# how much precious metals?



## riamo (Jun 18, 2009)

Hi,

I was wondering what percent you hold in precious metals?

And what vehicles do you use to hold these funds?

I came across BMG funds which has a fund that purchases gold, silver and platinum http://www.bmgbullion.com/bmgbullionfund/fundperformance/

what you think?

thanks


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## Belguy (May 24, 2010)

Five to ten percent of total portfolio in the RBC Global Precious Metals Fund. It's a long term, buy-and-hold as that is my style. I am not a trader but go for the slow and steady returns.

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=18215

Note that this fund, like many precious metals funds, is at the top of the volatility meter and so you have to be prepared for plenty of ups and downs along the way. 

It can be a rollercoaster ride!!!


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## kid5022 (Nov 14, 2010)

old saying was at least 10% <-----thats before 1980
1980-2000 pretty much anyone with precious metal will under perform
2000-present it had rise alot...so recommendations go from 10%-50% depend on how bullish you are...


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## Belguy (May 24, 2010)

And what your timeline is and whether you can sleep well at night through all of the volatility.

Everybody's circumstances and personality are different.

I don't feel that an overweighting in precious metals is conducive to having a well balanced and properly diversified portfolio.


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## Argonaut (Dec 7, 2010)

25% is the standard. I'm a bit heavier than that right now because of crappy interest rates. Hold it in 1oz gold coins, and CGL on the TSX. Hold some silver coins as well. Dabbled in palladium and platinum in the past. If the price of gold equals the price of platinum in the future, I'll consider loading up on platinum coins.


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## Belguy (May 24, 2010)

25 per cent is whose standard?


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## davext (Apr 11, 2010)

I'm at about 10%

RBC Global Precious Metals Fund
CIBC Precious Metals fund
GLD
OSK.TO
In and out of SLW, SLV, YRA.TO.


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## Belguy (May 24, 2010)

Why do you have three funds when one would do? It just makes managing your portfolio all that more complicated!

That's the beauty of the Classic Couch Potato portfolio--just four low fee, broad-based investments to manage and periodically rebalance.

There is a lot to be said for simplicity and for keeping your portfolio brief.

Having several funds in each sector is generally not as wise as just holding very few broad-based index products.

Keep it short and sweet!!


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## lewin (Jan 10, 2011)

I have 7% in XMA (iShares capped materials index). My allocation is 5%.


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## danny_yaya (Mar 21, 2011)

I'm at 25%...


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## Belguy (May 24, 2010)

At 25 percent allocation, I hope that you have a long timeline and a high tolerance for risk.


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## Argonaut (Dec 7, 2010)

Gold is the least risky asset you could possibly invest in. Companies fail, countries fall, debts are defaulted, and cash becomes worthless. One ounce of gold always equals one ounce of gold.

Precious metals become risky if you're trying to make a quick buck by following the hype like everyone with silver right now. But in the long run it won't matter.


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## clovis8 (Dec 7, 2010)

Argonaut said:


> Gold is the least risky asset you could possibly invest in. Companies fail, countries fall, debts are defaulted, and cash becomes worthless. One ounce of gold always equals one ounce of gold.


This is such an odd fallacy yet gold bugs cite it all the time as gospel. 

Gold has almost not inherent value. It has value only because we as a society have chosen to assign it value. There are more cultures who have assigned no value to gold, than those who assigned value. 

The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.

10% of gold has a real use. The rest is basically fiat currency in the exact same way as paper money. 

This is especially true since most countries left the gold standard, reducing the inherent value of gold even more.


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## Argonaut (Dec 7, 2010)

No, no, clovis, you've got this backwards. Stocks, bonds, cash, etc. are things that we as a society give value to. Gold is gold. Everything else is paper, with a fancy signature or a politician's head on it. One ounce is one ounce. 79 protons and 118 neutrons in an atom. 

Use a theoretical time machine and go backwards, forwards, or any which way in time several centuries, taking your Chinese IPO stock certificate, your $100 bill, and your ounce of gold with you. Which one will hold value in any period of time?


