BlackRock Gold and General 6% spread

According to Hargreaves Lansdown the bid offer spread on BlackRock Gold and General fund was 858.10p to buy, 810.00p to sell - that's a spread of nearly 6 per cent - I'm not sure what it usually is.

Cash in waiting

I put more money in my account this morning. But I am now down about £2,000.

I now want to make a judgement about buying more gold. I think I'm clear about why I own it but it's not a conviction and I have to remind myself why I'm doing it otherwise I get confused.

Gold investment - should my goal posts be moved?

Crumbs! This is what my gold investment portfolio looks like this morning.

I knew it would be bad and I'm not sure if this is worse than I expected.

It's not a reassuring signal to myself that I know what I'm doing. Did I buy gold for the right reasons and have they changed?

Buy or sell as gold price plummets?

Can I really make a sensible decision about whether to buy or sell now?

I've got about £1000 standing by but I'm not sure I'm aiming to buy anything yet, or sell anything.... but I might have changed my mind by tomorrow.

 My small portfolio, which now includes one share of Personal Assets Trusts (PNL), looks pretty shredded at the moment.

Portfolio: not much changed

Not much has changed  since a couple of weeks ago - September 18 2012 (Have I made money yet?) - and although my account is up a little, I still haven't properly worked out if I'm up on when I first invested as selling out and buying back in again added some costs!

Odd moves price moves for ETF Securities' PHAU and PHGP gold

It's  been a while since I looked at my tiny portfolio of physical gold ETF shares (PHAU) and BlackRock Gold and  General units.

When I do I usually see the kind of thing described here -  what I've started calling a price anomaly when it probably isn't. Generally, because I've left it so long,  I've forgotten what it was I found out the last time.

Anyway, I'm doing it again but as it's near midnight on Sunday I'm sticking to the basics. 

Have I made money yet?

My Hargreaves Lansdown account only has two holdings: ETF Securities physical gold ETF (PHAU) and BlackRock Gold and General fund.

As far as I can remember this is the first time since I started investing in gold and gold related shares that I have seen it in positive territory:

The BlackRock fund is still down a but I have held it longer than the physical gold ETFS and so it would be misleading to see it as a less successful investment.

Basically I sold all of my PHAU shares back in December 2011 (at a £250 loss) and couldn't make up my mind whether to buy in January and didn't own any again until March when I paid £1066 for 10 shares and  then again on April 4 2012 - 10 shares for £1009 and then another 10 shares for £978 on May 9 2012.  All together  my ETF holding is now up £146 so I haven't regained the original loss.

What I might try and work out is whether I would have lost less if I had simply held on and bought more.

All quiet at the Gold ETF sand castle this summer holiday?

There may be some calm in the gold markets before a (positive) storm according to people quoted in the Telegraph but summer holidays can be pretty dangerous.  

Another identity crisis at gold ETF Investor - fund or ETF?

This blog has had an identity crisis before.

There was another one last week: why do I invest in a fund rather than an ETF when it comes to gold mining companies? I only asked myself this question after seeing a piece on gold miner ETFs in Moneyweek - the inconsistency hadn't occurred to me before!

Very odd price crashes for gold stocks on Friday on London Stock Exchange

Prices drop in final trades

Despite Friday's massive rises for precious metals the shares of a number of gold and silver miners trading on the London Stock Exchange saw their closing prices drop sharply.

Fresnillo (FRES) shares closed down more than 4% after a one-off trade. Randgold Resources (RRS) and African Barrick Gold (ABG) also saw their prices plunge from daily highs. 

This may be normal after a volatile day but it still looks odd. These kinds of moves  have been noted on this blog before (here and here) showing that the share price of Fresnillo tends to jump at the end of trading days. 

Gold back over £1000 per oz - will it stay there?

As the price of gold tumbled earlier this week I mentally scrambled for the reasons why I had bought the stuff in the first place.

Yesterday and today's price rise - which took gold back over £1000 per ounce - eased my anxiety but there are still a number of issues I need to look at.

Catching a falling knife attempt: buying more BlackRock Gold and General

Today I invested another £250 into the BlackRock Gold and General fund despite it's dreadful performance. To invest I had to place the order before 8am and the transaction went through at midday.


Where my holding stood yesterday

I've already invested £2,250 into this fund. Unfortunately - judged on yesterday's unit price - my investment has lost 20% of its value (£466) since I started buying. What remains had a value £1783.48 as of yesterday.

BlackRock Gold and General: -10% in a week -40% from 2011 peak

The performance of my BlackRock Gold and General fund holdings has been dire.  It is down around 10% this week and nearly 40% since it's peaks in September 2011.

The 25% drop over the last year appears almost reasonable next to these two figures!

Over the year:

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).

