# Gold ETFs



## jargey3000 (Jan 25, 2011)

what are the "best" gold ETFs out there? any of them look attractive at all now?


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## dogcom (May 23, 2009)

XGD for gold producing companies.

CEF.A for bullion investment.

Both for Canadian investors.


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## james4beach (Nov 15, 2012)

I agree with the two dogcom mentioned. I hold CEF.A but keep in mind it also contains silver, which in recent years has dragged down the returns.

I'm also interested in *MNT* which are shares/receipts in the Royal Canadian Mint's gold reserves. My concern with MNT however is there are talks of the Mint getting privatized and I have no idea how that would affect the units. Any thoughts from others on this?

Note there is a big difference between gold miners and gold bullion. I personally think the better long term investment is bullion and I think CEF.A does look attractive. I bought shares throughout 2015.


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## mf4361 (Apr 11, 2015)

CGL.C hold gold bullion only and is not hedged. This is the one you want if you were to get into gold. At this point I don't think any commodity is attractive to put money in. But I might be wrong. Remember while buying gold ETF, you are buying physical golds. Not the managing company.

I don't think privatization of the Mint will affect the ownership of your gold.


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## Soils4Peace (Mar 14, 2010)

Two American domiciled ETFs of interest are GLD (MER 0.40%) and IAU (MER 0.25%). They are tied to the price of gold. They trade in USD.


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## james4beach (Nov 15, 2012)

Here is a list of the Canadian pure bullion funds traded on the TSX. Many of them trade with multiple ticker symbols, in both CAD and USD. For each, I've included the year it was founded and the current fund size in CAD.


 CEF.A (1961) $4,156 million
 GTU.UN (2003) $1,092 million
 PHY.U (2010) $1,798 million
 MNT (2011) $495 million
 CGL.C (2011) $62 million

The giants are CEF.A ($4 billion), GTU.UN ($1 billion), and Sprott's PHY.U (nearly $2 billion). The first two are run by the same people, the Spicer family. Sprott has been competing with the others for business by offering swapping of GTU.UN shares and also some harassment of CEF.A through frivolous lawsuits to gain voting rights. These top 3 are the big contenders and they are all well-run, high quality operations.

What makes these top 3 unique and particularly attractive are that the gold is allocated and segregated. This means the gold backing the shares are explicitly marked and separated. This is a huge safety and it's why these 3 funds have attracted all the money.

MNT is relatively recent, and is an offering from the Royal Canadian Mint. Shares are backed by gold in the vault, but they are unallocated meaning they are not specifically separated for the shares.

CGL.C is from iShares but it's so tiny that it almost doesn't matter. It's hard to have much confidence in such a small fund.


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## Moneytoo (Mar 26, 2014)

Soils4Peace said:


> Two American domiciled ETFs of interest are GLD (MER 0.40%) and IAU (MER 0.25%). They are tied to the price of gold. They trade in USD.


There's also IGT which is "a cross-listing of the iShares Gold Trust (IAU), that’s why it isn’t included on the iShares Canada site" (I read about it on the Canadian Couch Potato website out of all places: http://canadiancouchpotato.com/2011/07/25/ask-the-spud-ishares-gold-trust/ - and the only thing I don't like about it is low volume, but didn't have a problem selling some of it recently)


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## Soils4Peace (Mar 14, 2010)

I wonder how the operating costs of CEF.A/GTU.UN/PHY.U compare to IAU/IGT's 0.25% MER.

EDIT:
Here we are:

*CEF.A *is in the neighbourhood of 0.32% to 0.38%:
"Expenses as a percentage of the average of the month-end net assets (the “expense ratio”) for the year
ended October 31, 2015 were 0.38% compared to 0.32% for the year ended October 31, 2014. The
increase in the expense ratio was a direct result of costs incurred to address issues related to Class A
Shareholders’ Proceedings. If not for these costs, the expense ratio would have remained unchanged
at 0.32% for the year ended October 31, 2015."
http://www.centralfund.com/annualreport/CFOC 2015 AR 10 DEC 15 - FINAL.pdf

*GTU.UN:*
"For the twelve-month period ended September 30, 2015 the expense ratio was 0.97% compared to 0.36% for the twelve-month period ended September 30, 2014." 
http://www.gold-trust.com/MD&A/2015/CGT MDA Q3 30 SEPT 15.pdf

*PHY.U:* 0.45%-ish?
"Operating expenses for the year ended December 31, 2014 amounted to 0.13% of the average net assets during the year, compared to 0.07% for the same period in 2013.
...
The Trust pays the Manager, Sprott Asset Management LP, a monthly management fee equal to 1 /12 of 0.35% of the value of the net assets of the Trust (determined in accordance with the trust agreement), plus any applicable Canadian taxes."
http://sprottphysicalbullion.com/media/15768/phys-q4-2014.pdf


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## jargey3000 (Jan 25, 2011)

thank you people. good info.


