Gold ETF

[ASXNoob]

Probably a really stupid question but how come the value of the ETF (ASX code: GOLD) has not followed the rise in the gold price, isnt that what it is designed to do; track the gold price?

 

[Bloodwynch]

Probably a really stupid question but how come the value of the ETF (ASX code: GOLD) has not followed the rise in the gold price, isnt that what it is designed to do; track the gold price?

You are purchasing the gold exposure in $AUD terms so that's why it doesn't follow the USD gold chart.

 

[ASXNoob]

can you elaborate a little more? so the rising aussie dollar has neutralised the gains? i have no idea how gold is traded...

 

[Wysiwyg]

Gold at USD$1000.00 = AUD$1,088.05 when exchange rate is 1 AUD = 0.91908 USD

Gold at USD$1000.00 = AUD$1428.57 when exchange rate is 1 AUD = 0.70000 USD

 

[ASXNoob]

the gold price has been rising in $US, the aussie dollar has been rising against the US dollar, but the GOLD ETF is basically worth what it was a year ago....can someone save me from having to think too much and outline why?

 

[Robear]

Wysiwyg just did.

The ETF buys Gold in USD and sells in USD. They just show the prices in AUD
We live in Australian so we need Australian dollars for our use.

Using wysiwyg's example if you were to buy $1000 USD ETF Gold in example 2 it would cost you $1428.57AUD

Fast forward to later and you want to sell it with the exchange rate at .91908. You will be selling $1000USD ETF Gold (assume the USD gold price is still the same) and receiving $1,088.05 AUD.

In other words you have lost money.

For you to make money the rise in USD gold would have to outstrip the rise of the AUD.

Of course, if the AUD tanks against the USD and the Gold price goes up you will make out like a bandit.

 

[ASXNoob]

excuse my ignorance, but it just seems strange to me that with our aussie dollar going up, we have more buying power, so how can we take advantage of both the rising aussie dollar and the rising gold price?

 

[Wysiwyg]

excuse my ignorance,

Choose attention, research and respect.

but it just seems strange to me that with our aussie dollar going up, we have more buying power, so how can we take advantage of both the rising aussie dollar and the rising gold price?

You can buy the currency pairs through a foreign exchange broker and buy the gold price through spot and futures' brokers.

 

[ASXNoob]

You can buy the currency pairs through a foreign exchange broker and buy the gold price through spot and futures' brokers.

i really have no clue what that means haha

 

[DB008]

Or buy companies in Oz that produce or are involved with Gold production.

Newcrest (NCM) or Lihir Gold (LHG). DYOR please and it's all a gamble.

 

[ASXNoob]

i had a look at a few of those companies and their share price doesnt really correlate with the gold price

 

[Wysiwyg]

Probably a really stupid question but how come the value of the ETF (ASX code: GOLD) has not followed the rise in the gold price, isnt that what it is designed to do; track the gold price?

i really have no clue what that means haha

The original question has been answered and I suggest some reading or internet searches on subjects before asking more basic questions. You would do yourself a great service with this approach.

 

[ASXNoob]

no worries. appreciate the help

 

[Ageo]

Noob its quite simple, when the AUD is higher against the USD then our AU gold price will be lower as everything is priced in USD (the world gold price included).

So lets say the Gold spot (which is priced in USD) stays the same but the Aussie dollar drops to .70 then the AU price will go through the price.

Remember for a strong AU gold price it means our dollar should be lower and the spot gold price should be higher.

Make sense?

 

[neng1215]

Can I have a follow up question about GOLD etf? How reliable and true is it? I heard some rumours how paper gold is not backed 100% by gold and that maybe ETF securities may not be completely honest with their audited supplies of gold bars? I know some famous hedgefund managers like Goerge Soros and John Paulson have billions invested in SPDR trust GOLD, the biggest gold etf in USA, but here in Australia, we have ETF Securities offering GOLD etf. I'm just wondering if anybody knows of any big investors in GOLD etf here. Thanks.