Rebound... sort of

This morning Reuters said: "Asia's physical gold market witnessed a buying frenzy as jewellers, traders and investors rushed to take advantage of the nearly $100 drop in prices overnight, helping to boost prices."

Gold on 13 feb 2012

I started this at 11.45am with no particular aim. One thing I'd like to know is whether the gold price will fall a long way if something goes wrong in the eurozone - although that's what everyone is probably wondering.

This morning the price of gold was $1,729 (£1,094) after falling to $1,721  (£1,091) per ounce in early trading (which I saw late last night before I went to bed just as the price starting rising as news of the Greek parliament passing its austerity measures came through - at least that's what I think was going on.)

If I had wanted to buy this morning I would have got 10 PHAU shares for £1,084.85 after fees *(£1,072.9 before fees)

In comparison, on 29 January 2012 10 PHAU shares for $1,086.79 after adding £11.95 trading costs

On 12 December 2011 I bought 10 shares for £104.58 each - £1,057.74 in total (after fees).

On 4 November 2012 I bought 10 shares for £108.01 each - £1,092.10 in total (after fees).


On September 22 I bought 8 sharesfor £111.98 each - £907.78 in total (after fees).


On 13 January I was thinking about buying10 gold shares for £1,062.52 in total (after fees) which wouldn't have been much worse than my best buy rate on 12 December:

This morning my account at Hargreaves  Lansdown shows just  BlackRock Gold and General because that's all I have at the moment and its down a little.

The dollar index against GLD from this Bloomberg chart: http://www.bloomberg.com/quote/DXY:IND/chart

 And here's PHGP (sterling physical gold ETF) vs PHAU (dollar version)

Some of the stories I should look at today: BullionVault covers Peter Grandich - who is Peter Grandich? 

I scanned this from Wall Street Window which said trading margins in gold had been lowered last week which made it cheaper to speculate on futures markets. 

The piece quotes Bart Melek, head of commodity strategy at TD Securities, who said, "In a situation where the financial system may be at risk, people may need a lot of cash to buffer themselves against a potential shock such as a Greek default. They may swap out gold along with other assets for cash.” This is the thing that I am hoping will provide me with another good buying moment. But I am aware that this depends on how bad things get.

Jim Rogers says that gold will not go above $2,000 this year - but that's all he's said - no elaboration apparently.

Michael Hewson of CMC Markets gives his view on Greek deal today and the ongoing risks to its success. 

Gold - preparing for fresh buying opportunities?

I have not properly contemplated making any investment decisions since gold was a lot closer to $1,600. On Friday 13th of January 2012 I was waiting for further falls on Monday 16 January - hoping it would drop down to $1,605 or below.

It never happened. Gold may be down a bit over the last couple of days but it's still around $1,731.

Here's what's happened over the last week:

Meanwhile I still have about 75% of my portfolio in cash, the rest is in in Black Rock Gold and General fund. So despite the name of this blog I don't actually own any gold ETFs (PHAU) after selling them all in December.

Does this cash heavy situation mean I should fear something devaluing my pounds sterling before I get to buy any gold?

Greece could default with or without a bailout (Wall Street Journal: Greece could take the bailout money and run) and even if Greece goes smoothly attention will still turn to other eurozone problems.

 Generally, if something happens to the euro the pound gets hit too - at least it does in relation to the dollar. So while a falling euro would probably mean falling gold, it would also mean that the purchasing power of my pounds will be less, undermining the opportunity to buy US$ denominated gold. I need to work out if that's something I really need to worry about and if I can do anything about it.

(Although S&P is now threatening a further downgrade to the US as well - it also downgraded CME Group which runs commodities futures markets including gold but I've got no idea what the consequences of that might be).

Meanwhile some commentators say that stock markets have been over bought (Market watch: http://www.marketwatch.com/story/overbought-market-due-for-a-correction-2012-02-07?link=home_carousel). If something in europe or anywhere else upsets investors gold could go down too as it is still behaving like a risk asset.

For that reason I'm still not buying but I'm going to start watching a bit more closely now. Although judging by my past record that's good reason to expect gold prices to carry onwards and upwards!


Will Rhind, MD of ETF Securities in the US talks to Alix Steel on The Street. ETF Securities is still for sale but, like me, buyers may be waiting for a fall in the gold price before making an offer. Other commentators mentioned in her piece offered conflicting forecasts.

Bespoke said the U.S. dollar index was "in danger of breaking its six month uptrend" and a falling dollar could add support higher gold prices.

Meanwhile David Banister, chief investment strategist at TheMarketTrendForecast.com told The Street that gold is entering the last and final stage of its bull market. "I believe that it is a 13 year cycle and we are in the fifth and final wave pattern up," he says, which could last for 12-18 months."