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## clovis8 (Dec 7, 2010)

Argonaut said:


> No, no, clovis, you've got this backwards. Stocks, bonds, cash, etc. are things that we as a society give value to. Gold is gold. Everything else is paper, with a fancy signature or a politician's head on it. One ounce is one ounce. 79 protons and 118 neutrons in an atom.
> 
> Use a theoretical time machine and go backwards, forwards, or any which way in time several centuries, taking your Chinese IPO stock certificate, your $100 bill, and your ounce of gold with you. Which one will hold value in any period of time?


Go back and forth through time and your five dollar bill has the same weight and atomic mass. That is meaningless. 

There is nothing about gold that is any different from paper money. It only has value because we chose to assign it value. 

Take your gold back in time to prehistoric North America and it would be worthless because gold was unknown and therefore assigned no value. 

For most of human history gold was valueless and is still valueless in many places today. 

To be fair, the fact that a small percentage of gold is used for functional reasons does give it a little more real value than paper money, but not much.


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## dogcom (May 23, 2009)

What if you have a million US dollars and your friend has a million dollars in gold. In the normal course of events I would rather have the cash because it is easier to use. 

The real difference is if the Fed decides to just print money out of thin air to pay off debt or hand it out or whatever like it is doing now. You can get the paper or the mouse clicks out on the computer at a very fast pace and in seconds if you use the computer to make big numbers. Gold can also be inflated if you mine a lot of it, but it takes years to mine enough to accomplish that goal if you were able to do so.


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## HaroldCrump (Jun 10, 2009)

clovis8 said:


> This is such an odd fallacy yet gold bugs cite it all the time as gospel.
> 
> Gold has almost not inherent value. It has value only because we as a society have chosen to assign it value.


That can be said of almost anything.
Oil has no value, except for what our modern society (less than 200 years old) has decided to assign to it because of industrial needs.
Coal has no value, except what we have been assigning to it since the Industrial Revolution about 300 years ago.
Value is definetely epochal in nature.

The only thing that has had universal "value" is food, since it is needed for the survival of the body.

On this subject, look up "the diamond-water paradox".



> There are more cultures who have assigned no value to gold, than those who assigned value.


Actually, gold valuation goes back to the most ancient of cultures, as far back as the earliest known civilizations, in fact - the Egyptians, Mesopotamians, Harrapans, etc.
Value is not assigned to gold only in unorganized cultures like nomads, pre-agricultural communites, etc.
It is also the oldest currency.
On what basis are you saying that very few cultures have assigned value to it?


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## bean438 (Jul 18, 2009)

Yes you can say that about anything but how do we put a value on anything?

Gold doesnt do anything, meaning produce income.

Gold tracks inflation, actually under performing inflation over the past 200 years.

Buffets take on gold:

"You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?"


He is a billionaire. I am not, and I suspect no one on these forums is either.

Nuff said


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## clovis8 (Dec 7, 2010)

Harold when I get home tonight I will address your question about the prehistory of gold further. Just so you know i am not some crank on the issue, I hold a PhD in archaeology and have been studying prehistory for 20 years. 

In short yes many complex societies assigned value to gold but many did not.


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## lewin (Jan 10, 2011)

If the world ever gets so bad that all stock certificates are useless, I don't think my gold will be worth anything either. I'd be better off with canned food, gasoline, and a gun. 

And even if gold retains its value in an apocalypse, most gold bugs don't buy physical gold and put it in their basement. Even if you hold GLD, when the end comes I don't think they'll let you walk over and retrieve your share. The people with guns will have been there first already.


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## humble_pie (Jun 7, 2009)

what i wonder would archaeology have to do w the pog today.

early cultures didn't have ipods ipads either. Did not even have bush tom-toms, these came later.

does prehistory make these communication devices valueless.


