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Recommendation on gold/metals index fund?
Old 10-10-2004, 08:38 PM   #1
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Recommendation on gold/metals index fund?

I would like to hold a small amount of VGPMX (Vanguard Precious Metals) but the minimum is $10k and that would throw my allocation way out of whack (I'm just starting out). Can anyone recommend something similar with an opening minimum of $3k or less (this is for my Roth). Obviously, would like it to be no-load and have a low expense ratio.

Here's the top performing funds in this area from Yahoo... I can't seem to identify a consistent winner.
http://biz.yahoo.com/p/tops/sp.html
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Re: Recommendation on gold/metals index fund?
Old 10-10-2004, 08:48 PM   #2
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Re: Recommendation on gold/metals index fund?

I couldn't recommend precious metals now, any more than I could REITs. In both cases, it'd be like showing up to the party about 3-5 years late.
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Central Fund of Canada (CEF)
Old 10-10-2004, 10:26 PM   #3
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Central Fund of Canada (CEF)

CEF is unfortunately the ticker of this closed-end fund, which holds almost entirely gold & silver bullion. For some reason this commodity fund is trading at a 14% premium to its assets. The ER is 1%.

I made money on it last year and then stopped out, but it appears to be exploiting the dollar's decline. I wouldn't put your money into it unless you've already covered every other asset allocation that you feel necessary.

http://www.etfconnect.com/select/fun....asp?MFID=3653

You might try asking "Rono" and "Jughead" over at the FundAlarm discussion board for more leads. One has decades of experience with metals & coin-collecting while the other has made precious metals (commodities & miners) as much as 25% of his portfolio.

Compared to my asset allocation, my radiation-hardened cojones only have 311 millirem lifetime gamma exposure from military reactors.
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Re: Recommendation on gold/metals index fund?
Old 10-11-2004, 09:03 AM   #4
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Re: Recommendation on gold/metals index fund?

Tocqueville has a good fund. Not cheap but few gold funds are.

Vanguard's fund now have diversified into non-precious metals mining - everything from diamonds to copper to uranium. I bought it before the minimums went up. Interesting fund, very different from everything else out there.
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Re: Recommendation on gold/metals index fund?
Old 10-11-2004, 09:55 PM   #5
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Re: Recommendation on gold/metals index fund?

regardless of your vehicle of choice,unless you have a good grasp of charts,id recommend $ cost averageing in.Also as an aside,AMEX is coming out with a new ETF.Will represent current canadian producers if i remember correctly.Not sure what the symbol will be,but if you troll through AMEX web sight,im sure itl be plastered somwhere.The vangaurd idea is interesting since it has more exposure to industrial metals,which have been on there own appreciation rocket.--
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Re: Recommendation on gold/metals index fund?
Old 10-12-2004, 12:32 PM   #6
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Re: Recommendation on gold/metals index fund?

Frankly I wouldnt bother with metals if you're just starting out.

I added a chunk (either 10k or 25k I forget which right now) a few months back and it was more or less fiddling around/last asset class sorts of stuff. Some of the investment gurus we all like around here suggest 3%-5% as an 'icing on the cake'.

Part of the reason why I wouldnt get too excited right now is that these funds, along with other commodities funds are very expensive right now because they're en vogue. The other part is that they tend to help you during periods of unexpected rises in inflation. Almost everybody is expecting a rise in inflation. Therefore it wont be particularly unexpected. By the way, I dont expect a big rise in reported inflation, if for nothing else because the way its being reported isnt accurate in the first place.
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Re: Recommendation on gold/metals index fund?
Old 10-12-2004, 09:09 PM   #7
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Re: Recommendation on gold/metals index fund?

does anyone hold physical gold or silver as an investment?
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Re: Recommendation on gold/metals index fund?
Old 10-12-2004, 09:22 PM   #8
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Re: Recommendation on gold/metals index fund?

Yes, I bought a bunch of gold. I also hold gold stocks. The stocks are obviously more liquid, so the physical gold is more of a doomsday stash rather than a true investment.