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## james4beach (Nov 15, 2012)

For long term investment I think it's also important to consider the overall size of the fund and its ability to retain investors money over the years. Same goes for any ETF. Has management successfully kept the fund's size and grown the fund, or are investors fleeing and pulling money? If people are fleeing, it means they don't have much confidence in the management and that's very important.

This is especially useful to consider now since gold has been in a bear market in the last few years. You want to find a fund that has retained investors and which has not shrank due to investors pulling out money.

Here, there are warning signs from Sprott's fund (PHYS/PHY.U). The fund has lost 29% of its units since the 2012 high in gold popularity. I'm not talking price, but rather the number of outstanding shares. Investors pulled out 29% of their investment.

In comparison, MNT only shrank 7%.

CEF and GTU did not shrink at all. No investors pulled their money out by redeeming shares.

Based on that inability to keep the fund size during a bear market, I'm not very confident in Sprott's fund (and obviously neither are their investors). Add to that the smear campaign by Sprott against its competitors, and that worries me that Sprott is not managing their fund well and is engaging in smear campaigns out of desperation:

http://www.marketwired.com/press-re...er-condition-goldtrust-tsx-gtu.un-2070208.htm

Based on this (which I discovered last night) I'd reorder my list and my top ones for Canadian-domiciled, TSX investments:

1. CEF.A
2. GTU.UN
3. MNT
4. PHY.U


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## dogcom (May 23, 2009)

What is your opinion on GLD James? Do you think it has the actual amount of gold it says it does? Would you trust it over the long term?


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## james4beach (Nov 15, 2012)

dogcom, I am suspicious of GLD. The basis for my suspicion is the apparent efficiency with which they constantly move large amounts of physical gold into and out of the fund. You can see from the NAV history that they frequently claim there are days where the number of shares outstanding changes by 5 or 6 million shares.

Those are daily changes of around $600 million in the fund assets!

Now you tell me, how are they moving $600 million worth of gold bars on a daily basis into and out of segregated storage and maintaining confidence in which bars belong to whom? Compare to Central Fund of Canada and Central Gold Trust. These guys audit the segregated bars, including bringing in external auditors to view the vaults. They have a static number of bars that does not change for many years... they're literally just sitting in corners of the vault. Those kinds of bars can definitely be identifiable as allocated. That's believable.

GLD cannot possibly be maintaining a high standard of tracking of allocated/segregated bars when they claim to be moving so much gold in and out on a DAILY basis. My opinion is that GLD cannot maintain such proper allocation and segregation with the insanely high daily changes in "physical bars". So I'm skeptical, and I don't invest in them.

I also prefer a Canadian domiciled fund because I can sue their management and administrators, in case there's fraud.


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## dogcom (May 23, 2009)

Thanks for your thoughts and analysis on this James. I have heard that one of the reasons for setting up such a fund was so it could be sourced for physical down the road. Of course you can't say for sure so it is better to stay in Canada and buy the Central Fund of Canada.


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## james4beach (Nov 15, 2012)

dogcom, I am obviously biased as I have been a long term holder of CEF.

But there's something that can be said for the 55 year track record, and the fact that we know the owners are the Spicer family. Talk about transparency and personal accountability. Their family name is on the line, and they have made a solid, long term respectable business by managing CEF and now GTU. They have a huge incentive to maintain high quality management, and they have no incentive to engage in any kind of fraud.

I am a critical investor and I have studied every financial statement they have put out. Their financials are always clear and transparent and they don't play tricky games about the allocated gold storage. After 55 years of proven solid management, I've got to trust them.

The Spicer family has managed the Central Fund for longer than I have been alive. I can't argue with the excellent results.