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## clovis8 (Dec 7, 2010)

humble_pie said:


> what i wonder would archaeology have to do w the pog today.
> 
> early cultures didn't have ipods ipads either. Did not even have bush tom-toms, these came later.
> 
> does prehistory make these communication devices valueless.


You are missing the point. Nobody is saying gold is valueless just that it's value is culturally assigned just like paper currency.


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## humble_pie (Jun 7, 2009)

with respect to today's culture, a record high price is being assigned to gold & has been so assigned for most of the past decade & many claim that proliferation of fiat currencies will keep the price of AU permanently north of 1k per ounce ...


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## zylon (Oct 27, 2010)

riamo said:


> I was wondering what percent you hold in precious metals?
> 
> And what vehicles do you use to hold these funds?


After selling a small portion today, I'm at 20%

Holding gold & silver mining & exploration; and pm mutual fund


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## Argonaut (Dec 7, 2010)

clovis8 said:


> Harold when I get home tonight I will address your question about the prehistory of gold further. Just so you know i am not some crank on the issue, I hold a PhD in archaeology and have been studying prehistory for 20 years.


We're getting into irrelevant territory here. We're talking about gold as an investment, and investing is a concept that prehistoric cultures could care less about, except maybe saving food for the winter. Gold has held value as a world currency since civilization began.



lewin said:


> And even if gold retains its value in an apocalypse, most gold bugs don't buy physical gold and put it in their basement.


You can't call yourself a gold bug and not have the physical stuff. For me, maple leaf coins are the long term holdings and I buy CGL for shorter term.

Regarding Buffett. Paulson and Soros are billionaires as well, and they are two of the largest gold holders. So the "listen to him because he has money" argument doesn't fly. Ironically I like Buffett better, but I would rather have the giant cube. Gold isn't in a portfolio to create wealth, it's to protect your wealth and provide a hedge against inflation and the ills of government.


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## clovis8 (Dec 7, 2010)

My issue was not with gold as an investment. You would have to be an idiot to look at the last 10 years and not see it as an investment. 

My argument was with the people who say it has more intrinsic value than paper currency. The assumption of many gold bugs is that when the economy collapses all the people with money and stock are suckers and they will be the smart onces because their gold has some kind of magical value that is different than money. It does not. 

If I am wrong I would be interested to have someone explain to me where the inherent value of gold comes from?


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## lewin (Jan 10, 2011)

clovis8 said:


> My issue was not with gold as an investment. You would have to be an idiot to look at the last 10 years and not see it as an investment.
> 
> My argument was with the people who say it has more intrinsic value than paper currency. The assumption of many gold bugs is that when the economy collapses all the people with money and stock are suckers and they will be the smart onces because their gold has some kind of magical value that is different than money. It does not.
> 
> If I am wrong I would be interested to have someone explain to me where the inherent value of gold comes from?


I agree with this, and my point above was just that if things fall apart so badly that we stop assigning value to paper money and stock certificates, we'll probably stop assigning value to gold too.


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## fatcat (Nov 11, 2009)

> If I am wrong I would be interested to have someone explain to me where the inherent value of gold comes from?


 scarcity ... humans tend to assign higher values to substances that are rare ... gold has value becasue it is very beautful and very hard to "create" (i.e dig up)

paper money and stocks are an affirmation of the social contract, they reinforce the idea that we need to work together, trust each other and trade .. when we begin to have doubts about that social contract, we tend to look at other markers of wealth besides paper which is after all, only a "contract"



> Ironically I like Buffett better, but I would rather have the giant cube.


 argo, if the population of the planet earth continues on the same northeastern slope, i would take the farmland any day over the gold .. the man who owns land will be calling the shots over the man who owns gold, if only because, as someone has said, we all have to eat but we don't all need to wear jewelry (not that owning gold is necessarily a bad thing .. when times are tough and trust is slipping then gold is good to have a little of .. i like XMA which also has silver and timber and fertilizer .. a bit of bet hedge)


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## clovis8 (Dec 7, 2010)

fatcat said:


> scarcity ... humans tend to assign higher values to substances that are rare ... gold has value becasue it is very beautful and very hard to "create" (i.e dig up)
> 
> paper money and stocks are an affirmation of the social contract, they reinforce the idea that we need to work together, trust each other and trade .. when we begin to have doubts about that social contract, we tend to look at other markers of wealth besides paper which is after all, only a "contract"
> )



There are lots of things that are rare but worthless. I agree this is part of the reason gold is valuable but mostly it is a cultural decision. 

Someone earlier made the point that the things with inherent value are food, gas, oil, building supplies etc. If I were one of the tinfoil hat end of the worlders I would not be hoarding gold but rather these things.


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## Belguy (May 24, 2010)

Past performance of any investment is no guarantee of future results.

In fact, you might do better by looking at beaten down sectors and investing in those.

Buy low!!!


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## fatcat (Nov 11, 2009)

> Someone earlier made the point that the things with inherent value are food, gas, oil, building supplies etc. If I were one of the tinfoil hat end of the worlders I would not be hoarding gold but rather these things.


 or antibiotics or seeds or bullets or single malt scotch whiskey or insulin ... i think the tin hat guys are hoarding this stuff ... it depends on what the meaning of end is , if it's the end end or just a temporary regression back to a less technological society ... each scenario would have a different outlook for gold .. humans are eternally optimistic and as long as people thought there was a chance to rebuild a society based on material wealth, some people would be hoarding (and valuing) gold

i get your point about culturally assigned values, what was the name of the tribe that used use huge circular stones that looked like giant doughnuts for money ? the yaps or something ?

however, with the exception of isolated primitive tribes that have no real concept of material wealth, in general, almost all cultures that were at least somewhat materialistic show a very consistent appreciation for gold, you see it all over history in most of the major cultures so i think we can safely say that gold has had universal appeal and value since the beginning of human society


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## beans (Jan 25, 2011)

*Rai-ght on.*



fatcat said:


> or antibiotics or seeds or bullets or single malt scotch whiskey or insulin ... i think the tin hat guys are hoarding this stuff ... it depends on what the meaning of end is , if it's the end end or just a temporary regression back to a less technological society ... each scenario would have a different outlook for gold .. humans are eternally optimistic and as long as people thought there was a chance to rebuild a society based on material wealth, some people would be hoarding (and valuing) gold
> 
> i get your point about culturally assigned values, what was the name of the tribe that used use huge circular stones that looked like giant doughnuts for money ? the yaps or something ?
> 
> however, with the exception of isolated primitive tribes that have no real concept of material wealth, in general, almost all cultures that were at least somewhat materialistic show a very consistent appreciation for gold, you see it all over history in most of the major cultures so i think we can safely say that gold has had universal appeal and value since the beginning of human society



Haha, funny. Its called a Rai stone i believe (yap was also correct?!). there is one in the bank of canada loby...

http://basementgeographer.blogspot.com/2010/08/stone-money-of-yap.html

...amazing what i took away from my entry level economics course...


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## riamo (Jun 18, 2009)

ok i'm a newbie..so after reading that posts..still confused..i'm wondering is it important to have any physical gold/silver/platinum in my RRSP?

not talking mining stocks..if so what percent is recommended..
and if so..does anyone recommend the BMG fund (http://www.bmgbullion.com/bmg_funds.html) or any other fund or etf that is like holding precious metals?

thanks!


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## avrex (Nov 14, 2010)

riamo said:


> does anyone recommend the BMG fund?


Looking at the BMG mutual fund overview (BMG100), it seems quite expensive, with a MER of 3.06%. It has the following breakdown: Gold 33%, Silver 46%, Platinum 21%.

How about looking at a cheaper alternatives.

BMO has two ETFs. 
- BMO Precious Metals Commodities Index ETF (ZCP) with a MER of 0.65%. It has the following breakdown: Gold 85%, Silver 15%
- BMO Base Metals Commodities Index ETF (ZCB)  also with a MER of 0.65%. It has various other metals, such as copper, zinc, nickel, etc.


