Gold

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Re: Gold

Postby mac1214 » 25 Aug 2011 11:45

Most Canadians who are thinking of buying gold would probabaly be better off putting the money into paying off their mortgage than buying gold. One is an optimistic investment, while gold is based on investing in fear. You only have to look at the housing bubbleheads to see really bad investing, based on their fear of something. Gold used to be a good buy to combat inflation, since there's none around, people are buying it because interest rates aren't paying much and they want a get-rich-quick scheme, which means gold.
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Re: Gold

Postby optionable68 » 25 Aug 2011 12:42

mac1214 wrote:Most Canadians who are thinking of buying gold would probabaly be better off putting the money into paying off their mortgage than buying gold. One is an optimistic investment, while gold is based on investing in fear. You only have to look at the housing bubbleheads to see really bad investing, based on their fear of something. Gold used to be a good buy to combat inflation, since there's none around, people are buying it because interest rates aren't paying much and they want a get-rich-quick scheme, which means gold.


Yeah, just think, one day you will sell your family home for a shiny brick. :roll:
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Re: Gold

Postby MDunleavy » 27 Aug 2011 07:27

Nevertheless, decisive break of 1911.55 will target 2000 psychological level next.
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Re: Gold

Postby mac1214 » 29 Aug 2011 11:44

Someone says that one day a person will sell their house for a brick of gold, but a person can do that now, but not have anywhere to live. Gold is going up because a gold seller needs a buyer who's more afraid than he is and there's a few around. I guess they think that the economies of Europe and the U.S. are so bad that the only alternative is to go back to the old times when gold was the store of value. Those economies will turn the corner one day, like Canada did and the gold buyers will find out that there isn't a bigger chicken around to sell their gold to and that their shiny bricks are dropping in price. Perhaps they'll be be wishing that they had a nice house instead of a shiny brick.
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Re: Gold

Postby shmenge » 29 Aug 2011 12:42

mac1214 wrote:I guess they think that the economies of Europe and the U.S. are so bad that the only alternative is to go back to the old times when gold was the store of value.

We live in a Dollar World not a Gold Standard, until then gold is not money and the "Excited States" will not go bankrupt.
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Re: Gold

Postby Descartes » 03 Sep 2011 10:32

Not that I hold any gold or the opinion that economic collapse (with or without zombies) is imminent but here is a take on the fragility of what is called one's assets (read originally at Bogleheads):
Most financial assets are obligations due to you. A bond, bank account, or Treasury bill is someone's promise to pay you a number of dollars. A stock is a piece of paper that entitles you to a share of a company's assets and profits — if any.

And unless you maintain a private army, even real estate is a paper promise — since its value depends on the government's restraint in respecting your deed, and on the performance of its promise to protect your property.

Gold is the only investment that stands on its own. It is real money — portable, independent, divisible, durable, and recognizable — and so it survives when everything else fails. Welcome in far more places and circumstances than your American Express card, it is the most reliable source of financial security.

That doesn't mean that gold will always have today's value. But it will always have some value — no matter what happens to governments or currencies.

It is your portfolio's asset of last resort.

Source: Harry Browne, Why The Best-Laid Investment Plans Usually Go Wrong, Page 321.
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Re: Gold

Postby chiaroscuro » 03 Sep 2011 13:13

If you believe that there is a good possibility that your real estate can be taken away from you...then you have to be smoking crack to think that your gold can't be taken away from you. :wink: I suppose you could bury it and not tell anyone...or put it in a safety deposit box in Switzerland...but going to such extremes create new problems.

Being of German heritage I'll tell you that my ancestors lost everything that wasn't real estate after WW2. Anything of value that could be destroyed was destroyed. Anything of value that could be taken away from you was taken away from you. Anything portable and of value was sold at steep discount. You had to eat. Ironically they were "forced" to hold onto the real estate after the war because it had so little value and it took a while for government to function to be able to register the sale of a deed. Who wanted bombed out land when no one had money to develop it? They even got their real estate back in East Germany although that took 50 years.
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Re: Gold

Postby Descartes » 03 Sep 2011 14:13

chiaroscuro wrote:If you believe that there is a good possibility that your real estate can be taken away from you...then you have to be smoking crack to think that your gold can't be taken away from you.

