Investing, economics, finance and random thoughts.
A New Swiss Gold ETF
Blog reader Kyle sent me some information on a new gold ETF trading under the symbol SGOL. This ETF is a gold bullion ETF similar to the Street Tracks and iShares gold ETFS (Ticker: GLD and Ticker: IAU).
What makes this ETF different is SGOL’s gold is stored in Swiss bank vaults and not US financial centers. Since part of the Permanent Portfolio concept is to have some assets geographically diversified this could be an advantage. The expense ratio of this ETF is also very competitive as well at 0.39% which is right in line with the other offerings.
Now, some worry about a remote risk of US gold confiscation happening again in the future and this ETF would probably not prevent that (the govt. could simply pass an order requiring repatriation of funds for instance which would accomplish the same thing). However, this does give you a place for your assets that may not be open to the same type of risks as gold stored in the US. Risks such as from terrorist attacks, natural disasters, cyber attack, civil unrest, etc.
On the other hand, I’m not sure how if your US-based brokerage is having problems due to these issues here that it wouldn’t impact your ability to prove ownership in SGOL. Well, it’s a start at least.
This fund is brand new and I’m not one to jump into new financial products so I may give it time to build up some momentum. However, it’s something to consider for those that want to build a Permanent Portfolio and use ETFs for the gold portion but would like to have a modicum of geographic diversification.
Thanks again to Kyle for the tip.
| Print article | This entry was posted by craigr on October 7, 2009 at 11:20 am, and is filed under Investing. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed. |
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The most challenging aspect of implementing the permanent portfolio has to do with the gold allocation. Using ETFs such as GLD and now SGOL provides an easy to use and liquid way to invest in gold, but it also opens the door to some level of 3rd party risk — you do not directly own allocated gold.
IMO, one of the main reasons (in addition to the portfolio diversification) to own gold is to limit risk, an insurance of sorts in case of financial or currency crisis — While SGOL puts one in gold stored in another country, it still leaves one open to 3rd party risk.
I would suggest exploring firms such as GoldMoney and Bullion Vault as a less risky vehicle to personally own gold outside of your own country. It limits 3rd party risk because you directly own the allocated gold. It is stored in vaults in Switzerland. While it may require a little more work to set up than simply buying an etf, it provides direct allocated ownership which an etf does not. That peace of mind is worth its weight in . . . drum roll please . . . gold.