Wednesday, 4 April 2012

Should I buy more gold ETFs today?

The last time I looked (about 10.30am) I would have paid £1,019.43 including fees for 10 ETF Securities physical gold ETF shares (PHAU).

That's a good deal lower than the £1,066 I paid the last time - Monday 6 March 2012 - (also inlcuding a Hargreaves Lansdown's £11.95 trading fee.)

Today at 10.30am gold was around $1,630/£1,027 per ounce, on 6 March I think I bought at just under $1,700 per ounce (As discussed in the past HL doesn't say how much the exchange rate was or what price I was paying in dollars.) 

Including the fee how much less am I paying than I did before? 1066-1019= 47/1066 x 100 = this shows a price drop of around 4.4% on the last buy.

(Percentages don't come naturally to me so I need to see in black and what whether the fee dents the change in the price of gold much? 1054-1007=47 /1054 = 4.5% fall in the price of gold.) 

Gold fell last night after the minutes of the FOMC showed that more quantitative easing - money printing - was unlikely at the moment. Some people think that the gold story is now over and some don't: CPM (precious metals analysts) say gold has got nowhere to go vs Goldman Sachs which says expect prices to rise (BullionVault: Gold prices peaked last year).

As a normal human being running on free information I don't feel well placed to argue with either of them. One fear is that this could be a replay of what happened to oil in 2008 - Goldman vs Lehman (dotcom oil) when Goldman got it wrong and an investment club I was in got stung.

Buying a fund

I'm not selling anything today. The question is whether to buy. As a sort of half-hearted consolation I've put in an order to buy some BlackRock Gold and General units - not many - and the order won't go through until midday tomorrow by which time all the prices may have rebounded! But there are no fees and it's only £250. 


This time (on 4 April 2012) the spreads on PHAU were about 0.056% and 0.118% for PHGP. That's pretty similar to last time (6 March) when the spreads for PHAU were $166.7 - $166.59 = 0.06% while the spread was 0.113% for PHGP. (I looked at gold ETF spreads a bit more closely here).

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