Reply With QuoteThanks for the education. I assume the ishares gold etf is notionally 100% collateralised with gold, unlike some other gold etfs.Originally Posted by Raffe
I like your thinking about the zombie apocalypse.
Any gold fund or ETC is backed by gold, but you never own a share in that gold - unlike an equity fund, where you are the legal owner of your share of the underlying portfolio.
In the case of a fund, it can only invest into gold via derivatives, either traded future or an index swap. In the case of a ETC note, you don't own a share in the underlying investment but have a claim against the issue (which may or may not be collateralised).
Someone who lies about the little things will lie about the big things too.
Thanks for the education. I assume the ishares gold etf is notionally 100% collateralised with gold, unlike some other gold etfs.
You are now talking about a iShares Gold ETF? No such fund exists. We started the conversation about the iShares Physical Gold ETC - which is not a fund but a promissary note. Please compare section B3 of the summary prospectus:
The Issuer is a special purpose vehicle with no assets other than its paid-up share capital, and the assets on which the Securities are secured. Accordingly, claims of any securityholder against the Issuer may be extinguished if there is a shortfall in funds available to the Issuer in order to meet its payment obligations under the Securities.
The only gold-related proper fund available from iShares is the iShares Gold Producers UCITS ETF, which invests into shares of businesses engaged in exploration and production of gold.
Sorry, meant the physical gold. That paragraph reads like there is a risk there maybe a shortfall.
Well, there is a very small risk, but there is also the hedge of physical gold which is being bought from the invested amount. Your risk is related to the agreements not being enforceable when you need it (compare GFC, how many hedge funds were screwed because their assets were with their prime broker Lehman Brothers and they didn't have access when Lehman went into administration).
Is that just a timing issue in reality and you face the risk that by the time they are able to liquidate the gold to pay your withdrawal it may have dropped in value?
Is there also a risk that iShares goes belly up or is you investment effectively ring fenced in a client account?
The risks are legal/fraud related. The physical gold is held in escrow, the question is whether the legal agreements around that escrow agreements hold up when you need them and if the trustees are sufficiently capitalised to guarantee the integrity of the trust (>4 bln USD). Since the trustees are JPMorgan and State Street Bank I suppose you don't have to worry much (especially as you are not expecting the zombie apocalypse).
A further disadvantage of investing into gold ETCs is that you cannot withdraw gold but only the value of your investment in convertible currency, which defies the reason why some investors buy gold (fear of money crisis / financial system instability). The only way to be 100% safe that you can access the gold is that you buy physical gold. But that has other downsides, namely the extremely large bid/offer spread for small or medium denominations (10kg bars don't help in barter trade) and logistical problems around delivery and storage (a bank safe may not be the best solution if you are willing to protect yourself against system failure).
Long story short: the ETC is safe to buy, except if you are expecting the zombie apocalypse.
The risks are legal/fraud related. The physical gold is held in escrow, the question is whether the legal agreements around that escrow agreements hold up when you need them and if the trustees are sufficiently capitalised to guarantee the integrity of the trust (>4 bln USD). Since the trustees are JPMorgan and State Street Bank I suppose you don't have to worry much (especially as you are not expecting the zombie apocalypse).
A further disadvantage of investing into gold ETCs is that you cannot withdraw gold but only the value of your investment in convertible currency, which defies the reason why some investors buy gold (fear of money crisis / financial system instability). The only way to be 100% safe that you can access the gold is that you buy physical gold. But that has other downsides, namely the extremely large bid/offer spread for small or medium denominations (10kg bars don't help in barter trade) and logistical problems around delivery and storage (a bank safe may not be the best solution if you are willing to protect yourself against system failure).
Long story short: the ETC is safe to buy, except if you are expecting the zombie apocalypse.
Are all physical gold ETCs much the same or is there any preferred ones?
I can see the attraction of physical gold but storage of any significant amount must be a challenge.
Probably not much difference, but haven't done the research. Morningstar is your friend.
Someone who lies about the little things will lie about the big things too.
thinking of buying some sovereigns with some spare cash i have , re coins - i can see that the older 'used' coins are a bit cheaper (buying both online and at auction ), is there any real need to buy new minted coins ?
I don’t see any difference - you’re really buying by weight
Depending how you look at it, it’s not a great time to buy as the Virus has spiked prices upwards as good is always a safe bet
I’m sure it will calm down, and depending how much you want to invest it may level out if you can buy privately at reasonable (ie not spot cost)
Now you got me thinking.... Might start a business buying random crap on the cheap and selling it to some mugs at true value.
If only I knew of a good place where I could sell it, you got an idea?
It depends on the coins as some are worth more than their scrap value. Some of the 1oz Queens Beasts £100 bullion coins sell for 1.5 - 2 times gold value. My Scottish Unicorns are doing good but wish I'd bought the English lion and Welsh dragons too.
What is the difference between these two?
Seem to present themselves as the same thing but don’t have the same historic performance.
https://www.hl.co.uk/shares/shares-s...c/share-charts
https://www.hl.co.uk/shares/shares-s...-physical-gold
I assume the differences are as one is quoted in £ and the other $
Last edited by Montello; 22nd March 2020 at 20:33.
Bought some of each. Both up 4.5% in a day ... time will tell if this was a good idea.
All the money that is being “invented” right now has to lead to inflation.
For anyone looking at convenient ways to access Gold I can recommend you look at an app called Glint (Pay). It's a London based firm that is opening access to physical backed gold. It is free to sign up and minimum purchase (of gold) is 10 quid I think.
For those in the UK (US and Japan) you can also get a Visa Debit card attached to the account, so you can literally pay for your beer with Gold.
(as a disclaimer, I know several members of the team, but I can assure you I will be getting no commission at all for any referrals!).
I just bought another 250 quid of gold this morning at the touch of a button.
There's greater volatility in both the gold and especially silver markets recently - both up and down. Gold has made up nearly $150 to the upside in 5days, its going to be a rollercoaster ride over the next year or so. Hopefully we should see record prices in both markets possibly within 18 months, but theres going to be big big swings up & down - possibly $100 day changes in gold - buy and hold for the ride. Interesting times ahead in these markets..
Gold price is mainly set by people using it to store capital, other precious metals are mainly driven by their industrial usages. Especially platinum.
When things are turning to sh1t, your gold ETF is just paper or an app at best. Better to buy even 1/4 oz coins or small bars of physical - if you can store it.
If you are prepping for the apocalypse you need guns not gold coins.
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