Jump to content
  • The above Banner is a Sponsored Banner.

    Upgrade to Premium Membership to remove this Banner & All Google Ads. For full list of Premium Member benefits Click HERE.

  • Join The Silver Forum

    The Silver Forum is one of the largest and best loved silver and gold precious metals forums in the world, established since 2014. Join today for FREE! Browse the sponsor's topics (hidden to guests) for special deals and offers, check out the bargains in the members trade section and join in with our community reacting and commenting on topic posts. If you have any questions whatsoever about precious metals collecting and investing please join and start a topic and we will be here to help with our knowledge :) happy stacking/collecting. 21,000+ forum members and 1 million+ forum posts. For the latest up to date stats please see the stats in the right sidebar when browsing from desktop. Sign up for FREE to view the forum with reduced ads. 

Owning GOLD via ETF's on Trading 212 and FreeTrade Apps


BettyEdwards1929

Recommended Posts

My grandson has referred me to the Trading 212 and FreeTrade Platforms. A Fun way to get a 2 free shares. And buy high dividend stocks when you have filled your ISA's.  I was looking around and you can purchase GOLD ETF's. Is there any good reason to punt few £100 on these platforms as a quick way to cashout? I guess Gold will rocket around the 31st Jan before falling again in Feb. 

My PM is currently made up of Bullion coins safely stored in a secret place. Is there any benefit to ETF's or should I just buy a another Sov? 

Link to comment
Share on other sites

Not wishing to sound a little jaundiced, but in a gold ETF the ratio of paper to physical is about 96 to 1. Or for every 96 paper oz Comex actually holds 1 physical oz, ie they can’t actually cover what they have sold. A friend who works in commodities views ETFs as pure speculation and not a particularly good one at that. A Commodity Traded Fund or CTF on the other hand is for hedging for future delivery of physical. Try converting your ETF to physical and you would be in for a long wait especially during times of crisis. The paper to physical ratio of Silver ETFs are even worse at about 100 to 1.

If I was you I would buy a few more Sovereigns, as the saying goes “if you’re not holding physical you’re not holding anything” or words to that effect. 

Link to comment
Share on other sites

12 minutes ago, Airhead said:

Try converting your ETF to physical and you would be in for a long wait especially during times of crisis

 

completely missing the point.

an etf (exchange traded fund) is designed to be

traded. it's not a (convert to physical metal fund).

it merely tries to closely track the underlying asset,

the value gained and lost is in currency(£). it's a

paper asset in order to make it easier to trade.

how the etf buys and sells physical metal(if they

do this) only helps it to track the metal price. this

does not change the fact that it will always be a

paper asset.

physical bullion and paper trading of gold both

have their uses. your strategy should determine

how much of each one you should have.

 

HH

Link to comment
Share on other sites

No harm at all in bunging a few £££’s in ETF’s for a short term gain. But get your timing right and check the platforms trading prices so you know exactly when to get out with a profit - then buy physical bullion with your gains. 

💷 💷 Check out my Wanted adds and message me direct if you can help 💷 💷 

Link to comment
Share on other sites

If you wanted to speculate in the short term then perhaps, but I would keep it VERY short term and have your exit strategy set in stone.

For the reasons given I would not touch ETFs with a barge pole. There are much safer shares that yield a reasonable dividend National Grid for example, rather boring but a safe harbour.

As an old friend once told me when quite young and thinking of investing in stocks and shares. Never invest any money you are not quite happy to lose. I once ignored his advice and lost my shirt, metaphorically speaking. 

Link to comment
Share on other sites

10 minutes ago, HawkHybrid said:

 

completely missing the point.

an etf (exchange traded fund) is designed to be

traded. it's not a (convert to physical metal fund).

it merely tries to closely track the underlying asset,

the value gained and lost is in currency(£). it's a

paper asset in order to make it easier to trade.

how the etf buys and sells physical metal(if they

do this) only helps it to track the metal price. this

does not change the fact that it will always be a

paper asset.

physical bullion and paper trading of gold both

have their uses. your strategy should determine

how much of each one you should have.