I hope I never have to see it again, but if we hit a period of hyperinflation, or perhaps a wave of bank failures, I may pull it out and start buying guns, ammo, and a bullet-proof hummer for use as a get-away car.
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Re: Recommendation on gold/metals index fund?
Old 10-12-2004, 11:15 PM   #9
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Re: Recommendation on gold/metals index fund?

Yes i own physical metals as well as equities,Ive owned most of the physical for 4 yrs,obviously im very happy with it.I bought US MINT proof gold along with a few gold eagle bullion,and some St.Gaudens as well.Also 100 oz silver bars.In retrospect i wish i would have gotten canadian maples or the austrian coins since their gold content is closer to .99 % as opposed to the gold eagles.The Proof coins are very beautifull and fairly low mintage,but kinda wonder if straight maples might have been more bang for the buck.I have quite a few metal stocks,and patiently +/- around a core.Commodities are an asset class,the idea that some how they arent viable at any time point is a mistake in my opinion.--ak
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Re: Recommendation on gold/metals index fund?
Old 10-13-2004, 07:09 AM   #10
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Re: Recommendation on gold/metals index fund?

Hi there,
BGEIX (American century) is a cheap choice that is as close to a gold equity index fund as one can come. Low E/R and focused on gold miners.
CEF I use myself despite the high premium, another alternative is the South African closed end fund: ASA - and it trades at a nice DISCOUNT.

Precious Metals is about 10% of my base portfolio but my gambling money are in CEF/ASA these days too. Cheers!
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Re: Recommendation on gold/metals index fund?
Old 10-13-2004, 10:25 AM   #11
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Re: Recommendation on gold/metals index fund?

Quote:
kinda wonder if straight maples might have been more bang for the buck
I don't think it makes much of a difference, but I did go for maples for their higher purity. The only real benefit is that you can sell them to a jeweler who can melt them down, which is how a lot of gold was liquidated during the last gold boom/bust cycle.
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Re: Recommendation on gold/metals index fund?
Old 10-13-2004, 10:31 AM   #12
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Re: Recommendation on gold/metals index fund?

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another alternative is the South African closed end fund: ASA - and it trades at a nice DISCOUNT.
Hmm, the discount is over 10%. That's tempting, but their operations look pretty opaque. I couldn't easily determine their holdings or how they valued their assets. I'm always nervous about investing in holding companies that get to decide how to value their own investments.
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Re: Recommendation on gold/metals index fund?
Old 10-18-2004, 03:00 PM   #13
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Re: Recommendation on gold/metals index fund?

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Yes, I bought a bunch of gold. * I also hold gold stocks. *The stocks are obviously more liquid, so the physical gold is more of a doomsday stash rather than a true investment.
Buried in the backyard? I hope it's not in a safe deposit box at the bank because if you hit a scenario where you need it you likely won't be getting access to the safe deposit box.
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Re: Recommendation on gold/metals index fund?
Old 10-18-2004, 03:09 PM   #14
 
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Re: Recommendation on gold/metals index fund?

Quote:
Yes, I bought a bunch of gold. * I also hold gold stocks. *The stocks are obviously more liquid, so the physical gold is more of a doomsday stash rather than a true investment.

I hope I never have to see it again, but if we hit a period of hyperinflation, or perhaps a wave of bank failures, I may pull it out and start buying guns, ammo, and a bullet-proof hummer for use as a get-away car. *

Hey Wab,

Were you one of those folks that had a years food and water supply in the basement for the year 2000 Crisis? - Just wondering 8)
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Re: Recommendation on gold/metals index fund?
Old 10-18-2004, 03:31 PM   #15
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Re: Recommendation on gold/metals index fund?

Buried in the ground - as in a non working patented gold mine (stopped mining in the 1940's). Bought in the last frenzy - early 1970's. There's 20 acres on a creek - might be developed someday. Also from the 70's - a few gold and silver coins rattling around in the safety deposit box. Owned Vanguard PM and Homestake back in the days when it paid a 4% dividend.

Also have timberland with spotted owls - limited partnership that's actually making some (very small) money as vacation lots - no logging.

I don't count in ER the trail of junk left from my 'school of hard knocks days' - heh, heh - Harry Browne, multi asset class investing, etc., etc. On occasion - actually made money.