I think you are missing the main point which is that other financial assets are simply obligations others have to you that may or may not be honored (you are dependent on their ability and their desire to do so) whereas gold "stands on its own". Of course, I could rob you of your gold (and I may when I finally find where you've buried it), but that's not the point.
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Re: Gold

Postby chiaroscuro » 03 Sep 2011 23:06

Real estate is not a financial obligation. I live in my house and it is mine. If the government wants to take it away it will probably be coming for your gold also.
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Re: Gold

Postby Descartes » 04 Sep 2011 09:58

chiaroscuro wrote:Real estate is not a financial obligation. I live in my house and it is mine.

Oh, sure, absolutely... unless someone snakes that promise on a flimsy piece of paper out from under you through deed fraud or the government decides to do it because you didn't pay your tribute ..er.. property taxes promptly enough or they simply want to plow a freeway bypass through your kitchen. :wink:

Unless you're a turtle, if crap like that happens you can't easily hoist that asset on your back and head down the road to sell it to someone in Spokane or Timbuktu (like you can with those gold coins).

I don't own any gold and I do, supposedly, own a house like you but the tenuous web of agreements and promises that comprises that "ownership" gives me some thought.
Last edited by Descartes on 04 Sep 2011 16:46, edited 1 time in total.
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Re: Gold

Postby chiaroscuro » 04 Sep 2011 10:16

...as I said, if they are coming for my house you can be darn sure they are coming for people's gold. In fact they would probably want people's excess gold before they would want people's homes. Also there are no capital gains on the sale of a house.

Ultimately I agree with you, you can transport gold, but if we are at the point where they have taken my house away and are chasing down people for their gold assets you would probably be better off investing in large munitions stockpiles. If we are thinking end of the world possibilities, contrary to what the tinhatters think, it will probably be better to be part of a group then to isolate yourself in a bunker. People are social animals and I believe that during troubled times they will band together. Sure there will be some "wolf packs" but would they rather take on a small community living hand to mouth or go after a lone wingnut sitting on a pile of gold, munitions, and canned goods? Owning a pile of physical gold makes you a target in more ways then you can imagine. :D Easy transportation also has it's drawbacks. :wink:
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Re: Gold

Postby Nemo2 » 04 Sep 2011 10:52

chiaroscuro wrote: it will probably be better to be part of a group then to isolate yourself in a bunker.

A continuum? :wink:

If it comes down to the proverbial wire....even a 'group' ain't gonna cut it, you'll be up against armies and their associated firepower.
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Re: Gold

Postby chiaroscuro » 04 Sep 2011 11:59

Nemo2 wrote:
chiaroscuro wrote: it will probably be better to be part of a group then to isolate yourself in a bunker.

A continuum? :wink:

If it comes down to the proverbial wire....even a 'group' ain't gonna cut it, you'll be up against armies and their associated firepower.
At that point I won't care if I own mutual funds or gold. :wink:
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Re: Gold

Postby jpeterman » 04 Sep 2011 20:47

I am contemplating investing in a gold bullion ETF - possibly one of the following: 1) SPDR Gold Trust GLD, 2) iShares Comex Gold Trust IAU, 3) ETFS Physical Swiss Gold Shares SGOL or 4) Claymore Gold Bullion CGL.C (non-hedged).
I would like to take advantage of the high Canadian dollar vs. the US $ at the same time and that is why I am considering the first three which trade on US exchanges and the last which trades on the TSX but is "un-hedged".
From a tax standpoint, these funds do not normally make distributions, so I am not concerned about this. From a capital gain / loss standpoint, from what I can see reading the prospectus for the Claymore ETF, any capital gain realized from the CGL.C would be treated as any other stock capital gain. Half the gain is taxed at your personal tax rate.
My question - is there any problem from a tax standpoint or otherwise in owning and selling units in the first three ETF's, as they trade on US exchanges?

Thanks.
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Re: Gold

Postby newguy » 04 Sep 2011 21:01

jpeterman wrote:I am contemplating investing in a gold bullion ETF - possibly one of the following: 1) SPDR Gold Trust GLD, 2) iShares Comex Gold Trust IAU, 3) ETFS Physical Swiss Gold Shares SGOL or 4) Claymore Gold Bullion CGL.C (non-hedged).
I would like to take advantage of the high Canadian dollar vs. the US $ at the same time and that is why I am considering the first three which trade on US exchanges and the last which trades on the TSX but is "un-hedged".
From a tax standpoint, these funds do not normally make distributions, so I am not concerned about this. From a capital gain / loss standpoint, from what I can see reading the prospectus for the Claymore ETF, any capital gain realized from the CGL.C would be treated as any other stock capital gain. Half the gain is taxed at your personal tax rate.
My question - is there any problem from a tax standpoint or otherwise in owning and selling units in the first three ETF's, as they trade on US exchanges?

