes gold mining stocks.

There are ETFs that track the price of gold, one that come to mind is SPDR Gold Trust ETF

You will pay a large percentage at the moment for gold coins, small gold bars are a bit cheaper.

Another way to own gold is through www.goldmoney.com.

None of the above are recommendations, and I am not affiliated to any of the companies. My only recommendation is for you to do your homework and make your own decision on whether and how to invest in gold.
 
For what it's worth I invested a small amount in the Rabo BGF World Gold fund and it seems to track the price of gold quite closley (i.e. gold increases in price so does the value of your units in the BGF World Gold Fund and the opposite is also true of course).
 
You should actually find that gold mining stocks increase/decrease more than gold. The reason for this is that the cost of producing gold is pretty much fixed regardless of the price of gold. Example: price to mine and melt 1 ounce of gold is $400 and spot price of gold is $1000; if the spot price of gold goes to $1100 then gold has gone up 10% but the gross profit to the mining company has gone from $600 to $700 which is 16.5% increase in profits.
You will often find that mining stocks and funds that track them have higher profit and loss potential. It is something to be aware of.
 
Chris makes an excellent point. Many people seem to believe that an investment into the Black Rock Gold & General Fund or a Gold Mining Fund is the same as an investment in physical bullion. This is simply not the case as [broken link removed] of the Market Vectors Gold Mining ETF since 1998 clearly illustrates.
 
thanks for the info re gold investing. One little question in relation to rabo direct fund fees as brought up in this discussion. On the rabodirect.ie website fees are quoted at 0% entry, 0.75% exit and annual ranging from 1.2 % to 2 % depending on the fund. However the prospectus' for each fund mention a distribution fee of 5%. What is this 5% fee and does the investor have to pay this. Frankly a 5% fee would certinly be a deterrant to investing in these funds. Not very clear from the website. any info?
 
Forget the Rabo fund and go for any of the gold ETFs. Open a stockbroking account and buy one of them. Ask the broker for a selection. If it is an on-line broker then you need to know yourself what product you want to buy. Put Gold ETF into google and several Gold ETFs will come up.

Rory Gillen
 
Very interesting article on Market Oracle yesterday about how the natural gas ETF has massively underperformed actual Natural gas prices and - this is something that those wanting to own gold need to be aware of as a potential risk in ETFs - http://www.marketoracle.co.uk/Article15238.html .

Not too mention their 0.5% charge per annum, bid/offer spread, stock brokers fees and very significant counter party risk from owning this derivative of gold bullion.
 
Hi all. Some interseting threads here on the gold situation and ways of investing. Can't let on to know much about it but was thinking of buying. Seems actual gold is preferable to the ETFs linked to it?
Was listening to E. Hobbs the other day and he was all in favour of purchasing even at the current price. Any thoughts? Think he was talking about these certs from Perth mines? He reckons with the imminent "inflationary tsunami" its a very wise investment saying somewhere between 10-20% of our wealth should be in it?
 
eddie hobbs is always late to the party. gold is gone parabolic at the moment, it could still rocket higher in the short term but there will be a big correction shortly. i would wait to get in then. it is going higher over the long term as the dollar is in demise but listening to eddie hobbs about stuff is always a bad idea
 
FYI Hobbs has been recommending gold for the past five years since it was under $400 per ounce and in his magazine it features regularly along with many other energy-related plays. His latest book is worth checking out and is all about scarcity pricing, inflation and oil. He's been right on his calls so far including suggesting that March was the low in the stock market and is suggesting that we are entering a long period of very high inflation. On the property side his punt on Germany seems right despite the bust here since Germany wasn't in a bubble, is already out of recession and has rents linked to CPI. Knock him if you wish but don't ignore what he's been consistently saying.
 
jebediah33 said:
was thinking of investing in the Eagle Star Gold Fund through Zurich life. Hoping to invest about 5,000 Euro (which i believe is the minimum amount possible). This fund tracks the price of Gold. However as it deals in US dollars i am a bit worried about currency fluctuations euro v us $.