But pretty much balanced index (Boglehead ) for the last ten years.

Do like to read raddr's forum on the new generation of commodity investment instruments - but any side money would probably go to the blindingly obvious like Wellesley or the like with an income stream(no more N word).

If I could convince myself that a new multi decade trend had started - maybe ? - but at age 61 - will look at large cap value first.
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Re: Recommendation on gold/metals index fund?
Old 10-18-2004, 03:43 PM   #16
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Re: Recommendation on gold/metals index fund?

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Yes, I bought a bunch of gold. * I also hold gold stocks. *The stocks are obviously more liquid, so the physical gold is more of a doomsday stash rather than a true investment.
Wab, my parents were only children during the depression, but they were greatly affected by it. They have about 95% of their assets in farmland and 5% in CDs. My mother has been convinced for most of her life that doomsday is just around the corner, and she takes great comfort in the fact that they can always live off the land if it comes to that. Over the last 30 years farmland has performed about as well as the stock market, although not as well in the last 10. So I have considered buying 50 acres or so because it has intrinsic value. I haven't done it yet, but if prices plunge (which they often do) I might be a buyer. Of course, if we ever get into a real doomsday scenario I'll probably be screwed no matter what I do. I don't have enough assets to cover every scenario.
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Re: Recommendation on gold/metals index fund?
Old 10-18-2004, 04:38 PM   #17
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Re: Recommendation on gold/metals index fund?

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Over the last 30 years farmland has performed about as well as the stock market, although not as well in the last 10. So I have considered buying 50 acres or so because it has intrinsic value. I haven't done it yet, but if prices plunge (which they often do) I might be a buyer.
Hi Bob,

I bought 120 acres of good land in western KY during the farmland crash of the mid-80s. I knew the area from childhood. I sold it because I lived too far away, and I wanted to be present at the harvest, since I got shares, not straight rent.

I think in spite of what people often say about farmland being a lousy investment, it can be pretty good. IMO it will be increasingly secure in the future, due to population pressure.

You probably can draw on your parents experience and your contacts in the area to help you, which is also a big plus.

My concerns were being sure to get prime land for row crops, so that there would always be rental demand, even in a very soft market. And there is no substitute for high yields. The farmer has to go back and forth so many times to prepare and harvest. He might as well get a top harvest.

My other idea was to get well located land, so that my relatively small piece would be easy for a large farmer to integrate into his operation.

Good luck if you try this. It's more fun than stocks.

Mikey
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Re: Recommendation on gold/metals index fund?
Old 10-19-2004, 02:24 PM   #18
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Re: Recommendation on gold/metals index fund?

Quote:
Hi Bob,

I bought 120 acres of good land in western KY during the farmland crash of the mid-80s. I knew the area from childhood. I sold it because I lived too far away, and I wanted to be present at the harvest, since I got shares, not straight rent.
Hi Mikey,

My Dad was a tenant on the family farm for years. In the earlier days I believe most arrangements were like you had - share cropping. He gets cash rent now. The current tenant is barely making it and may fold. The profit margins are incredibly slim for tenants, but it's amazing how many people are lined up to be tenants. But like you say, the best situation is to have someone nearby who can integrate it into their existing operation.
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Re: Recommendation on gold/metals index fund?
Old 10-19-2004, 02:28 PM   #19
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Re: Recommendation on gold/metals index fund?

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I bought 40 acres about 25 miles from St. Paul Minnesota in 1996. It has gone up 4 times in value since then.
Cut-Throat, is that up in the Stillwater area? My brother's home near Marine on St. Croix has significantly increased in value. He has several acres with it and has been talking of selling it for some time now, but it just keeps going up.
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Re: Recommendation on gold/metals index fund?
Old 10-19-2004, 05:37 PM   #20
 
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Re: Recommendation on gold/metals index fund?

Gosh Cut-Throat, you sure are an up-beat guy.
Seriously, I hope that your land "skyrockets" and there
is always a fresh hatch on your favorite trout stream.
Buying well located land and holding is easy money,
if you have the time. I don't any more.

John Galt
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