Gold up $200 in 1 month, will China support it?

On 29 December 29 gold was selling for $1,523 today its around $1,723.

On December the 28th I nearly bought back all my gold shares but thought the price would fall further. I was right (and therefore thought I'd always be right), it did fall, but only for one day and I didn't buy it on that day either - then it started it's most recent rally.

I'm deciding what to do next. Should I bite the bullet and get back on again? This guy (Nigam Arora) thinks that investors were making a mistake in seeing the Federal Reserve statement as a buy signal. But that's a lot of wrong people! Bloomberg reports 9 out of 15 gold traders expect gold prices to rise next week - which starts with a summit of 27 countries of the EU about growth and jobs buy 17 eurozone countries could break off to discuss Greece.

Another indicator of how this rally will go will come from China after its New Year holiday according to a report from UBS analysts reported by Mineweb. UBS said: "It will be interesting to observe China's appetite when markets there reopen after the one-week Lunar New Year break. For although physical markets naturally prefer cheaper prices, Chinese buyers by and large prefer to buy into rising momentum, while taking advantage of hefty pullbacks. That has been the pattern in recent years, but it was always grounded in expectations of higher prices ahead. So the returning Chinese participants need to believe that this is the start of something larger, otherwise they'll sell the rally."

At 2pm 10 PHAU shares would cost have me £1,088.60. My BlackRock Gold and General units are about level. 

My issue is whether gold will behave as an insurance for my cash. Is that likely if the price of all assets is rising? Although I'm sure it's not a valid argument the chart below shows everything moving in the same direction at the moment and the Bloomberg article linked above lists all asset classes rising except sovereign debt.

Some reading on gold, Iran and the petrodollar - stuff I didn't know but may be should have via Plan B economics.

More navel gazing at Gold ETF Investor: saver, trader, investor?

Comments in the last post suggested that I only buy on 'red' days... like today.

But I'm still not ready yet.


Part of this is because I still believe the price could fall further but this isn't really an excuse anymore, I should have a longer term view. So I'm doing nothing while I work out what I should be doing, for how long and with how much money. (Although, if I'm honest, I know I'm also delaying in the hope the gold price will fall and make a decision to buy easier - and I can't quite accept that this may not be a good idea.)

So for now I'm just gathering up what people claim is going on and views on how and when to buy gold.

What's happening today?


Why is the price going down today? Here's Reuters view  with comments from Michael Lewis, analyst at Deutsche Bank saying current price moves don't have much to do with fundamentals and a note from UBS analysts which expects Chinese demand to fall.

But recent figures on Chinese gold imports have turned most gold traders positive according to Bloomberg.

Gold ETFs seem to be have been down all day in various forms

With the US dollar version looking a little worse as the dollar index rose.

What would I get if I bought now and how would it compare to previous buying and selling?



Between 22 September 2011 and 16 December I paid £3,058 for 28 PHAU shares with purchases on three different occasions:

On 12 December 2011 I bought 10 shares for £104.58 each - £1,057.74 in total (after fees).

On 4 November 2012 I bought 10 shares for £108.01 each - £1,092.10 in total (after fees).

On  September 22 I bought 8 shares for £111.98 each -  £907.78 in total (after fees).


If I bought today I would get 10 gold shares for £1,062.52 in total (after fees) which is not much worse than my current best buying rate on 12 December. 

But I think I'm going to hang on for now for academic reasons.




My BlackRock Gold and General fund is back to where it was before the price gyrations although...

I did buy a bit more back on November 24 and 25 which didn't match December lows but wasn't such a bad move as my ETF sale may prove to be 

Food for thought on when and why to buy gold

Bill Bonner, writing in Money Week on 6 January said: "And how about gold? Buy it when people predict it will go lower, not when they expect it to rise. Of course, you don’t know where it will go. But when people think it is going down, odds are… it is cheap."

He also said: "We explained yesterday, we don’t think gold is going to go up this year... even so, we should probably expect it to go up again. Because the danger of thinking it will go up is far lower than the benefit of thinking it will down. We don’t know where gold is going in 2012 but the rest of the monetary system could slip into chaos and calamity at any moment. Gold is the only thing we can depend on."

He gave more on prices in an earlier Forbes article where he thought gold could still fall back to £1,200 but I'm not sure if these are still relevant post the December lows.

"Gold is not too cheap at $1,500. At $1,900 it was too expensive.... In the meantime, we’ll probably see a further correction in the gold price…perhaps down to $1,200. Or, perhaps it will stop at $1,400. We don’t know. And it doesn’t matter. Buy gold on dips; sell stocks on rallies."

When Jeff Lewis interviewed Grant Williams (pointed out in a piece by Bron at Gold Chat), he also mentioned the threat of a $1,200 low but I don't know if it still stands since the pre- New-Year lows.

