Here are some questions that point towards reasons why I own some gold in my portfolio.
Why does the US Federal Reserve hold thousands of tons of it?
Why are other central banks loading up on it?
Why is it culturally important in places like the world’s most populated country?
What should happen to the price of it in fiat currencies if the overlords of fiat currencies explicitly seek to (and successfully) inflate their value away year after year?
One thing gold doesn’t do is produce a real return, but then that’s not the case for something like a JGB these days either.
If I owned nothing but stocks in my portfolio, then perhaps I might not see any attraction in gold. In the unlikely event that global central bankers credibly changed tack towards price stability for their fiat currencies, and sought to bring prices down, then maybe gold might lose some relative luster.
One worrying trend recently that you all might have seen is the appearance of several “ゴルカン” funds, a play on the popular “All Country” toshin name, which throw some gold in with exposure to stocks. Bruce Ikemizu had highlighted a leveraged such fund some weeks back and now this week the “ゴルカン” term of a born. This seems more like a business play be the funds providers to me, jumping on the bandwagon.
Next, on owning gold.
- I would like to own some physical gold, but in Japan the 10% consumption tax makes it less attractive, when one could buy it overseas instead. I don’t want to pay expensive premiums on gold either. Safely storing it somewhere is the other thing to deal with. For now, I am restraining myself to stick with paper products.
- gold tsumitate products are interesting for the DCA approach, but the fees are relatively high. I have been using one at a bank for some years
- gold futures trading is one of the few liquid commodities worth trading in Japan, but it’s not so suited to buy and hold. There is a listed spot gold product, but I haven’t used it
- gold toshins are similarly interesting to the tsumitate products, and seemingly lower fees. I am buying the cheapest, best looking fund I could find in my securities account
- US ETFs - GLD was the original famous one, but its fee is high and it’s more suitable for active trading. But the GLDM one has a fee of 0.1%, which makes it suitable for long term buy and hold. (Monex currently has GLDM in its commission free section of ETFs)
Gold is forever!