Thanks.


Hmm... all this talk of people buying gold makes me want to sell....oh wait I don't have any :cry:

The currency that gold is measured in makes no difference, it's like saying you're 2 meters or 6'7" tall - it's the same. There's no advantage to buying one over the other. If you only have Cdn $ it will be easier to buy a Cdn fund. It's all capital gains but if you die with US assets you might be in for some estate tax.

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Re: Gold

Postby jpeterman » 04 Sep 2011 23:24

newguy wrote:
jpeterman wrote:I am contemplating investing in a gold bullion ETF - possibly one of the following: 1) SPDR Gold Trust GLD, 2) iShares Comex Gold Trust IAU, 3) ETFS Physical Swiss Gold Shares SGOL or 4) Claymore Gold Bullion CGL.C (non-hedged).
I would like to take advantage of the high Canadian dollar vs. the US $ at the same time and that is why I am considering the first three which trade on US exchanges and the last which trades on the TSX but is "un-hedged".
From a tax standpoint, these funds do not normally make distributions, so I am not concerned about this. From a capital gain / loss standpoint, from what I can see reading the prospectus for the Claymore ETF, any capital gain realized from the CGL.C would be treated as any other stock capital gain. Half the gain is taxed at your personal tax rate.
My question - is there any problem from a tax standpoint or otherwise in owning and selling units in the first three ETF's, as they trade on US exchanges?

Thanks.


Hmm... all this talk of people buying gold makes me want to sell....oh wait I don't have any :cry:

The currency that gold is measured in makes no difference, it's like saying you're 2 meters or 6'7" tall - it's the same. There's no advantage to buying one over the other. If you only have Cdn $ it will be easier to buy a Cdn fund. It's all capital gains but if you die with US assets you might be in for some estate tax.

newguy


Help me out here as I am new to gold investing. I take $183 Cdn and buy 1 share of GLD worth $183 US now and in 2 years the Cdn $ goes to $0.80. Assume the price of gold goes up but comes right back down to where it is now. Wouln't I be able to sell my GLD share and take the $183 US and convert it to $229. Cdn. and have a 25% gain? Likewise if I bought the CGL.C I would think under the same scenario it would be worth 25% more because the Cdn dollar weakened and the CGL.C is un-hedged.
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Re: Gold

Postby adrian2 » 05 Sep 2011 09:28

jpeterman wrote:I take $183 Cdn and buy 1 share of GLD worth $183 US now and in 2 years the Cdn $ goes to $0.80. Assume the price of gold goes up but comes right back down to where it is now. Wouln't I be able to sell my GLD share and take the $183 US and convert it to $229. Cdn. and have a 25% gain? Likewise if I bought the CGL.C I would think under the same scenario it would be worth 25% more because the Cdn dollar weakened and the CGL.C is un-hedged.

In your example, the price of gold did not stay the same in CA$, which is the currency that matters for us (and the CRA). It's irrelevant whether you paid for it with CA$ or US$.
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Re: Gold

Postby newguy » 05 Sep 2011 10:53

jpeterman wrote:Help me out here as I am new to gold investing. I take $183 Cdn and buy 1 share of GLD worth $183 US now and in 2 years the Cdn $ goes to $0.80. Assume the price of gold goes up but comes right back down to where it is now. Wouln't I be able to sell my GLD share and take the $183 US and convert it to $229. Cdn. and have a 25% gain? Likewise if I bought the CGL.C I would think under the same scenario it would be worth 25% more because the Cdn dollar weakened and the CGL.C is un-hedged.

I didn't check your math but your logic is correct. So you realize it makes no difference what currency you buy it in, only the CAD price of gold matters to you.

If you want to get philosophical, that's the reason people buy gold - it's supposed to hold it's value regardless of currency fluctuations. If the CAD drops to 80¢ then you'll be paying that much more for imports in CAD but they will still cost the same in gold (assuming gold has value like in historical times).