He said: "I suspect going into 2012, the set up for both precious metals is bullish providing they can hold these levels and I think that is important to know. A lot of very good and well-respected chartists worry that gold could correct to 1,200 to 1,400 bucks. And certainly, if you look at the technical pictures, that could happen. Silver could correct down to the low-20s; it absolutely could happen. But it’s important to decide whether you’re a trader or whether you’re an investor. If you’re investing in silver and you’re investing in gold, based on the fundamental reasons to do so, then falls to the price aren’t that much of a problem for you because they give an opportunity to buy more metal at cheaper prices. If you’re a trader, it’s a whole different world and you have to be very agile and you have to be very attuned to moves like this that could go significantly lower.

But then on 3 January 2012  John Embury at Sprott Asset Management told King World News: "When gold broke through $1,000, I said it would never trade below $1,000 again and it hasn’t. I now think that, unless we have a complete and total financial collapse in the world, I would be surprised if gold ever traded below $1,500 ever again."

Gold: should I believe the parameters set by the experts?

This afternoon I could have bought back all my gold shares for less than I sold them on 16 December, including costs. 

Back then I sold my 28 ETF Securities Physical Gold ETFs (London Stock Exchange ticker  PHAU) for £2,821 plus the cost of trading (£11.95) which meant I got £2,809.75. I could have bought them all back for £2,794.59 - saving myself £15 or around 0.5%.

This was after the price of gold in US dollars fell nearly 3% today although it was down just 0.75% in pounds sterling (Google Chart) The ETFs - PHAU AND PHGP - seem to have had a choppier time than the spot price that could just be a technical difference between Google Finance and BullionVault's spot price chart (although spot price is not an exact science).

Physical gold ETF performance on the London Stock Exchange:

The spot price (over six hours) from BullionVault:

Meanwhile the dollar index from Bloomberg rose today

And the pound fell more than 1% against the dollar (Google Chart).

What happened today? 

I haven't spent a great deal of time trying to work this out. Apparently the movers of the gold price included an Italian bond sale that went well and less gold and silver buying in India and China (according to this from BullionVault which includes details of what's going on in the Indian market). This report from The Street mentions all of these - claiming the successful bond sales lessened the chances of more money printing in Europe as an explanation for gold's performance. 

But this piece in the FT suggested that the auction was pretty much ignored as investors worried more about banks using the European Central Bank lending facility and another Italian bond auction due tomorrow (Thursday). Compare this to before Christmas when a successful Spanish bond sale moved gold prices (Forbes on effect on stock markets, Reuters on Spanish bond sale effect on gold) Both suggested that good news for Spanish debt sale was good for gold. 

What do I believe now?

What is the story I am acting on now? It isn't a story I made up myself it came from the guys who prompted me to sell - some of them listed at the end of this article about selling my ETFs - and, as far as I can tell it goes like this: the fear around the eurozone crisis will grow and the situation will unfold like a slow motion car crash. Whatever the outcome the build-up will be a loss of confidence in the euro and the eurozone.

This will accelerate the flight to safety that we are already seeing to the US dollar. The rising dollar will force down the price of gold.

At the same time investors have seen that gold now moves up and down pretty much in line with other riskier assets like shares and commodities. Both of these factors help people like me believe that if the financial system takes another big hit gold will fall along with everything else before it recovers.

As far as I can tell this is the story I am being told and it is the reason why I sold my gold shares. The fact that I have sold all my gold suggests that I think I understand their argument and believe it and, therefore,  I am confident that I know what I am protecting myself from. 

But... 

Investors like me depend on commentators who have been staring at the controls of the financial system for a couple of decades. I can't work out if their view is too narrow, a bit like relying on the geologists who tracked the Japanese tsunami to predict that it would turn into a nuclear crisis? 

The course of events appear very neatly foretold and the actions required of people like me are not complicated. 

Essentially the investment plan for gold investors who believe this story is to hold very little gold up to the point of disaster... a eurozone crisis... and not to buy until gold has suffered the worst of sure to occur losses but before the next catalyst for buying... like a fall in the value of the dollar, QE.

But all of this excludes not only other interpretations of what may be going on in the financial system but also significant events beyond these boundaries. How can leftfield events and possibilities be left out, such as the US government taking the advice of people like Don Coxe who says it should buy gold for $2000 and sell for $2,200 with the aim of capping its price?

I have swallowed the parameters set by gold experts which may not be such a big problem but I don't think I had realised that before. I had accepted their goal posts as the only ones. 

May be I should remember that I own gold for protection, not specualtion, but does that mean I should buy back some more now? And does my holding of BlackRock Gold and General count at all?