Was also looking at purchasing physical gold. However, the charges involved in purchase price versus selling price seems prohibitive. Also storage costs add to overall costs.

Would appreciate any advice here in relation to gaining low cost exposure to Gold for about Euro 5,000 or so.
Click to expand...

When you buy physical gold, and take possession of it, you can also knock a small amount off your investment pot as you've effectively contaminated it. In order for that gold to be bought back into the market, they have to be sure that you haven't tampered with it in any way e.g. a bar of gold could be drilled out and re-sold. By taking possession of it, you depreciate it. See here for an example of tampering
 
Last edited by a moderator:
gold is way too popular now. its going to pull back. plus this whole dubai thing will probably spill over to the rest of the world and cause major issues with commercial real estate
 
Sorry Spursman, what you're stating is a feeling. It's a common mistake to assume just because an asset has collapsed it can't fall further and this is the bottom eg Irish bank shares heavily bought once they fell 10% to 20% early 2008. Similarly just because Gold has hit new highs doesn't mean it can't go further. The fundamental direction is up if you accept the loss of confidence in the US economies ability to service its debt at present dollar value. It's a pretty convincing case when you examine the debt relative to GDP and its trajectory. If you further accept the evidence of oil flattening, then loading up on certain commodities like Gold and especially Silver makes a heap of common sense.

As for Hobbs, his 2005 book LOOT predicted a credit bubble burst and gave strategies on what do do including eliminating debt, switching to dollar mortgages and buying gold. So call him lucky if you wish or a royal pain in the neck but he's been right.
 
spursman said:
gold is way too popular now. its going to pull back. plus this whole dubai thing will probably spill over to the rest of the world and cause major issues with commercial real estate
Click to expand...

I dont understand the Dubai crisis forcing gold down. Isnt gold a hedge against all this. Isnt that why it gone up over the last 2 years.
 
spursman said:
if the market will crash then everything will sell off. gold included
Click to expand...

No, not true. When the stock and currency markets crash, then gold rises, as it is the only form of money that has underlying value (in that it is finite and much sought after).
In 2007/2008 stock markets crashed and so did the dollar, gold on the other hand went up. After a couple of futile intervention attempts in the US to prop up the dollar, it did temporarily go up in value, only to be crushed again, forcing gold to it's current price. If you believe that the dollar and fiat currencies have a long term, stable and viable future then don't invest in gold. If you think they will all cumble one by one, then gold is what you want.
 
The mistake people make is in comparing gold to other commodities, like copper or lead. Gold is not like other commodities. It is money and a safe alternative to fiat currencies. Thanks to 'quantitive easing' fiat currencies, in particular the american dollar, are being devalued. The dollar recently reached parity with the Swiss franc and a new low against the euro. This was a serious boost to precious metals, that surged on the news.

Gold is in a bull market that stretches back to 1999. Just look at the end of year quotes for the yellow metal (spot gold):

2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00

Even after its sharp pullback in 2008 -- mainly due to sales by funds needing to meet redemptions -- it still ended higher on the previous year. And is due to finish higher this year too. You cannot dispute what is a stone cold fact. And gold is far from popular at the moment. People are actually flogging the stuff to those 'Cash for Gold' people that have set up shop in every shopping centre in the country! It's getting very little media coverage and the man on the street just isn't talking about it. There will come a stage when we'll enter the third 'euphoric' stage of this particular bull market when gold will really go parabolic.

Also, it's claimed that gold is now expensive. It is not. Gold is up roughly 33% this year. Copper is up 125%, lumber is up 45%, heating oil is up 73%, palladium is up 92%, silver is up 64%. Relative to other commodites gold has a lot of catching up to do on the upside.

Now, nothing is for sure in life, certainly when it comes to the commodities markets. All of the above is what is LIKELY to happen, not what will definitely happen. The signs so far say to us that there is a lot of room for price increases, not just in gold. No evidence has appeared yet to suggest otherwise.
 
You must log in or register to reply here.
Back
Top