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## dant (Jan 10, 2016)

I have both, CEF and GTU. I have no complaints about the integrity of their management. However, GTU has been quite a headache for me because of the Sprott people. As mentioned in this thread, Sprott has launched a hostile takeover for GTU. They have been at it since May 2015, and they have harassed us shareholders from the start. This is not what I had in mind when I bought the fund. Specifically, Sprott hired a firm that did some data mining (as opposed to gold mining) and obtained one of our unlisted telephone numbers. Then, they kept calling all times of the day and in the evening (yes, dinner time and after). Mind you, my shares are registered in the brokerage's street name, so that should have buffered me from the assaults. They also bombarded me with their junk mail, probably 5-10 kgs of it so far. Sprott has chiseled away, and there is a chance that they might get their hands on GTU very soon, January 15, 2016. If they do, I will bail out, as I don't do business with firms like that.

There is a lot you should know before buying a gold/silver ETF. Study the difference between closed-end funds like GTU/CEF and, say GLD or IAU. There is a peculiar artifact of the closed end funds like GTU and CEF which makes the NAV (net asset value) be below or above the price of the share. In a bull market, a share will cost more than its NAV. In a bear market (for gold/silver), the opposite is true. For example, CEF is currently trading at a significant discount to NAV (almost 10%). If you think that gold and silver will turn the corner and take off, then buying CEF now would be a good move from that standpoint. It is this discount that allowed Sprott to entice some of the shareholders into supporting the takeover.

If I had to do this again, I would stay away from all of the funds because people like Sprott can come along and turn a low maintenance investment into months of reading really convoluted legal documents with all kinds of disclaimers and countless paragraphs that inevitably advise you to seek help from your tax accountant. If you want to put money into gold, I would suggest buying coins from the Mint and storing them in a safe deposit box. That will cost a lot less than the management fees at a fund and you will sleep a lot better. The only reason I can see for buying an ETF would be if you are speculator and you have no long term interest in gold. Then, I would go with something that is very liquid. That's what ETFs like GLD are good for. BTW, I too am puzzled about the nature of their gold holdings. They never really explained the details in their prospectus. Anyway, the idea there is that you would be out of the fund long before the world finds out if they actually have the bars or just claims on some bars that are elsewhere.


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## zylon (Oct 27, 2010)

*Movement of GLD physical gold*

Far as I can tell, transferring gold in and out of GLD is a ledger entry at the end of the day.

From FAQ #18 here: http://www.spdrgoldshares.com/usa/faqs/#q4fa24b4ed8f8f

Quoting:
*How is gold transferred to or withdrawn from the Trust?*

The Bank of New York Mellon, as trustee of the Trust, or the Trustee, and the Custodian have entered into agreements which establish the Trust's unallocated account and the Trust's allocated account, which are described in more detail in FAQs 20 and 21. The Trust's unallocated account is principally used to facilitate the transfer of gold between Authorized Participants and the Trust in connection with the creation and redemption of Baskets (a "Basket" equals a block of 100,000 SPDR® Gold Shares). The Trust's unallocated account is also used to facilitate the transfer of gold from the Trust for the payment of the Trust's monthly expenses. The Trust's Authorized Participants are the only persons that may place orders to create and redeem Baskets and, in connection with the creation of Baskets, are solely responsible for the purchase and delivery of London Good Delivery Gold Bars (described in FAQ 24) to the Trust. All gold transferred in and out of, and held by, the Trust must comply with the rules, regulations, practices and customs of the LBMA. Except when gold is transferred in and out of the Trust, gold is held in the Trust's allocated account in bar form. When Baskets are created, the Custodian transfers gold into the unallocated account of the Trust maintained by the Custodian from the unallocated accounts it maintains for each Authorized Participant and then transfers gold from the Trust’s unallocated account to the Trust’s allocated gold account it maintains for the Trust. More specifically, after gold has been first credited to an Authorized Participant's unallocated account in connection with the creation of a Basket, the Custodian transfers the credited amount from the Authorized Participant's unallocated account to the Trust's unallocated account. The Custodian then allocates specific bars of gold from unallocated bars which the Custodian holds, or instructs a subcustodian to allocate specific bars of gold from unallocated bars held by or for the subcustodian, so that the total of the allocated gold bars represents the amount of gold credited to the Trust's unallocated account. The amount of gold represented by the allocated gold bars is debited from the Trust's unallocated account and the allocated gold bars are credited to and held in the Trust's allocated account. The process of withdrawing gold from the Trust for a redemption of a Basket follows the same general procedure as for transferring gold to the Trust for a creation of a Basket, only in reverse.