 

HH

Very true if they are in fact trading them, but many people invest in PM ETFs thinking it is a convenient way of holding bullion, without vaulting costs and that there is an easy way of converting to physical in times of crisis. You only have to look at the issues around JP Morgan being caught with thier hand in the till to see that PM ETFs are not a safe investment.

Link to comment
Share on other sites

6 minutes ago, Airhead said:

Very true if they are in fact trading them, but many people invest in PM ETFs thinking it is a convenient way of holding bullion, without vaulting costs and that there is an easy way of converting to physical in times of crisis. You only have to look at the issues around JP Morgan being caught with thier hand in the till to see that PM ETFs are not a safe investment.

What is this view based on?  Seems unfounded to me, I would expect most to near all people investing in ETFs understand they have exposure to the underlying asset without buying the asset.  I dont believe people buy a gold ETF expecting delivery of physical on demand, any more than buying S&P ETF leads to delivery of collection of share certificates.  If there is evidence to the contrary, happy to see it.

Link to comment
Share on other sites

You are obviously welcome to invest how you wish. The OP was thinking of investing in a PM ETF and I just gave my opinion.

https://www.cnbc.com/2019/09/16/three-jp-morgan-precious-metals-traders-charged-in-criminal-probe.html

Personally I would not invest in a PM ETF. But if it fits in with your investment strategy then good luck.

Link to comment
Share on other sites

27 minutes ago, Airhead said:

Very true if they are in fact trading them, but many people invest in PM ETFs thinking it is a convenient way of holding bullion, without vaulting costs and that there is an easy way of converting to physical in times of crisis. You only have to look at the issues around JP Morgan being caught with thier hand in the till to see that PM ETFs are not a safe investment.

 

I think the story was about someone(can't remember who)

who tried to get delivery of physical metal from the comex

during a crisis. comex refused delivery of the physical metal

(as per the contract). physical metals dealers then took the

story and implied that the comex refused delivery of physical

metal due to the non existence of said metal(which is not

true). then all the conspiracy theories came out(conveniently

providing support for physical bullion which said metals

dealers had for sale).

the comex is a price discovery platform which can be used

as a guide for markets trading.

 

pm etfs are not designed for investment they are for trading.

 

HH

 

Link to comment
Share on other sites

I have both physical and ETF exposure. They both have their advantages.

 

ETFs can easily be bought incrementally in a cost-averaging strategy. Difficult to do with fractional gold.

ETFs are much more suitable if you want to trade gold and silver at various points of the GSR.

You never have to worry about FAKES with ETFs. Or faffing around wasting your time on Fleabay auctions.

ETFs cost about 0.5% to hold annually. Not free, but not at all bad compared to the spread on physical.

 

ETFs won't help you one iota in a grid-down apocalyptic scenario, but if you want exposure to fiat changes in gold within your traditional investment portfolio then ETFs are absolutely the dogs bollocks.

Link to comment
Share on other sites

As I understand it, when you request conversion of your ETF to physical, that trade is passed to LBMA London as London is the global centre for bullion trading. The LBMA has to then source the physical and arrange for delivery. All well and good during times of normal market operation where the majority of investors still hold paper. During times of market stress such as a financial crisis, if the number of investors trying to convert is greater than the ability of the LBMA to source physical then, well.  

Link to comment
Share on other sites

2 minutes ago, vand said:

I have both physical and ETF exposure. They both have their advantages.

 

ETFs can easily be bought incrementally in a cost-averaging strategy. Difficult to do with fractional gold.

ETFs are much more suitable if you want to trade gold and silver at various points of the GSR.

You never have to worry about FAKES with ETFs. Or faffing around wasting your time on Fleabay auctions.

ETFs cost about 0.5% to hold annually. Not free, but not at all bad compared to the spread on physical.

 

ETFs won't help you one iota in a grid-down apocalyptic scenario, but if you want exposure to fiat changes in gold within your traditional investment portfolio then ETFs are absolutely the dogs bollocks.