You should check price to NAV. I know someone mentioned here that CEF had a high premium and I know PHYS had a huge one. Check it out for CGL

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Re: Gold

Postby Nemo2 » 08 Sep 2011 11:45

I'm not a gold bug, and know less than zip about calls, but has anyone, (apologies if it's been discussed previously), had any exposure to HEP
Name: Horizons Enhanced Income Gold Producers ETF ("HEP")
Ticker Symbol: HEP:TSX
Investment Manager: JovInvestment Management Inc.
Distributions: Net call option and dividend income
Distribution Frequency: Monthly
Management Fee: 0.65%
Distribution Tax Treatment: Call option premium as capital gains and dividends as dividend income
Eligibility: RRSP, RRIF, DPSP, RDSP, RESP, TFSA
DRIP Eligible: Yes

INVESTMENT OBJECTIVE
The investment objective of HEP is to provide unitholders with: (a) exposure to the performance of an equal weighted portfolio of North American based gold mining and exploration companies; and (b) monthly distributions of dividend and call option income. Any foreign currency gains or losses as a result of HEP’s investment in non-Canadian issuers will be hedged back to the Canadian dollar to the best of its ability.

HEP invests primarily in a portfolio of equity and equity related securities of North American companies that are primarily exposed to gold mining and exploration and that, as at each semi-annual rebalance date, are amongst the largest and most liquid issuers on the TSX in that sector. HEP will rebalance, on an equal weight basis, the portfolio of constituent securities on each semi-annual rebalance date.

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Re: Gold

Postby chiaroscuro » 08 Sep 2011 22:35

Yeah but can you buy canned goods and ammo for the bunker with a HEP? :lol:
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Re: Gold

Postby shmenge » 09 Sep 2011 08:37

chiaroscuro wrote:Yeah but can you buy canned goods and ammo for the bunker with a HEP? :lol:

yes you can :wink: if you're smart enough to use your call premiums to make your purchases. Current yield @ 23% IMO a good way to play gold if one must. Pays out monthly :thumbsup:
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Re: Gold

Postby chiaroscuro » 09 Sep 2011 15:33

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I'd want physical gold if the armies are marching and their are riots in the streets! :wink:
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Re: Gold

Postby Peculiar_Investor » 17 Sep 2011 08:42

From Jason Zweig, WSJ* -- Is Gold Cheap? Who Knows? But Gold-Mining Stocks Are. He offers some insight on the attempt to put a valuation on gold.
As John C. Bogle, founder of the Vanguard funds, told me two weeks ago, gold "has no internal rate of return." As a result, there isn't any reliable way to tell what it is worth.

So the people who say gold is in a bubble might well be right. But the people who think gold is heading for $2,500, $5,000 or $10,000 also might be right.

Folks on both sides would be more intellectually honest if they admitted that they are just guessing what gold is worth. With no measures like price/earnings ratios or bond yields as benchmarks of value, figuring out whether the precious metal is cheap or dear is like trying to solve a Rubik's cube while you are blindfolded.

Decades ago, the great investing analyst Benjamin Graham pointed out that there is no such thing as a "good" stock; every company is good at one price (when it is cheap) and bad at a higher price (when it is too expensive). But try asking a gold bug at what price he would sell, and you are likely to get an answer somewhere between $6,000 and "never." Ask a gold skeptic at what price he would buy, and you be met with silence, followed by "never" or a quavering "$900, maybe?"

Precisely because I don't know how to determine its fundamental value and have never been able to identify anyone else who can, I haven't written about gold for years.

Some good nuggets (sorry, couldn't resist) of general wisdom from John C. Bogle and Benjamin Graham weaved into the article.

* Google might be required to peak behind the WSJ paywall.
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Re: Gold

Postby shmenge » 17 Sep 2011 09:17

Trump's New Gold Standard
On Thursday, the newest tenant in Donald Trump’s 40 Wall Street, a 70-story skyscraper in Manhattan’s Financial District, will hand Mr. Trump a security deposit worth about $176,000. No money will change hands—just three 32-ounce bars of gold.
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Re: Gold

Postby Shakespeare » 17 Sep 2011 09:24

As John C. Bogle, founder of the Vanguard funds, told me two weeks ago, gold "has no internal rate of return."
It actually has a small negative IRR due to storage charges.
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