Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Which way to buy gold: The metal or the companies?

I don't have a WSJ subscription but I was able to read this at my brokerage. If you are considering a PM position this might assist you.

Bullion or the Miners


  • Howdy Mark/all,

    I can't read the article but am able to share a bit. The POG has been hammered due to folks having to raise cash for margin calls, etc. This is paper gold. While this is going on, gold had been hitting new highs in every other currency than the dollar, BEFORE the virus. Add in the virus and the run on physical bullion becomes significant. Ergo, we've got a classic case of artificial pricing in the market. This is where the official price is below what the street price is. Supply either disappears or premiums skyrocket or both. Right now it's both.

    For paper bullion, be careful of ETFs as they are taxable at a higher rate as collectibles. Keep them in an exempt account. Many of them are investing in the metal, supposedly. Most pm mutual funds don't have this problem but most are investing in mining stocks, rather than bullion. For stocks, you can find them all here for gold and at their companion silver site for those miners:

    As for risk, you know the drill. The broader the investment as in a mutual fund the lower the risk and return. The more narrow you invest, they higher the risk and return. The broadest would be a natural resource fund, while the riskiest would be penny mining stocks. The other leverage issue is gold vs. silver. Silver has a much higher potential rate of return. In the Hunt Bros. run in the late 70's gold went up about 3x while silver went up 10x. During the Big Bonanza from 2002-2011, a similar pattern occurred. Right now, and always, it's gold in the spotlight but silver ends up running in tandem.

    For those that are looking at buying physical bullion, here is a listing of premiums. Same as any other market, volume discounts but more importantly with the metals is fungibility. You want to be able to sell it. This means you're going to pay more for an AGE than an Austrian 100 Corona but are sure you can sell the latter. Hell, you can sell at AGE at McDonalds. Generic gold ingots and rounds (not coins) have the lowest premium but again, you buy junk and . . . It's a tradeoff between fungibility and cost.

    I am not touting LCS although I've been dealing with them for over 30 years. What you have to do is shop around. I like Apmex but there are dozens.

    Do not under any circumstances buy bullion or coins off of a TV channel. The stuff they sell is genuine but normally priced as much as 50% over retail. Do you have any idea how long you have to hold something to make this up.

    just a few thoughts,

    and so it goes,


Sign In or Register to comment.