The Custodian makes available to the Trust's unallocated account up to 430 fine ounces of gold in order to permit the Custodian, by the end of each business day, to fully allocate to the Trust's allocated account all gold that has been credited during that day to the Trust's unallocated account. As a result, at the end of each business day, all of the Trust's gold is held in the Trust's allocated account.

The Custodian updates its records at the end of each business day (London time) to identify the specific bars of gold held in the Trust’s allocated account and provides the Trustee with regular reports detailing the gold transfers in and out of the Trust's unallocated account and the Trust's allocated account. The Trust's website includes a list of the gold bars held in the Trust's allocated account. The list identifies each bar by bar number, refiner, gross weight, assay or fineness and fine weight and is updated once a week.


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## james4beach (Nov 15, 2012)

Right, so with GLD, which bars are "allocated" is a matter of which electronic ledger changes were made that day. If the ledger says it's allocated, then everyone believes it's allocated. They are not moving or tagging any physical items.

Compare that with what Central Fund and Central Gold Trust do: they have a block of allocated bars. Their auditors come and count them, and make sure they are physically identifiable and allocated. This group of bars does not change often ... in fact it's very rare for these closed end funds to acquire new bars. That's why they are closed end funds.

It's also why you get the premium and discount to NAV: it's because the number of gold bars is static over time.

I think there's a huge difference between GLD and CEF/GTU. Look at the above processes and think of which is more prone to errors or possible fraud/misreporting. Clearly GLD is far more vulnerable to those pitfalls. Such an "error" could be made *daily*. With CEF/GTU, the error can only be made at the time bars and acquired and sold (once every few years), and there are many audits in between each of those actions.


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## james4beach (Nov 15, 2012)

Sprott physical fund, PHYS has acquired Central Gold Trust in its entirety
http://sprottphysicalbullion.com/sp...st/press-releases/press-release/?prId=2129926

This increases the Sprott fund from $1 billion to $2 billion and I presume it means that all the physical gold from GTU will be moved to Sprott's custodian, the Royal Canadian Mint in Ottawa.

Basically we just had a $1 billion M&A deal in Canada that nobody noticed


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## james4beach (Nov 15, 2012)

Moneytoo said:


> There's also IGT which is "a cross-listing of the iShares Gold Trust (IAU), that’s why it isn’t included on the iShares Canada site" (I read about it on the Canadian Couch Potato website out of all places: http://canadiancouchpotato.com/2011/07/25/ask-the-spud-ishares-gold-trust/ - and the only thing I don't like about it is low volume, but didn't have a problem selling some of it recently)


Yes IGT is another option. Remember though, it's a US-domiciled bullion fund. The gold is held in the USA. This means it's at the whims of changes in US tax laws surrounding commodities and gold. Given the nature of this kind of holding, I'm only comfortable with Canadian-domiciled funds.

My two favourites continue to be *CEF.A and MNT* which are both Canadian-domiciled, CAD-traded large funds with reasonably good daily liquidity. As MNT is run by a Crown corporation it's also immune to shenanigans from Sprott.


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## Moneytoo (Mar 26, 2014)

james4beach said:


> Yes IGT is another option. Remember though, it's a US-domiciled bullion fund... My two favourites continue to be *CEF.A and MNT*


Yeah I sold the remaining shares of IGT on Feb 11th (when gold reached its latest peak in CAD) and added CEF.A to the watchlist (was paying attention to your recommendations) But don't think I'll be buying gold ETFs anytime soon - even my husband would rather short volatility when it spikes, not to mention a perma-bull like me...


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## andrewf (Mar 1, 2010)

james4beach said:


> dogcom, I am suspicious of GLD. The basis for my suspicion is the apparent efficiency with which they constantly move large amounts of physical gold into and out of the fund. You can see from the NAV history that they frequently claim there are days where the number of shares outstanding changes by 5 or 6 million shares.
> 
> Those are daily changes of around $600 million in the fund assets!
> 
> ...


What if the bars are all there, but the gold moving into and out of the fund is sitting in the same vault(s), but held by APs who create/redeem units in the fund, hedging against the spot price.

Nothing necessarily nefarious happening here.


