Thursday, 24 November 2011

Gold to fall to $1,500? Buy now find out later

The pound fell even further against the dollar today and ETF Securities physical gold (PHAU) closed nearly 1% higher. Consequently this Google chart shows the sterling physical gold ETF (PHGP) higher than the dollar PHAU (when the pound is low against the dollar its a good time for a sterling investor to sell dollar assets - but I'm looking to buy now and a weak pound doesn't help).

However the BlackRock Gold and General Fund fell again today. I bought £250 worth of units today (Thursday) and I put in order for another £250 for Friday. I haven't properly checked the costs for buying like this yet though, although I can't see why it would be a problem. The fund is managed by Evy Hambro whose dad is Peter Hambro, founder of gold mining firm Petropavlovsk, formerly Peter Hambro mining. Evy's old boss, the old manager of BlackRock Gold and General, Graham Birch is now a director at Petropavlosk... of which BlackRock owned a large chunk... it's like investing in some kind of gold dynasty.

As yet no sign of the fall forecast by John C Burford yesterday. However Julian Phillips of, writing for BullionVault, is also expecting a big drop.

In piece posted today he said: "The threat of a fall in the Gold Price to $1,500 appears real at the present moment."

But he added: "If a fall back to $1,500 or anywhere below $1,650 we believe it will be for a short period only. It might even drop there for only a day then bounce back to current levels."

Sebastian Lyon reported on the progress of Personal Assets Trust today and still has just over 12% in gold which is classed in cash. This used to be held in gold ETFs but is now done via a gold account after he converted the shares.

Before I forget, I was trying to get hold of spreads for PHGP and PHAU from ETF Securities. They never got back to me. This old article from Index Universe suggests that buying or selling ETFs during periods of volatility (basically when you really want to do it) can be an expensive business. The article says PHAU is among the best but I don't know about PHGP which a lot of people still buy.

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