Gold ETF holding more than doubled

From 22 September to 4 November I owned 8 shares of ETF Securities Physical Gold (PHAU).

I now own 18 of them. The extra 10 shares have set me back another £1092.

This is not going to look like a fortune to some but I don't have a great deal to play around with.

According to my Hargreaves Lansdown account my total holding in PHAU is now down by 3.26%:

At the end of the today PHAU was down 0.5% and the pound was up 0.65% against the dollar, both more favourable than the price at which I bought at.

I didn't check to see how my original shares were doing before this purchase but when I bought the original 8 shares they were £111.97 each. At the end of today these shares were worth £107.5.

So the 8 shares I bought for £111.97 were down 4% while the 10 I bought for £108.015 were down just under 0.5%.

I'm worried I've bought at a bad time but I felt that if I was buying as a defence against disaster I can't keep waiting for the disaster to pass before investing. Unfortunately gold has generally fallen in the wake of upsets then staged a recovery. While this shows it should make sense to invest after the event, do I know if that pattern is going to persist?

I have until Monday morning to work out what I'll do if the gold price falls sharply on Monday on the back of whatever may develop in Greece. For now though, it appears as if Greece has taken the least tumultuous route.

What people are saying about gold and gold ETFs: 4 November 2011

The deal from Hargreaves Lansdown at 11.09am. I couldn't make up my mind again (details below).

Before that, here's what some other people have been saying:

Up or down

Nicholas Trevethan, a senior metals strategist at ANZ Bank told Reuters: "If Papandreou keeps his mandate, that may well trigger another round of buying, not only in gold but in other commodities as well." (From Reuters: "Gold eases after rally")

Down

In the physical market the piece reports the current price could be too much for jewellers to buy and "speculators could be tempted to cash on gold's recent gains" and higher prices might prompt people to sell their scrap gold. (From Reuters: "Gold eases after rally")

Up for now

"I think gold is really supported by the euro zone (crisis)," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"I think sentiment is more or less still bullish because of the Greek problem and the banking sector is also not good. People are still packing their money into safe-haven assets," said Leung, who pegged resistance at $1,800. (From Reuters: "Gold eases after rally")

Up (in euros)

Bloomberg quotes Dennis Gartman: “The driving force in the gold market is the problems in the euro" adding that “Central banks in Europe and individuals will want to lower their euro holdings and buy gold since no one knows what is happening to the euro. The euro is heading towards parity once again.”
He then said: “Gold is a currency.” (He's wrong, according to Dean below...)

From "Gartman sees gold in euros..."

Up

On 2 November Bloomberg said its "Top gold seers forecast record high in March" The piece cites Ronald Stoeferle at Erste Group Bank AG in Vienna, apparently he is Bloomberg's "second most- accurate forecaster in the past three months".

He said: "There is a loss of trust in the entire financial system and urgent need for safe-haven investment” adding “the environment for gold is just perfect.”

Up or down

But then, later it has Dean Junkans an analyst at Wells Fargo & Co. (whose accuracy as a forecaster is not mentioned although he did say back in August that gold is a “bubble that is poised to burst” before the price plunged).

He said: “It’s not risk free and is not a currency, even though too many people think of it that way” adding “It can go down to $1,300, and could also rise to $2,000, but there is definitely a downside potential.”

Up euro stlye

Up

Bloomberg's "most accuarte" gold analyst - Jochen Hitzfeld, the analyst at UniCredit SpA in Munich - said: "There’s huge potential for gold in the coming years.” He said: “Investors are buying gold. That’s reinforced by buying from central banks. Prices did run up a little bit too fast, but the drop was just a breather.”

Up

Bloomberg's fifth most accurate analyst Jason Schenker, the president of Prestige Economics LLC in Austin, Texas, said: “When we look at gold five years from now, we will say gold was wildly cheap." He said: “What happens to gold is going to hinge on what happens to the dollar, and that is going to be influenced by what happens in Europe and monetary policy.”

“The driving force in the gold market is the problems in the euro. ” He said: “Central banks in Europe and individuals will want to lower their euro holdings and buy gold since no one knows what is happening to the euro. The euro is heading towards parity once again.”

UP

This morning Citywire's chart of the day notes the rise in Physical Gold ETF holdings and quotes strategists at Commerzbank: 'Gold can be expected to enjoy continued strong demand as a store of value and a safe haven amid the many U-turns we have seen during the Greek crisis.'

Citywire also quoted RBS strategists: ‘Gold is now building a bridgehead and we forecast higher prices in the months ahead with an average of $1,900/oz possible during the key gifting period of the 2012 Chinese Lunar New Year.’

UP

A piece on Seeking Alpha by George Maniere, who's blog can be found at Investing Advice said: "In conclusion, I think that every retail investor needs to have 20% of his portfolio in gold and silver. What they need is exposure to precious metals. The biggest threat to anyone in retirement is inflation. "

He also said: "Look for gold to attack $1775 first, then $1800, $1840, and $1900 in the coming six to ten weeks or so."

So what do I do?

The deal from Hargreaves Lansdown at 11.09am was this:



Two days ago I was looking at this:

This is what PHAU was doing.



The bigger move was the pound, up 0.6% against the dollar (Google chart link) and the dollar value of PHAU is down a bit (Google Chart link) together they point to a 1% better price for a UK gold ETF investor.

But as I've pointed out before, I won't know if that's why I'm getting the price I'm getting from HL.

So I'm still not sure about buying now or waiting til after the Greek votes and non farm payrolls in the US.

The latter could see some changes in the value of the dollar. I'm not sure it'll have much effect on the price of gold - but both of these are guesses. I'll have to have a look.

I want to try and see what my decision making process is and why my brain screams "don't do it" every time I think I might.