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## james4beach (Nov 15, 2012)

I was looking at these various bullion ETFs today (on the TSX) because with the huge move and broad market volatility, it might be a good time to sample the volume and bid-ask spreads. Today at 10:20 am, according to Scotia iTrade, on Canadian markets

CEF.A ... 72.4k volume, 0.17% spread
MNT ... 49.3k volume, 0.22%-0.72% spread
CGL.C ... 7.5k volume, 0.40%-0.47% spread
PHY.U ... 5.7k volume, 0.18% spread
IGT ... 0 volume, no bid/ask, illiquid

Several good options there. IGT has no activity whatsoever, and I wouldn't invest in it. CEF.A has the most volume & smallest bid/ask spread. PHY.U has a very narrow spread too, but I'm disappointed that its volume is so low. MNT has strong volume second only to CEF.A, but with a wider spread.

*With liquidity in mind, I'd say the best ones are: CEF.A, MNT, and maybe PHY.U*

I say maybe PHY.U because though its bid/ask spread is narrow, there just isn't a lot of money changing hands. By 10:55, only about $66 K has moved through PHY.U whereas much larger amounts have traded hands through CEF.A ($1.8 M) and MNT ($0.9 M)


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## james4beach (Nov 15, 2012)

An update for anyone who stumbles across this thread: IGT has been delisted from Canada

I hold both CEF.A and MNT. Their management fees are the lowest among all of these funds. My intention is to keep accumulating shares of these long term for asset class diversification, implementing the permanent portfolio (stocks/bonds/cash/gold).

Total management expense ratios (MER) are:

MNT 0.35% ... see latest performance docs
CEF.A 0.38% ... see annual report page 2
PHY.U 0.48% ... see annual report page 5
CGL.C 0.56% ... see iShares page

I think the Royal Canadian Mint's MNT shares are very competitive. They actually have the lowest expense ratio in Canada at 0.35%, and are awfully close to the cheapest gold ETF in the world (which is IAU at 0.25%).


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## mordko (Jan 23, 2016)

^ Nice summary. As of this year I have 5% allocated to a mixture of gold/silver/platinum. Used CEF.A for gold, HUZ for silver and PPLT for platinum.

One thing I don't quite get - CEF is consistently trading below NAV. Anyone knows why?


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## james4beach (Nov 15, 2012)

Historically, CEF's premium has corresponded nearly perfectly to bull and bear phases in precious metals. In periods where gold & silver were popular, it trades at a premium. At times they're out of favour it trades at a discount. This is a closed end fund so there is a constant amount of metal sitting in a vault, and investors trade shares around it.

CEF has done well year to date, but if you look at the longer term gold chart, metals are still in a weak phase. In US $ terms, gold is significantly below the 2011 peak. The fund flows on GLD and other bullion funds tell the same story ... generally gold has been unpopular since 2013.

I take CEF's discount as an indication of poor sentiment. For example I did my heaviest buying when the discount was rather severe; I purchased it around 10% discount.

The discount is somewhat of a gift and a useful indicator of general PMs sentiment. For long term investment, it seems sensible to buy CEF.A when there is a discount to NAV.


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## mordko (Jan 23, 2016)

Thanks.


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## james4beach (Nov 15, 2012)

An update on CEF.A fees based on the latest quarterly report. The expense ratio is running at 0.39% but part of this was elevated expenses to deal with legal actions initiated by Sprott Asset Management. Sprott has been harassing Central Fund of Canada for some time and driving up their legal costs.

Without these Sprott-induced costs, CEF.A fees are 0.33% a year.

For comparison, GLD has expense ratio 0.40%


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## Kher-Spade (Oct 6, 2016)

james4beach said:


> Here is a list of the Canadian pure bullion funds traded on the TSX. Many of them trade with multiple ticker symbols, in both CAD and USD. For each, I've included the year it was founded and the current fund size in CAD.
> 
> 
> CEF.A (1961) $4,156 million
> ...


Hey James. What platform do you use to buy those 3. And are the prices in CAD?


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## james4beach (Nov 15, 2012)

Kher-Spade said:


> Hey James. What platform do you use to buy those 3. And are the prices in CAD?