 

[explod]

Can I have a follow up question about GOLD etf? How reliable and true is it? I heard some rumours how paper gold is not backed 100% by gold and that maybe ETF securities may not be completely honest with their audited supplies of gold bars? I know some famous hedgefund managers like Goerge Soros and John Paulson have billions invested in SPDR trust GOLD, the biggest gold etf in USA, but here in Australia, we have ETF Securities offering GOLD etf. I'm just wondering if anybody knows of any big investors in GOLD etf here. Thanks.

I am not, nor aware of others on ASF investing that way either.

I have read similar but you should come to your own conclusions. Some on ASF can GATA but to me it provides insights that ballance the status quo of the financial industry in general.

Have a scan of the following organisation and would be interested in your take in a few days of pondering further.

http://www.gata.org/

cheers explod,

any investment not understood is gambling

 

[Bron Suchecki]

Re GOLD I have no doubt they have the physical metal, but note this from their prospectus:

3.2 Storage and Insurance of Metal. The Custodian (or one of its affiliates) may make such insurance arrangements from time to time in connection with its custodial obligations with respect to Bullion held in allocated form as it considers appropriate. The Custodian has no obligation to insure such Bullion against loss, theft or damage and the Issuer does not intend to insure against such risks. In addition, the Trustee is not responsible for ensuring that adequate insurance arrangements have been made, or for insuring the Bullion held in the Metal Accounts, and shall not be required to make any enquiry regarding such matters.

and

5.5 Custody and Insurance. Accordingly, there is a risk that some or all of the Bullion could be lost, stolen or damaged and the Issuer would not be able to satisfy its obligations in respect of the Metal Securities.

I find this an incredible statement. The custodian does not have to insure it, we don't intend to insure it and the trustee is not responsible for ensuring it is insured. What sort of custodianship is this? What a great business - give me your gold and if it gets stolen, that's your problem, just trust me I'm doing a good job. And for that you pay 0.39% management fee.

Suggest you look at the Perth Mint's ASX product - ZAUWBA. Backed by the Perth Mint's metal, held in Australia and 0.15% management fee. Yes I'm biased, but read both propectus/PDS and make up your own mind.

 

[Ageo]

Re GOLD I have no doubt they have the physical metal, but note this from their prospectus:

3.2 Storage and Insurance of Metal. The Custodian (or one of its affiliates) may make such insurance arrangements from time to time in connection with its custodial obligations with respect to Bullion held in allocated form as it considers appropriate. The Custodian has no obligation to insure such Bullion against loss, theft or damage and the Issuer does not intend to insure against such risks. In addition, the Trustee is not responsible for ensuring that adequate insurance arrangements have been made, or for insuring the Bullion held in the Metal Accounts, and shall not be required to make any enquiry regarding such matters.

and

5.5 Custody and Insurance. Accordingly, there is a risk that some or all of the Bullion could be lost, stolen or damaged and the Issuer would not be able to satisfy its obligations in respect of the Metal Securities.

I find this an incredible statement. The custodian does not have to insure it, we don't intend to insure it and the trustee is not responsible for ensuring it is insured. What sort of custodianship is this? What a great business - give me your gold and if it gets stolen, that's your problem, just trust me I'm doing a good job. And for that you pay 0.39% management fee.

Suggest you look at the Perth Mint's ASX product - ZAUWBA. Backed by the Perth Mint's metal, held in Australia and 0.15% management fee. Yes I'm biased, but read both propectus/PDS and make up your own mind.

LOL that is the best insurance policy ever eh, i suggest before investing in any ETF you understand the terms and conditions and make sure your metal is allocated and insured. The whole point of an ETF is to invest in a paper like physical without having the handling/storage requirements.

 

[explod]

The following should light alarm bells on those who hold paper contracts for the prescious metals. Do these firms have the metal to match all contracts?

http://www.theglobeandmail.com/news...ord/an-unkind-complicatedness/article1643419/

Picked this up via the GATA website

 

[thembi]

Has anyone seen the new Gold ETF that is hedged to A$? Seems like a potentially good way to get "pure" gold exposure?

What do others think?