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## CanadianCapitalist (Mar 31, 2009)

avrex said:


> How about looking at a cheaper alternatives...


ZCP is *not* the same as holding precious metals. It appears to be an ETF that holds futures contracts.

GLD & SLV would be ETFs that actually hold precious metals. Claymore has a precious metals ETF: CGL and CGL.C.

And don't forget the grand daddy of all: central fund of canada.


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## fatcat (Nov 11, 2009)

> Looking at the BMG mutual fund overview (BMG100), it seems quite expensive, with a MER of 3.06%. It has the following breakdown: Gold 33%, Silver 46%, Platinum 21%.


 compare to brompton group precious metals bullion trust (TSEBU.UN) which holds gold silver and platinum and has an mer of .35


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## avrex (Nov 14, 2010)

CanadianCapitalist said:


> ZCP is *not* the same as holding precious metals. It appears to be an ETF that holds futures contracts.


Good catch, CC. I didn't realize those were futures.

I was just looking a bit further at your suggestion of Central Fund Of Canada
It has a low MER of 0.31%. 
The breakdown looks like an approximate 50/50 split between Gold and Silver (or an approximate 1:50 gold:silver ratio by weight). 
There are many ways to obtain this fund: CEF.A-T (CDN dollars), CEF.U-T (US Dollar), or CEF-N (NYSE in US Dollars).



fatcat said:


> compare to brompton group precious metals bullion trust (TSEBU.UN) which holds gold silver and platinum and has an mer of .35


Yeah, fatcat. This looks like another good option, with a low MER 0.35%
It has the following breakdown: Gold 27%, Silver 46%, Platinum 26%


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## riamo (Jun 18, 2009)

so what % of your RRSP is allocated to pure precious metals?
not talking about mining equities..


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## davext (Apr 11, 2010)

clovis8 said:


> You are missing the point. Nobody is saying gold is valueless just that it's value is culturally assigned just like paper currency.


I would say gold has value, not because society necessarily assigns it value but because if I found a lot of it, I'd like to build my house out of gold and it would look gorgeous. It is so rare and so easy to use in so many ways that it is very different from a lot of the other rare things you find in this world. 

It will always have value because it will always be attractive for people to want to own it. If I found it, I would want to keep it, not because someone else wants it, but because it looks different from everything else I find in nature and then I'd figure out a way to use it.


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## davext (Apr 11, 2010)

To answer the thread, i'm probably in about 10% precious metals and every day gold and silver go up, I wish I had more. 

Silver is rough sailing though.


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## CanadianCapitalist (Mar 31, 2009)

I have 0% allocated to gold and silver. If you see me crying, it's because I've been missing out on all the fun that gold investors are having these days


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## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> I have 0% allocated to gold and silver. If you see me crying, it's because I've been missing out on all the fun that gold investors are having these days


You probably have indirect exposure to the miners through the Canadian index funds/ETFs.
I know, not the same as direct holding of gold/silver but some exposure nevertheless.


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## el oro (Jun 16, 2009)

I'm at a little more than 40%, the lowest it's been in a couple of years. I'm happy to trim on the way up to allocate elsewhere.

It's been interesting to watch the change in attitude towards gold over the past few years. The negative gold posts have dwindled to nearly nothing these days (They don't pay dividends and whatnot). It's just a little concerning.


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## CanadianCapitalist (Mar 31, 2009)

$1600 Gold by 2011 said:


> The negative gold posts have dwindled to nearly nothing these days (They don't pay dividends and whatnot). It's just a little concerning.


For me, the original thesis why I decided to stay out of gold still remain true: poor long-term returns, lack of dividends / interest payments and significant carrying costs. That's why I'm not adding gold to the portfolio. I'm perfectly content to watch all the fun from the sidelines.



HaroldCrump said:


> You probably have indirect exposure to the miners through the Canadian index funds/ETFs.


