# Value of Gold in for a couch potato



## mf4361 (Apr 11, 2015)

What are you opinions on holding Gold (Physical or Gold ETF) in a Couch Potato portfolio? 

I see gold has some ability in resisting inflation and considered a safe haven in crisis situations. But for us who don't want to touch our holdings too often, are they still beneficial in a longer time horizon? (Say 10 years)

Here I am assume it's a small percentage (5-10% of total) and Physical gold or equivalent only (Not paper gold/gold futures)

Thanks!

Disclaimer: I hold CGL.C


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## Moneytoo (Mar 26, 2014)

We bought* iShares Gold Trust (IGT)* ETF last year, it's ~4.5% of portfolio at current prices. Not as a long term hold, more like something to sell during a crash/correction to buy stocks


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## Westerncanada (Nov 11, 2013)

Moneytoo said:


> We bought* iShares Gold Trust (IGT)* ETF last year, it's ~4.5% of portfolio at current prices. Not as a long term hold, more like something to sell during a crash/correction to buy stocks


I hold Goldcorp on the .TO for the same reason.. it seasonally eclipses $30 and I am a buyer under $22/ share so I can keep unloading over $30. 

Also, moving into physically too in a smaller capacity for further diversification


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## Moneytoo (Mar 26, 2014)

Yeah, I watched Goldcorp going up from $20 to $30 in December-January, thinking that I should've purchased it instead (at least would be collecting a nice dividend if it drops and I'm stuck with it ) I want to dedicate an "explore" portion of my TFSA to shorter term/seasonality plays, but need to finish building the "core" first... sigh


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## Westerncanada (Nov 11, 2013)

Moneytoo said:


> Yeah, I watched Goldcorp going up from $20 to $30 in December-January, thinking that I should've purchased it instead (at least would be collecting a nice dividend if it drops and I'm stuck with it ) I want to dedicate an "explore" portion of my TFSA to shorter term/seasonality plays, but need to finish building the "core" first... sigh


I am in the same boat. My rrsp is all td eseries couch potato.. and my tfsa is half blue chips and half higher risks now (among them a 10k position of goldcorp purchased for $21 and change. 

I sold my original position at $30 and bought back in at $22. 

Everything else is long term hold for me except for this stock.


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## birdman (Feb 12, 2013)

I think it depends on the size of your portfolio and if you can afford to carry an asset which may not appreciate in value and is something that you will most likely just pass on to your heirs. Not so sure it should be a percentage of your portfolio. For example, if you are retired with say a 2.5 million portfolio do you really want a $125,000. in gold- how about 50,000.? Coins and bars are always nice and may be a nice legacy to children or grandchildren.


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## dogcom (May 23, 2009)

I would always go with coins over bars because it is far easier to be recognized or valued especially in the event that the insurance is desperately needed.


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## OhGreatGuru (May 24, 2009)

Doesn't it rather contradict the whole philosophy of Couch Potato investing, which is based on broad, diversified, index investing?


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## none (Jan 15, 2013)

Yeah holding gold adds very little value - anything you do beyond the 4 recommended ETFs is just trying to squeeze out fractions of additional %'s that could easily go the other way.


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## mf4361 (Apr 11, 2015)

I thought metals are in a completely different asset class, which has little or slightly negative relation to equities, and that adds diversification.


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## none (Jan 15, 2013)

It does but don't chase diversification - holding the standard 4 ETFS already gives you a tremendous (and I would argue sufficient) amount of diversification.


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## james4beach (Nov 15, 2012)

Gold is vital diversification.

In the 2008 crash for example, every stock ETF on earth plummeted in lock step. They exhibited perfect correlation: every country, every sector crashed together.

Gold priced in CAD on the other hand, remained stable


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## zylon (Oct 27, 2010)




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## cainvest (May 1, 2013)

james4beach said:


> In the 2008 crash for example, every stock ETF on earth plummeted in lock step. They exhibited perfect correlation: every country, every sector crashed together.
> 
> Gold priced in CAD on the other hand, remained stable


Just took a quick peak at that, seems Gold dropped a fair bit in Oct 2008 right on the steep down edge of S&P500.


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## CPA Candidate (Dec 15, 2013)

When it comes to gold I'm with Warren Buffet, weighting zero. Gold does nothing for you, it's an unproductive asset. It just sits there and you hope that somebody values it more highly in the future. The 5 year return on gold is currently negative and there's no dividend. IF you are worried, cash is a better investment in my opinion.


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## dogcom (May 23, 2009)

I remember the same because the rush to raise cash and to pay margin calls meant sell everything. If we get that sort of scene again then gold will initially drop with everything else once again as cash will become king. This would be great news for the bullion banks as they dump their huge number of shorts and then change to the long side.

On the other hand if we get a currency crisis and or a loss of confidence in central banks and governments then gold and silver will rise considerably.


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## scorpion_ca (Nov 3, 2014)

Top 7 Warren Buffett Quotes on Gold Investing

Read more: http://www.minyanville.com/trading-...ng-investing/10/3/2012/id/44617#ixzz3erTA6ruD


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## besmartrich (Jan 11, 2015)

scorpion_ca said:


> Top 7 Warren Buffett Quotes on Gold Investing
> 
> Read more: http://www.minyanville.com/trading-...ng-investing/10/3/2012/id/44617#ixzz3erTA6ruD


Well said!