You are obviously a sophisticated investor who understands both the risks and rewards and more power to your elbow. But someone who does not have your understanding who is just thinking of a bit of a punt I personally think there are better investments, that’s all.

Link to comment
Share on other sites

2 minutes ago, blindguy said:

instead of gold etf way not just buy gold mining stocks? as far as i am concerned i like my gold investment only one way, in my hands, if you do not hold it you do not own it.   jim

Totally agree.

Link to comment
Share on other sites

12 minutes ago, Airhead said:

And you can be categorically sure of that?

ETFs serve a important and useful purpose for the plenty of ordinary investors.

But ETFs give you exposure to whatever it says on the tin, it doesn't give you access to the underlying. How can I be sure? Because nobody buys stock ETFs thinking that they really "own" the underlying companies. You don't buy an ETF and then claim to be a Google shareholder. You don't buy into a mining ETF and expect to be able to attend the AGM for Newmont. 

Link to comment
Share on other sites

Just now, HawkHybrid said:

 

I'm with vand on this one.

anyone who buys an etf with the intent of taking

physical delivery will not want to make that mistake

again.

 

HH

I totally agree 

Link to comment
Share on other sites

4 minutes ago, vand said:

ETFs serve a important and useful purpose for the plenty of ordinary investors.

But ETFs give you exposure to whatever it says on the tin, it doesn't give you access to the underlying. How can I be sure? Because nobody buys stock ETFs thinking that they really "own" the underlying companies. You don't buy an ETF and then claim to be a Google shareholder. You don't by a mining ETF and expect to be able to attend the AGM for Newmont. 

Although through my holding in BT, I do get invited to the Barbican but have never taken the trouble to go. Not enough freebies perhaps 🙂Surely through being a shareholder you are a part owner of the company, abet in a small way.

Link to comment
Share on other sites

14 minutes ago, blindguy said:

instead of gold etf way not just buy gold mining stocks? as far as i am concerned i like my gold investment only one way, in my hands, if you do not hold it you do not own it.   jim

Mining stocks are introducing a whole range of other opportunities and risks than the metals.  To me they look like an arbitrage, dig into the fundamentals to work out if company is making large margin from production well below spot, or reserves are undervalued.  But those things can be going the other way too.  Better to buy as stocks in own right than for exposure to gold imo. 

Link to comment
Share on other sites

To state the obvious, Gold and gold miners are not the same thing. We have discussed this before. Just overlay the chart of GLD with the chart of the HUI if you want to see how different. 

Mining ETFs are a sensible way to go if you want exposure to gold miners. Mining is a cash-intensive and precarious business. The risks in any one company is very high. Trying to pick out the wheat from the chaff in this sector should be left to the experts, and I'm sorry but I don't consider anyone to be a real expert unless they have dug gold out of them ground themselves and know what it takes to successfully run a mining company.

Link to comment
Share on other sites

20 minutes ago, Airhead said:

Although through my holding in BT, I do get invited to the Barbican but have never taken the trouble to go. Not enough freebies perhaps 🙂Surely through being a shareholder you are a part owner of the company, abet in a small way.

The key point is with an ETF you are not a share holder in the underlying asset, you're a shareholder in the ETF.   

Link to comment
Share on other sites

1 hour ago, Martlet said:

The key point is with an ETF you are not a share holder in the underlying asset, you're a shareholder in the ETF.   

Yes I do now realise that, thank you.

I did have a look at some mining ETFs just as an educational exercise and to be perfectly honest it is not something that I have either the knowledge or expertise to make a balanced investment decision on so I will leave well alone. 

A few nice 1oz lumps of gold Britannias or 2oz silver beasts - lovelies. I will leave complex financial instruments to those who have the interest in such things. Unfortunately there are other calls on my meagre resources, motorcycles etc so not much scope for large purchases 😞

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

×
×
  • Create New...

Cookies & terms of service

We have placed cookies on your device to help make this website better. By continuing to use this site you consent to the use of cookies and to our Privacy Policy & Terms of Use