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What are your thoughts on gold exchange traded funds as part of a portfolio? Basically, the one I'm looking at sells shares which represent ownership in 1/100 ounce of gold which is deposited somewhere. At 50,000 shares you can make withdrawals.
I'm an economist by interest (accountant by trade) and I tend to follow the Austrian school so I believe that we're currently in a huge bubble because of QE2, and all gains are unsustainable and don't reflect economic reality. I don't have enough money to buy ounces of precious metals so does anyone see this as a solid temporary option? I want to place some of my paper money into assets rather than sit in a bank account.
yes and no... its taxed at a maximum of 28% if you held it a year and a maximum of 35% if short term because thats the highest tax bracket we have. . however it could be less depending on your tax bracket. its not a fixed 28%,thats only the max,it still goes by your total income level.
I do not recommend any of the gold (or silver) ETF's.
I recommend holding physical gold (and silver) in your own possession.
The ETF's do not have all the metal that they claim to have. It is just storage in the event of a default on the COMEX or LBMA; that would be a stash available to offset default. And believe me, it would be used for that, if push came to shove.
If your prospectus states that at 50,000 shares you can make withdrawals, how long before you reach 50,000 shares? Read the prospectus carefully. Even investors in futures are being told that they will settle in cash, not metal -- so what are the chances for an ETF holder?
Any kind of pools, unallocated accounts, allocated accounts, funds, etc are just "paper gold". You want to hold real metal. This is not for investment, it is for INSURANCE, and you will not have any if you are just holding paper metal, and the system goes down. Then, you won't even be able to get your paper back, let alone any metal.
Of course, if you are looking to turn a quick profit, and insurance bedamned, then have at it. You aren't interested in real metal, anyway. Gold can be bought in fractional ounce sizes (coins), so cost should not be the deciding factor.
You can buy gold pool shares from an offshore holder like Kitco. The buy-sell spread is less than 1%, based on spot, online 24 hours a day, there is no commission or fee, and paying tax on your gains is voluntary, since transactions are not reported to IRS. You can buy the shares with USD, and then resell them in EUR, CAD or UKL if you want. I've been using them for more than 6 years, never had a problem.
I use IAU and also have a small physical position in both gold and silver coins... it is a prudent hedge but a very small part of the portfolio.
Owning commodities is a loser in many respects as you pay storage and insurance (in one form or another) but get no earnings or interest. Unless you trade it for profit (still covering margins and transaction costs) it is nothing more than a sunken asset (maybe cheaper to hold than RE, but not a performing asset). You can bet on a higher future value but only the inflation rate is sure.
I don't recomment gold for most investors.
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