General advise to buy gold etf

[aim-high]

Hi,

I have been predominantly buying stocks, etfs.. but now i am researching on gold etfs like GLD, NUGT etc. In general, does gold etf go up when stocks fall ? I am not trying to oversimplify this . Lets say before market opens cnbc reports the dow index looks to be down today. Once the market opens anything can happen but focussing on buying gold etf on the day stock falls down is a good strategy ?

[colby99]

1. Open a Vanguard account. Cheaper trading costs.

2. Put cash in.

3. Place an all-or-none, good till canceled, buy limit order to buy IAU or GLD - there's not much difference between the two - some percentage below the current market price. Gold etf prices can be pretty volatile so you may as well pick it up when it trades down some.

[Sam1000]

GLD is the biggest though some gold enthusiasts have raised debates on whether it really has the physical it claims and whether it has loaned out/leveraged its gold (and how much). My favorite is GTU. The premiums are generally lower than GLD, which is a plus. I also have shares of CEF which is 50/50 gold & silver. These two have integrity over their physical metal, IMO. I also own PHYS and looking at PSLV.

[TexasHusker]

Hi,

I have been predominantly buying stocks, etfs.. but now i am researching on gold etfs like GLD, NUGT etc. In general, does gold etf go up when stocks fall ? I am not trying to oversimplify this . Lets say before market opens cnbc reports the dow index looks to be down today. Once the market opens anything can happen but focussing on buying gold etf on the day stock falls down is a good strategy ?

Gold generally, though not always, has an inverse relationship to equities. In other words, when stocks are up, gold is often down. And vice versa.

A lot of folks playing a precious metals trade like you are referring to, tend to go for other metals because they movement is more dramatic than gold. Palladium, silver, copper, etc. There are ETFs out there that are "precious metals" and "natural resources". Again, these TEND to have an inverse relationship to the stock market, although not always. Gold's ETF ticker symbol is "GLD". Silver's is "SLV". You see these going across the tape throughout the day on the CNBC or Bloomberg ticker.

Generally, stock bull markets result in natural resources bear markets. And vice versa. The stock bull has been going for quite some time. The worm has to turn at some point. Natural resources could be a very prudent play at this point. Or at least a chunk of your portfolio.

If you buy anything at the open, you aren't going to benefit from any pre-market futures action: That has already been "baked in" by the time you are able to buy a single share. Rather, you are hoping that news breaks and that the ETF price continues to rise/fall throughout the day.

If you want to bet on a stock market decline, it is much more efficient just to buy a "Put" ETF, which rises when stocks fall 100% of the time, because the ETF is BETTING on a market fall. These are called "bear" ETFs, or some variation thereof. If you truly believe the future of the market is down in the near term, buy a bear ETF!

I have traded massively at different times in my life. I traded S&P 100 Options for over a year, sometimes have 30 or more trades in a single day. I also traded a lot of stock options and precious metals about the same. All total I probably lost $150K doing so. I decided that if I wanted to gamble in the future, I'd just become a really good black jack player and go to Vegas. At least the drinks are free if you bet enough.

In all honesty, much of investing these days has denegrated into online gambling. It's basically the same thing.

[disneysteve]

Gold continues to offer good returns

No it doesn't.

GLD has a 1-year return of 10.46% which is far below what stocks returned. The 3-year return is 1.78% and the 5-year return is NEGATIVE 4.56%. Folks who have been investing in gold have actually been losing money in recent years. Even the 10-year return is a measly 3.42%.

These funds are managed by gold experts, so you stand a better chance of making money than you would on your own.

That's highly doubtful but if you have data to support that, please share it.

In 2016, inflows into gold ETFs were the second highest on record and accounted for 34% of total investment demand. So, you can predict your return from above.

So the fact that a lot of people put money into gold ETFs somehow allows you to predict what your return will be? How does that work exactly?

[msomnipotent]

Gold continues to offer good returns, and investors who are interested in owning the precious metal may consider buying shares in a gold exchange-traded fund (ETF). These funds are managed by gold experts, so you stand a better chance of making money than you would on your own. In 2016, inflows into gold ETFs were the second highest on record and accounted for 34% of total investment demand. So, you can predict your return from above.

Sounds like someone has been reading Investopedia.

The problem with ETFs is that too many people know too little about them and invest anyway. Many are leveraged, so they don't always track the price of gold. Unless you are invested in mining stocks, you will more than likely be taxed at your income rate and not at the long term gains rate, regardless of how long you hold it. Why? Because there is no difference between gold and Pokemon cards to the IRS. They are both collectibles.

I have made more money than I have lost with gold ETFs, but I see it as a fun way to gamble. It isn't part of my investment plan, and I don't think it should be for a normal investor. I have had much more luck buying physical gold on the dips and keeping it until I earn a profit.

[TexasHusker]

No it doesn't.

GLD has a 1-year return of 10.46% which is far below what stocks returned. The 3-year return is 1.78% and the 5-year return is NEGATIVE 4.56%. Folks who have been investing in gold have actually been losing money in recent years. Even the 10-year return is a measly 3.42%.


That's highly doubtful but if you have data to support that, please share it.


So the fact that a lot of people put money into gold ETFs somehow allows you to predict what your return will be? How does that work exactly?

If I was buying anything right now, I’d be long on precious metals and natural resources positions, and short equities.

Because precious metals and resources tend to have an inverse relationship to equities, of course it is no surprise that they have been bearish over this extended equities bull. The worm will turn, however, and when it does, it wlll be dramatic.

[greenskeeper]

SILVER

been buying monthly since 01

about 10% of my savings overall

[corn18]

SILVER

been buying monthly since 01

about 10% of my savings overall

Why silver, out of curiosity? I'm sure you know the real returns vs. everything but cash are not good.

[greenskeeper]

Why silver, out of curiosity? I'm sure you know the real returns vs. everything but cash are not good.

the real short version is there is much more upside to silver than gold. The ratio has been out of whack for a while due to the shenanigans on the COMEX. Silver is also consumed by industry. Physical silver is also an "off the books" storage of wealth, that when needed can be sold for cash tax free.

[JBinKC]

If you are bearish you are better off buying the VIX etfs but it takes experience of when its best to time it and its nothing you want to hold very long.

If you are looking for a gold investment a quality gold streamer at least pays you a dividend to hold gold while the GLD etf does not.

I think the main reason why the commodity space has done relatively well is related to the weak dollar index not demand.

Gold does not automatically perform inversely to the market while it falls. If there are margin calls it is likely gold will also be sold to meet the margin requirement.

Holding individual gold shares I wouldn't recommend for most people. Most of the people running the firms really are more concerned about enriching themselves and don't care about share holders. Most of the firms do a very poor job at allocating capital and generally overstate the quality of the mines and the firms that do generally trade at a very high cash flow ratio.