CEF.A and MNT are priced in CAD. You can buy them through any Canadian discount brokerage (TD Direct Investing, RBC Direct Investing, Scotia iTrade, etc). PHY.U is priced in USD


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## JohnnyFactor (Jul 5, 2016)

How do you feel about the 40% silver in CEF.A, in regards to the Permanent Portfolio? Doesn't it distort the pure gold holding the PP calls for?

edit: I saw your answer in another thread. Balancing MNT and CEF.A to reduce the silver percent. I may consider doing this too.


james4beach said:


> *B* - My gold component is under-performing ideal gold because of my CEF.A holding. This is due to its silver exposure and varying premium/discount; lately it is under-performing. Note however that year-to-date, CEF.A has outperformed gold, so this one can go either way.
> 
> Pretty obvious how I can fix this. I have to push my allocations towards the equal weight targets, and I'm going to be careful that CEF.A doesn't dominate my gold exposure. More ideal gold price movement can be obtained via MNT in Canada or GLD in US. My approach is to combine physical gold, MNT, CEF.A


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## james4beach (Nov 15, 2012)

I agree that the high silver content in CEF.A is not quite the right idea for the permanent portfolio. Silver is more closely related to industrial activity. And yes, that's why I've started building a MNT position (I just prefer MNT to GLD due to being domestic and traded in CAD).

In November I bought more of both CEF.A and MNT. I still like CEF.A. I've also recommended that my parents increase it in their portfolio (link) due to the buying opportunity in metals.


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## new dog (Jun 21, 2016)

I believe silver is more useful and valuable then gold in respect to the gold to silver ratio. Gold mined is also still mostly available above ground where as the silver gets used up unless it is in coins, objects like silver ware and jewelry. Silver is also easier to buy in lower values so it is easier to use then gold where you may not get change back. Your can buy gold in lower values but it gets expensive to buy it that way.


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## lonewolf :) (Sep 13, 2016)

Gold money now holds gold & silver with royal Canadian mint. Can make purchases with your debit card which is backed by gold silver you own @ the Royal Canadian mint. THIS IS THE WAY TO GO. Can store gold in other countries convert into a lot of different currencies


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## getliquid (Mar 2, 2014)

any reason for the recent 20% drop? will it rebound with the federal rate hike?


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## mordko (Jan 23, 2016)

Two correlations for gold:
- higher interest rates -> lower gold prices
- high stock volatility - > higher gold prices

I had some gold in CEF.A but got rid of it on the eve of the election. Lucky.


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## zylon (Oct 27, 2010)

Finally got around to building a spread sheet to make tracking allocations easier.

I'm at 30% "materials" - and a big portion of that is precious metals related.
Higher than I expected, definitely enough exposure there. 
Will be looking to lighten up on any significant bounce.


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## lonewolf :) (Sep 13, 2016)

mordko said:


> Two correlations for gold:
> - higher interest rates -> lower gold prices
> - high stock volatility - > higher gold prices
> 
> I had some gold in CEF.A but got rid of it on the eve of the election. Lucky.


 correlations often come & go


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## new dog (Jun 21, 2016)

For gold as long as there is limited manipulation then it would seem the outlook not the interest rate determines the price. Interest rates climbed during the 70's and gold did very well but declined when they finally raised it enough hammering everything back down along with inflation. High stock volatility does seem to matter as well. I think it matters because it is seen as a loss of control by the Fed and people then move to cash or real money as they call it.


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## mordko (Jan 23, 2016)

new dog said:


> Interest rates climbed during the 70's and gold did very well but declined when they finally raised it enough hammering everything back down along with inflation.


I wouldn't read anything into 1970s as far as the gold is concerned. US treasury tried to maintain gold price of $35/ounce up until 1972. It's like trying to hold down a spring. After release from attempted price controls there was a rebound which lasted several years. It's not reflective of today's economics.


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## james4beach (Nov 15, 2012)

zylon said:


> Finally got around to building a spread sheet to make tracking allocations easier.
> 
> I'm at 30% "materials" - and a big portion of that is precious metals related.


That's a pretty high resources and metals exposure.

My gold & silver exposure is 17% of net worth; I've been buying during this recent weakness.


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## mordko (Jan 23, 2016)

17% is also extremely high for an asset class that has zero long-term growth in real terms.


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## james4beach (Nov 15, 2012)

It's bought for protection against currency collapse, not for growth. Look at gold priced in GBP for instance. It's been an excellent holding for Brits.

At times a currency is stable (as CAD and USD mostly are) gold can seem like an unnecessary investment.


