# Q: ETF and Gold - Auto Re-balancing



## AbleEng (May 9, 2021)

I have some questions related to account types, portfolios, ETFs and Gold.
1) I want to create an auto-balanced portfolio with a balanced ETF and Gold. How could I do that?
2) Would it require a self-directed account or a portfolio/robo account?


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## james4beach (Nov 15, 2012)

AbleEng said:


> I have some questions related to account types, portfolios, ETFs and Gold.
> 1) I want to create an auto-balanced portfolio with a balanced ETF and Gold. How could I do that?
> 2) Would it require a self-directed account or a portfolio/robo account?


What do you mean by auto-balanced? In a self directed account you would typically place trades to occasionally rebalance. e.g. rebalance once a year.

Are you saying that you want it completely "hands off" so that you don't have to place any trades?


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## hfp75 (Mar 15, 2018)

Im trying to think of funds that use a gold hedge ….


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## james4beach (Nov 15, 2012)

One could buy RPAR, which is a diversified fund that holds both equities and gold. It's kind of like the All Weather portfolio, in one fund, and automatically rebalances all its positions.


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## AbleEng (May 9, 2021)

AbleEng said:


> I have some questions related to account types, portfolios, ETFs and Gold.
> 1) I want to create an auto-balanced portfolio with a balanced ETF and Gold. How could I do that?
> 2) Would it require a self-directed account or a portfolio/robo account?


The idea is similar to that of the Permanent Portfolio (PP), but done outside their company. The auto-balancing is similar to that done by a Robo Advisor where the asset allocation is determined by the brokerage, but includes the gold. The mix for PP is that of equities, fixed income, gold, etc. See the list on a Google search for "Permanent Portfolio".
Note that these are not mutual funds, but rather a portfolio of ETFs, including an ETF for gold.

The account type makes a difference in that self-directed accounts would require that I do the re-balancing, with accompanying costs. The Robo-type account would cost much less because the re-balance is automatic.

Thanks to james4beach for, some time ago, explaining the advantage of re-balancing (i.e.: sell high, buy low).

I am still counting on using Questrade. Their Portfolio account may have the right mix, but no gold, so they may no longer meet my needs.
Thx.


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## Spudd (Oct 11, 2011)

If you use WealthSimple Invest, I believe they include gold as part of their portfolios. And they rebalance for you. 

I am not aware of any other self-rebalancing portfolio that includes gold.


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## hfp75 (Mar 15, 2018)

james4beach said:


> One could buy RPAR, which is a diversified fund that holds both equities and gold. It's kind of like the All Weather portfolio, in one fund, and automatically rebalances all its positions.



RPAR is USD... off the NYSE.... I think the OP is prob looking for a CAD solution... ?


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## AbleEng (May 9, 2021)

Any comments on the wisedom of this strategy? Better approaches that accomplish the same thing?


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## Spudd (Oct 11, 2011)

AbleEng said:


> Any comments on the wisedom of this strategy? Better approaches that accomplish the same thing?


Which one?


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## AbleEng (May 9, 2021)

Spudd said:


> Which one?


LOL. OK, ok.
Spudd>Wealthsimple does have what I want and I can build a custom portfolio with some gold unless one exists already. And all with auto re-balancing - the robo-advisor.
Amazing.
After all my reading and searching, it comes back to what started me on this path to begin with.

And it seems AltaRed and CP were right: the asset allocation comes first.

Time to get invested!
Thanks very much for your help so far


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## james4beach (Nov 15, 2012)

AbleEng said:


> And it seems AltaRed and CP were right: the asset allocation comes first.


Yeah the right asset allocation has to come first.

Make sure you're careful about the gold weight, and do it the right way. *Don't* hold gold mining stocks (they stink)... DO hold gold bullion using a fund like CGL.C

I say CGL.C because it has the best bid/ask spread of the Canadian gold ETFs. There are other ETFs but they have wider bid/ask, and that means that every time rebalance occurs, you will pay a (hidden!) penalty "fee". You don't want that.

This is another reason to not rebalance too often when gold is involved. See below.



AbleEng said:


> Spudd>Wealthsimple does have what I want and I can build a custom portfolio


If this lets you use any arbitrary ETFs you want, sounds like a good way to do it (if you really want it fully automated).

A small implementation detail. As you know, gold is very volatile. This makes it somewhat important that you don't constantly rebalance. So you don't want rebalancing to occur every month. Maybe once a year (only) or perhaps using tolerance bands, such as more than 5% off the allocation weight target.


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## AbleEng (May 9, 2021)

james4beach said:


> Yeah the right asset allocation has to come first.
> 
> Make sure you're careful about the gold weight, and do it the right way. *Don't* hold gold mining stocks (they stink)... DO hold gold bullion using a fund like CGL.C
> 
> ...


This issue about gold would have been my next post, and choosing the ETFs will be another challenge. Thanks for your concern.

BTW: Is there a better alternative to gold?


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## james4beach (Nov 15, 2012)

AbleEng said:


> BTW: Is there a better alternative to gold?


Well you can invest in just about anything you want. Most experts say there is no point in having gold in an investment portfolio, but some people do invest in it.

Some people invest in gold mining stocks, but based on the research I've done, I think that's a bad idea.

I do invest in gold bullion myself, which is stuff like CGL.C

Really this will all depend on what portfolio you have researched and decided on. There are millions of different opinions out there.


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## AbleEng (May 9, 2021)

james4beach said:


> Well you can invest in just about anything you want. Most experts say there is no point in having gold in an investment portfolio, but some people do invest in it.
> 
> Some people invest in gold mining stocks, but based on the research I've done, I think that's a bad idea.
> 
> ...


I plan on gold bullion as well. It should go up as the market drops and so should balance. I just have a feeling that returns are slow and not so great. Someone suggested a margin account that would provide a better return more frequently, but I'm not sure it can be part of an auto re-balancing portfolio. This has to be decided now; re-arranging may become complicated and likely cost money.


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