Agree. IIRC gold miners made about 20% of XIU. So, yes, those who have broad exposure to Canadian markets have some exposure to gold indirectly via gold stocks.


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## andrewf (Mar 1, 2010)

^40%? Crazy. I'm at about 6 or 7% and that's enough for me.


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## zylon (Oct 27, 2010)

$1600 Gold by 2011 said:


> The negative gold posts have dwindled to nearly nothing these days ...


Maybe here, but I bet over at "the other place" the curmudgeons are waiting to pounce on any PM positive comment. I used to get pounded over there along with "Capital Ideas" (Howard?) when gold was under $400. I quit going there long time ago.

Saw a guy on BNN just yesterday calling for return to $250. Ha! - alrighty then 

oh ... and dividends? I pay myself dividends ... take some profits once in a while.

*added*: so far this year I've taken 5% "dividend" and since it's in the form of cap gain, the after tax return is more than a divvy would be.


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## el oro (Jun 16, 2009)

Way to stick to your guns CC. 

40% is not as crazy as the 100% I had at one point. I'm doing muchos research as I plan to revamp my investing/trading strategem. I'll have much less gold once I reach my goal, maybe even 0%.


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## Argonaut (Dec 7, 2010)

0% is insane. Far more crazy than 40%. I'm at about one third, maybe more with the recent run-up.


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## Jayde (Oct 4, 2010)

At the moment I have about 6-7% in physical gold and silver. 

I don't buy metals for the investment though. It goes up, I buy it. It goes down, I buy more.

I have a pretty bleak world view so I'm preparing for the coming apocalypse


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## fatcat (Nov 11, 2009)

> Agree. IIRC gold miners made about 20% of XIU. So, yes, those who have broad exposure to Canadian markets have some exposure to gold indirectly via gold stocks.


 this is sort of a "passive" way to own gold ... 
gold equities seem to be going nowhere which makes me a little nervous ... understanding the long term health of gold miners involves going out years ahead and people are less certain what will happen with gold ... 

owning etf's or physical is the flavor of the moment for whatever reason (inflation hedge, gold-buggery) .... 

when i see the gold equities then i will know that gold is here to stay (and then it will benefit the broader canadian index)

i did buy a whack of silver and gold and it is nice to see it all go up on days when equities are just tanking


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## davext (Apr 11, 2010)

CanadianCapitalist said:


> I have 0% allocated to gold and silver. If you see me crying, it's because I've been missing out on all the fun that gold investors are having these days



Come on CC, it's never too late to pick up some gold as part of an asset allocation strategy. Although you may own some gold miners directly, you could add a couple % of real gold bullion to your portfolio.


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## zylon (Oct 27, 2010)

fatcat said:


> ...
> gold equities seem to be going nowhere which makes me a little nervous ... understanding the long term health of gold miners involves going out years ahead and people are less certain what will happen with gold ...


Gold equities are stocks first, gold investments second. They are sold off along with everything else in a down market.

In Q4 2008, gold index *XGD* lifted off the bottom before the broad market. After the composite index *XIC* started up in Q1 2009, the two indices have been almost even, with XGD lagging slightly.
3 year comparison XGD vs XIC

Since May 2011, XGD has been showing strength againt XIC, with exceptional out performance during July.
6 month comparison

I expect gold equities to hold their own against the general market until the next severe gold sell off.


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## CanadianCapitalist (Mar 31, 2009)

davext said:


> Come on CC, it's never too late to pick up some gold as part of an asset allocation strategy. Although you may own some gold miners directly, you could add a couple % of real gold bullion to your portfolio.


The problem is that a few years back it was commodities that were suggested for diversification reasons. Now it is gold. A few years from now, it will be something else. An investor adding the asset class du jour only after it has soared is going to end up with a portfolio with a smattering of past winners.


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## marina628 (Dec 14, 2010)

I am at under 1% sold off most of my precious metals MF in early part of year and took my profits off the table.I was about 25% for a while.


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