Worth going into the Paper markets?

[Tn21]

Hi TSF, I would just like anyone's opinion on whether going into GDX/GDXJ is worthwhile or not. There is often talk that the miners can be huge beneficiaries when spot prices rise so is it worth allocating some funds towards the miners and specifically the 2 mentions ETF.

 

 

[Abyss]

I have done some research into GDX/GDXJ (VanEck Vectors Gold Miners ETF/VANECK VECTORS/JUNIOR GOLD MINERS ETF).

I have them listed in my broker account

But I view them the same as any another other ETF such as SPY/QQQ (S&P and NASDAQ)

On a percentage terms GDX/GDXJ will outperform Gold both on the up and downside relative to spot.

25 minutes ago, Tn21 said:

GDX/GDXJ is worthwhile

The question not is it worthwhile or not but are you comfortable and can you manage the associated risk? Do you have understanding of technical analysis the ability read price action on a chart? Do you know about stop loss and target price, support and resistance levels? I have not traded GDX/GDXJ but some point in the future I will have position in these.

But please be careful with all ETFs/Commodities/Futures/Currencies traded with leveraged paper and you can very easily lose your shirt.

[sixgun]

GDX is a good introduction to the precious metal mining section. Do you have a broker account and if so with whom? Do you have access to options?

[Abyss]

The broker I use is Interactive Brokers (IB) and they offer options 

The Exchange Traded Funds (ETFs) list for IB https://www.interactivebrokers.co.uk/en/index.php?f=567&exch=bex that contains both GDX & GDXJ

[sixgun]

The reason i ask is you could buy GDX through the options market.

If you were prepared to buy GDX at say $19, you could sell PUT with an exercise price of $19.

If price falls below $19, 100 GDX shares will be assigned to you for each option contract sold. At the same time you pick up the option premium.

You can then sell out of the money CALL options. You get extra income this way.

It might sound a bit complicated but it isn't that complicated when you get the swing of it.

 

[vand]

I buy the Blackrock Gold fund for my pension, which is very similar to GDX. I see it as in investment and long term leveraged play on gold. Miners are VERY cheap right now. I think there will come a time in the next 20 years where they will be re-evaluated multiples higher. Maybe it won't take anywhere near 20 years, but as I said its in my pension. I can afford to be patient.

[Abyss]

I have been watching some of the videos posted by the Cambridge House Silver and Gold Summit 2018. Jeffrey Christian believes going into the paper markets worthwhile and makes compelling case. See the video below....

 

[Bumble]

I think there are two separate issues here: whether it is worth buying shares in companies in the gold sector, and whether it is a good idea to do so through a fund such as GDX.

As to owning shares in gold companies, remember that they are extremely volatile and can go down a lot in bad times. Depending on where they are operating, there are political risks: sometimes countries nationalise their assets or slap a huge tax on them and your shares might be worthless. Natural disasters can happen, spills of toxic chemicals, strikes, environmental protests, criminal gangs or corrupt politicians wanting a share of the proceeds, etc. Also, many companies are run by idiots or fraudsters who will destroy value. Mark Twain's definition of a gold mine as a hole in the ground with a liar standing beside it is still true. That said, they can do very well in good times when metal prices are rising, and they provide leverage. If you are going this route, you need to learn about the sector and be willing to do some research into the companies there.

As to funds such as GDX: the advantage is that they provide diversification across many companies, so risk is reduced. The disadvantage is that some of the companies in their portfolio have a poor track record of creating value and may be overpriced. The paradox of index-tracking funds is that the higher the price of a share goes, the more funds needs to own it to retain their index-tracking. An experienced investor is able to say this share has gone too high so I'll sell and take the profit. Index trackers can't do that. There are of course some other managed funds where the managers will pick stocks for you. These can also be a good option if you are happy with the fees and the liquidity.

[MHoppy]

On 19/11/2018 at 19:01, vand said:

I buy the Blackrock Gold fund for my pension... 

Sorry to hijack the thread

Couple of quick questions do you use IB to manage your SIPP portfolio ?

I'm just looking at transferring my SIPP away from my current provider and IFA to take control myself. I'm been on the IB website and phoned the list of approved SIPP Admins for quotes. 

Do you guys recommend a particular IB SIPP admin? and does it even matter which I go with? I'm thinking not a go with the cheapest.