Gold ETF is a very good deal

RYK

Not to beat a dead horse, but if you are interested in buying/speculating in gold bullion, this new ETF (GLD) appears to be a very efficient way to do it.

The expense ratio is 0.4%, and the fund holds gold bullion equal to the market value. It started trading to do with a share price of 10% the value of a troy ounce of gold. If you want to buy/sell gold and have a discount brokerage account (I pay $8/stock transaction), this is a much better spread than actually selling the gold yourself. Plus, there is no storing of the gold, no risk of moving it from one place to the next, etc.

There is only one potential downside that I can think of... which I will not add to this thread right now.

What next, an ETF for MS-64 Saints? An ETF for MS-65 Morgans?

dthigpen

Been doing so for awhile now, fortunately before the recent gold increase

Longacre

Can you short it??

Longacre

It's down 0.16, but gold is up $4.60.

KentuckyJ

Any idea what the tax deal is? CNBC has made several obscure comments this morning re how taxes on GLD gains/losses are different and should be considered before trading this ETF.

KJ

AValde

CBS market watch says the Gold ETF (GLD) is a blockbuster.

Stork

Am I understanding this ETF correctly and that there has to be hard assets to back it up? Does this mean buying a share causes the etf to go and buy real gold, which in turn drives up demand? Did they start with a pile of gold already amassed (probably a little while ago at a much lower gold price, lucky them), or do they start from scratch on day one and call up Tulving and ask for 2 million or so ounces (free shipping!!)? Also, the 0.4% expense ratio has to get deducted from somewhere, does this gradually eat into the actual metal held? I'm really not clear on how their expense ratio is handled. It sounds interesting, but I'm still not totally clear on it. About the taxes though, I did read that the capital gains would be categorized as a 'collectable' and therefore would be at 25% rather than what stocks/dividends are doing.

topstuf

And....remember, folks. If TSHTF, you can always take your brokerage statement showing your ETF position ANYWHERE in the world and people will give you food for it.

Longacre

The tax comment is interesting. Do you have any text or written material on it? I happen to be a tax lawyer (not to take the thread off-track; sorry).

topstuf

I have not VERIFIED this, but it is extremely interesting.

comment on expenses of the fund

Stork

I tried to post a link to the cbs market watch page, but apparently the filter couldn't stand the juxtaposition of the last letter in market with the first three letters in watch. I think in my line of work I could have come up with something else to use if I was trying to talk about that! Anyway, the article did mention some of the above concerns.

"http://www.market watch.com/news/story.asp?siteid=mktw&dist=moreover&guid={FC149F2C-BA64-4D04-94FB-4D7BD4ED0F62}" almost a link anyway.





<< <i>And....remember, folks. If TSHTF, you can always take your brokerage statement showing your ETF position ANYWHERE in the world and people will give you food for it. >>





I'm sure there are alot of precautions in place and it's all very secure, but...hmmm... an absolutely foolproof way to safegaurd the gold, the records and that all those who should be, will be, accountable. Not that I can swear my saftey deposit box will never, ever, ever be breached, at least it is a small, non-tempting type target.

RBinTex

Can you short it??

Of course.

RYK

There is an element of privacy and portability in owning gold bullion that this ETF cannot replace.

How about this for a paried trade:
Buy Newmont/Short the ETF

You can hedge out the value of spot and get a pure play on Newmont's ability to produce gold cheaper than spot.

"The funds will pay their fees by selling off small amounts of gold bullion. In other words, the fractional amount of physical gold represented by each share will decrease over the life of the trust."

That means that over time the value of the fund will drop incrementally and slightly lower than the price of 1/10 oz. gold. To me, it is a very small price to pay for the convenience.

KentuckyJ

> CNBC has made several obscure comments this morning re how taxes on GLD gains/losses are different

Trading gains/losses will be taxed at the higher "collectibles" rate, not as capital gains. Interesting, but not fair, IMHO.

KJ

topstuf

How bout just buy FAX, earn 6%, gain from dollar drop and use the dividends to buy neat coins?