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.

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).

Gold on Sunday night 11 March 2012

BullionVault's market report from Friday is the only outline I've read of what went on at the end of last week.

ETF Securities up for sale - does it matter?

The Financial Times reports that ETF Securities is up for sale. This is the firm which runs and and administers my physical gold ETF shares for a 0.39% annual management charge. The possibility of something like a sale happening at the firm soon was discussed on this blog last month - (Could ETF Securities IPO soon?) - odd things seemed to be going on at the firm back then.

Admittedly the speculation was based almost entirely on a reluctance of its press office to answer any questions about anything at all.

I had asked for historical spreads for it's three physical gold ETFs: PHAU, PHGP and GBS. I wanted to see how differently they behaved in times of stress (based on this Index Universe article and other chat it sounded like PHGP might not be a good deal) and to compare this with Black Rock Gold and General unit trust.

BlackRock provided its fund's spreads for several years within an hour of being asked. ETF Securities told me they would get their research team to take a look - but nothing happened for weeks. Then the head of their press office left, then I asked if the firm was about to IPO... and I haven't heard back from them since.

The question is whether the firm's silence back in November was just the norm or a result of the sale. And could it mean there will be complete silence about anything going on in the firm from now on?

Back in 2008 investors who owned ETF Securities' ETFs narrowly missed disaster when several of its AIG-backed ETFs were forced to stop trading as market makers waited to find out if AIG would be bailed out by the US government.

Several safeguards have been put in place since then and the physical gold products are hopefully not vulnerable to similar problems that require intervention by the provider. But with markets as they are it seems more likely than ever that any flaws in investment products will be tested. This is not a good time for low levels of communication.

But if there are any problems that could effect investors are they less likely to hear about it while an attempt is being made to sell the firm and it is being scrutinised by potential buyers?

The FT's report said: "Goldman Sachs recently sent out information to potential bidders, which include asset managers and private equity groups." This appears to mean that Graham Tuckwell, who owns most of the firm, has given up on the idea of ETF Securities becoming a public company.

Update: glad to be distracted

On Monday Goldman Sachs and Credit Suisse both were positive about gold and today it was reported that John Paulson cut his gold ETF holding by a third).

I haven't worked out what I'm going to do with some extra cash I'll be adding to my account over the next couple of weeks and, more importantly, I still haven'g got a selling strategy for my existing investment. Unfortunately I am too busy to work on either of these at the moment.

The main job is to ignore what other people are saying about the price and work out why I'm invested - and hopefully that'll provide me with an idea about whether I want to invest more, and under what conditions I'll think about selling.

Today my ETF Securities Physical ETF shares looked OK in term of sterling but were down in dollars.

But here's what my account looks like now: