Barron's Online - Forget Newmont! Go for Gold With ETFs
You will need a subscription. It makes the point about mining stocks with NEM that I made a month ago with Anglogold.
The bone I would pick with the article is that while over the last month the ETF has been better to own, that will not be the case forever.
At some point I think I will go back to Anglogold. The timing of such a move might be great or not but the ETF will not be the better hold forever.
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3 comments:
Bill Cara makes a couple interesting points about that, both connected to the growing collective size of the gold ETF's. To whit, the securitization of gold is: (1) leading it to behave more like a stock and the apparent decoupling between the commodity and large cap miners is actually a relic of old trading habits (e.g., in a rollover first sell the stock, then the underlying commodity) and (2) also making gold more like money, a viable alternative to fiat currency (e.g., the $USD).
As much as they've grown the gold ETF's do not seem large enough nor gold liquid enough to really pull this off IMO but it leads to some interesting speculation including the possibility of a significant bounce in both the commodity and stocks. I'll be watching this closely, standing pat on my positions in the meantime.
RW
Some of my comment could have been phrased better, in particular the reference to gold ETF’s as 'money' since it makes Cara sound like a gold bug.
Cara's point I think is that the securitization of gold via ETF's is stabilizing the commodity price more than suspected, providing a floor that will stand up well when compared to the value of fiat currencies. A gold ETF therefore may be a viable alternative for USD$ holders seeking relative value in the forex markets via other currencies, a notoriously difficult avenue from which to profit for smaller investors.
That's closer to what Cara meant I believe but I need to think about all of it some more.
RW
i understand the concept and I don't know that I could refute it but it doesn't feel right to me.
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