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## mordko (Jan 23, 2016)

The Brits would have done much, much better by using other asset classes for diversification. Like foreign shares and bonds. This is an argument for not limiting all your investments to N. America. 

What you are talking about is, in any case, a short-term effect which tells us nothing about long-term returns. Long term returns from gold are zero.


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## james4beach (Nov 15, 2012)

Long term returns from gold are low only if your currency stays strong. These are basically two currencies against each other so all we're talking about is a currency conversion. (I agree by the way that foreign stocks & bonds also help defend against a currency depreciation).

Gold is a way to diversify outside of your national currency without dependence on stock & bond markets. That seems like a nice diversification to me.


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## mordko (Jan 23, 2016)

I am talking in real terms. Bonds and stocks (including in gold companies) have positive expected long-term real return. The gold doesn't. The fact you can get more units of devalued currency for it is neither here nor there.


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## james4beach (Nov 15, 2012)

I think that gold just hit an all time high in CAD

And along with that, MNT and CGL.C (which both track gold bullion) just hit all time highs as well.


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## OneSeat (Apr 15, 2020)

J4B referred to this 6 months ago but does anyone know why MNT deviated 
so far from actual bullion price and what the ongoing implications are?
CGL.C deviated a little when Covid broke but then corrected.
NYSE ETFs did a better job of staying "on track".


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## james4beach (Nov 15, 2012)

Yup, MNT strayed from the pure bullion price. CGL.C tracked well and the big American ones (GLD and IAU) also tracked well.

I added some notes to the other thread. Here is the best information I have on this issue:



james4beach said:


> I've been in contact with the Mint's program administrator for MNT.
> 
> I asked them why the Mint does not issue more units, as there is demand, and issuing shares would reduce the premium and expand the asset base. They told me that since COVID-19, the Mint has had to focus on refining and bullion operations which were deemed an essential service for the economy. They are aware of the high premium to NAV, and I was also told that "senior leadership is certainly focused on the ETR".


It wasn't a great reply, but at least the Mint is aware of it. I continue to hold some MNT, but I also hold CGL.C and IAU


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## OneSeat (Apr 15, 2020)

I was thinking of buying some more and have previously split between the two.
Is the current consensus to leave MNT alone for now?


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## james4beach (Nov 15, 2012)

OneSeat said:


> I was thinking of buying some more and have previously split between the two.
> Is the current consensus to leave MNT alone for now?


I would check to see its premium to NAV. You can look at this in (nearly) real time during the trading day by going here: Mint's gold reserves site

Click Investors, then Net Asset Values. Under 'Intraday Security Data' check the Premium to iNav during the day. I would not buy it at more than 4% premium and I suspect it's more like 10% premium these days.

I will be buying some more gold for my RRSP in a few days and I'll probably buy CGL.C


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## moderator2 (Sep 20, 2017)

Merged with an old thread with the same title


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## Tostig (Nov 18, 2020)

What are your thoughts on PHYS.TO? Is it hedged? I read through some of the past threads containing PHYS and could not find the answer. I plotted a comparison chart against known hedged gold etfs and non-hedged and it looks like PHYS.TO is not hedged.

What are your thoughts on this 2010 article about PHYS?








PHYS: Not A Gold ETF, And A BAD Deal


In the words of Star Wars' Admiral Ackbar: “It's a trap!"




www.etf.com






I currently hold CGL-C.TO in my RRSP. Daily trading volumes are lower than PHYS.TO. Are the concerns in the article relevant if I plan to hold PHYS.TO in my RRSP? in my TFSA?

Thanks


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## james4beach (Nov 15, 2012)

Tostig said:


> I currently hold CGL-C.TO in my RRSP. Daily trading volumes are lower than PHYS.TO. Are the concerns in the article relevant if I plan to hold PHYS.TO in my RRSP? in my TFSA?


I am not very familiar with PHYS, but this is run by Sprott so I've ruled it out for myself anyway.

There is no problem with CGL.C. The volumes may be low, but the bid/ask spread is quite tight which is the important part. It's perfectly liquid and I was watching it closely even during the March crisis, and it was very reliably liquid and kept tracking gold perfectly the whole time -- which is awesome.

I would stick with CGL.C. I looked at the charts just now and CGL.C tracks gold perfectly, but PHYS does not. So I don't see what advantage PHYS has.