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## lonewolf (Jun 12, 2012)

Gold/silver is a good hedge against the government.

governments destroy the money world.


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## RBull (Jan 20, 2013)

Put me down as a zero weighting for a couch potato or any investor for that matter. I agree with Buffets take.


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## uptoolate (Oct 9, 2011)

'going long on fear' - nice quote and so true. I don't hold any gold in my couch potato portfolio nor do I recall ever seeing any of the approach's advocates suggesting it whether it be 'couch potato', 'sleep easy' or 'gone fishing' portfolio. If you have a Canadian version of the approach, you already have quite a bit of exposure with the TSX component. Perhaps more than one might want!


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## james4beach (Nov 15, 2012)

cainvest said:


> Just took a quick peak at that, seems Gold dropped a fair bit in Oct 2008 right on the steep down edge of S&P500.


In US dollars it did, but in Canadian dollars (which is what matters to us) it barely dropped. Here's the chart of gold-in-CAD in 2008 with the TSX chart below it. There is no contest here ... gold trended up while the TSX went down:

http://stockcharts.com/h-sc/ui?s=$GOLD:$CDW&p=D&st=2008-01-01&en=2009-01-01&id=p60590215255

In October (2008) at one point the S&P 500 and TSX were both down -25% vs the start of October. The most that gold in CAD fell was -8% that month.

Over the full 2008 year, the TSX was down -32% including dividends while gold was up +30%


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## james4beach (Nov 15, 2012)

uptoolate said:


> If you have a Canadian version of the approach, you already have quite a bit of exposure with the TSX component. Perhaps more than one might want!


No, you have exposure to gold miners, but not gold bullion. The protection comes from gold the metal - big difference!


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## cainvest (May 1, 2013)

james4beach said:


> In US dollars it did, but in Canadian dollars (which is what matters to us) it barely dropped.


So you're saying it was the change in the CDN $ (not the gold value) during that period that held the price up ?


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## My Own Advisor (Sep 24, 2012)

I think holding gold long-term is somewhat akin to fear-mongering.


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## dogcom (May 23, 2009)

At this time I would be very afraid with what we are seeing going on all over the world. We saw the results and systemic risk play out in 2008 and we know nothing has been fixed and has been kick down the road. We have seen many QE's and now the Fed has stopped but not really as the EU and Japan has picked up where the Fed left off so QE really hasn't stopped.

We have a media that has been muzzled by their corporate owners so most issues are hidden from public view. We have wars being started or countries destabilized everywhere. Greece is possibly going bankrupt officially which could start the domino that topples the enormous derivatives pile that is out there. 

You may or may not own some gold but there is much to be fearful of out there.


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## My Own Advisor (Sep 24, 2012)

The GDP of Greece is less than 0.50% of the world's economy.

I can appreciate this is a big deal for the Greeks and I feel sorry for the citizens, (with poor management = government) but declaring bankruptcy and then moving forward is likely the best thing. 

No?


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## scorpion_ca (Nov 3, 2014)

A picture is worth a thousand words









http://www.joshuakennon.com/stocks-vs-bonds-vs-gold-returns-for-the-past-200-years/


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## dogcom (May 23, 2009)

Totally agree with this as gold in theory stays generally at the dollar you pay for it on that day. Of course there is undershoot and overshoot pricing that needs to be corrected as with everything.

Bonds and stocks on the other hand can pay you interest, dividends and grow where gold is very limited on these fronts. 

Where gold is useful is when the system breaks down as we are seeing now. The only reason it hasn't gone up is because the central banks must keep it down and in check or their ponzi schemes and true value of money may be exposed. So gold and silver I think are under priced at this time because of the out right manipulation that has occurred. This of course doesn't mean it has to go up today or tomorrow but is is something to be mindful of.


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## uptoolate (Oct 9, 2011)

james4beach said:


> No, you have exposure to gold miners, but not gold bullion. The protection comes from gold the metal - big difference!


You may think that it is a big difference (and obviously it is in some ways - I don't have to find a place to bury my stocks)... but many others do not from an investing point of view.


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## uptoolate (Oct 9, 2011)

dogcom said:


> At this time I would be very afraid with what we are seeing going on all over the world. We saw the results and systemic risk play out in 2008 and we know nothing has been fixed and has been kick down the road. We have seen many QE's and now the Fed has stopped but not really as the EU and Japan has picked up where the Fed left off so QE really hasn't stopped.
> 
> We have a media that has been muzzled by their corporate owners so most issues are hidden from public view. We have wars being started or countries destabilized everywhere. Greece is possibly going bankrupt officially which could start the domino that topples the enormous derivatives pile that is out there.
> 
> You may or may not own some gold but there is much to be fearful of out there.


Statistically speaking, in terms of affluence and personal safety, there has never been a better to time to be living. Oh darn, I've gone and ruined it... have to go out and get more ammo and water jugs.


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