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## dcris07 (Nov 23, 2020)

james4beach said:


> I am not very familiar with PHYS, but this is run by Sprott so I've ruled it out for myself anyway.
> 
> There is no problem with CGL.C. The volumes may be low, but the bid/ask spread is quite tight which is the important part. It's perfectly liquid and I was watching it closely even during the March crisis, and it was very reliably liquid and kept tracking gold perfectly the whole time -- which is awesome.
> 
> I would stick with CGL.C. I looked at the charts just now and CGL.C tracks gold perfectly, but PHYS does not. So I don't see what advantage PHYS has.



CGL.C is an open ended ETF meaning that they can issue and retract units of the fund when needed. PHYS on the other hand is a closed end trust so they do not issue shares, so you could notice that it can trade at a discount or premium to NAV depending on the demand for that security. Closed ended trusts do have some tax advantages as far as I understand. Since were on the subject of gold, what do you guys think about investing in miners through an ETF like ZGD ( BMO Equal weight Global gold index) or XGD ( Ishares Market weighted) ??


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## james4beach (Nov 15, 2012)

I track some numbers for the different Canadian gold ETFs, how many ounces of physical gold they hold.

The iShares CGL.C holds 20% fewer ounces today compared to last summer. And MNT holds 24% less gold than last summer, about the same reduction.

This reflects net redemptions from gold ETFs... money is being pulled out. It's nice to see gold becoming unpopular again. This is what makes gold a diversifying and _uncorrelated_ asset class, and these are the forces which make it useful in portfolio design.

These are *huge* redemptions of gold in recent months.



dcris07 said:


> Since were on the subject of gold, what do you guys think about investing in miners through an ETF like ZGD ( BMO Equal weight Global gold index) or XGD ( Ishares Market weighted) ??


I don't like miners myself. They don't have a good track record, and my own opinion is that mining executives and CEOs have a culture of ripping off investors and abusing the public's trust. I think long term returns reflect the fact that they have not produced value for investors. You'll get more out of the shiny, inert metal (bullion) in my opinion.


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## james4beach (Nov 15, 2012)

KILO.B was mentioned in another thread, as Purpose has these newer gold ETFs. The non currency hedged one is KILO.B which should perform identically to CGL.C

I've been keeping an eye on KILO.B and it does not have any liquidity, unfortunately. Today the markets have been open for a few hours and KILO.B only shows 15 (fifteen) shares and the ticker price hasn't even updated, since there hasn't been a board lot trade on the TSX. So this just is not liquid enough to use.

CGL.C has a tighter bid/ask spread and is more liquid so I still think this is best one if you really want to make sure you are tracking the gold price precisely.


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## james4beach (Nov 15, 2012)

I just want to point out that gold has been one of the best-performing major asset classes in 2022 so far.


*Asset class**YTD performance to June 27*Global stocks, XAW-16.1%Canadian stocks, XIC (has commodity exposure)-8.0%Bonds, intermediate term, ZAG and XBB-13.4%Short term bonds, XSB-4.8%[green] Gold bullion, CGL.C*+1.5%*[green] Commodities, the US-based DBC (dominated by oil & gas)*+35%*


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## james4beach (Nov 15, 2012)

Good news for Canadian investors... gold is really strengthening. Remember that gold is a currency so everything is relative (it's an exchange rate). What matters to us is gold in CAD.

Year to date, *gold is positive*! This is one of the few assets classes that's positive in 2022.

CGL.C is +1.2%
MNT is +2.8% (due to the discount to NAV alleviating)


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## Faramir (11 mo ago)

I am a HOLD in gold right now, but have PHY. Do not get involved in the Horizon Beta Pro products. They are suppose to match the gain by 2 times on gold, or the markets, ect....but it never turns out that way.


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## james4beach (Nov 15, 2012)

Faramir said:


> I am a HOLD in gold right now, but have PHY. Do not get involved in the Horizon Beta Pro products. They are suppose to match the gain by 2 times on gold, or the markets, ect....but it never turns out that way.


I wouldn't use the leveraged ones either. They suffer from something known as volatility decay. Better to use one of the bullion funds, as you're doing.


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## Faramir (11 mo ago)

james4beach said:


> I wouldn't use the leveraged ones either. They suffer from something known as volatility decay. Better to use one of the bullion funds, as you're doing.


Oh see I didn't know about volatility decay. But yes, put aside greed, and the ETFs are better. Right now just break even on PHY hoping to finally see 10% rise soon.


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