Gold, a store of value for thousands of years, a backer of currencies until 1971, a favorite rock for authoritarian regimes to horde (China and Russia) and the treasure of choice for pirates, rappers, dentists and everyone in India.
Yet Warren Buffett has never invested in it. In his 2011 letter to shareholders, he wrote that “gold has two significant shortcomings … it is neither of much use nor procreative.”
Nonetheless, most of us don’t have the investing acumen of Buffett who started honing his stock-picking skills in 1942 at age 11. To have a little gold bling in your portfolio’s back pocket is not a bad idea for the rest of us. The price tends to channel for long periods and spike when macroeconomic conditions are in its Goldilocks zone and then settle down a bit to channel at a new higher level until the next event that causes fear, uncertainty and doubt. An ounce of gold maintains about the price of a good suit. Gold miners, senior and junior, can occasionally move to the beat of their own drums and can be very fruitful for those in the know.
If you are a gold bug reading this you will think we are morons, but for the rest, who want to have something in their portfolio to act as a ballast to hedge against the volatility of growth stocks or the doldrums of dividenders, don’t want the hassle of dealing with physical gold and don’t have time to visit gold mining sites around the globe, here is a quick breakdown of some of the gold ETFs out there.
- GLD: 10 year CAGR = 3.6% // tracks price of gold bullion
- GDX: 10 year CAGR = 1.9% // tracks approximately 50 senior gold miners
- GDXJ: 10 year CAGR = -1.4% // tracks approximately 100 junior gold miners
- TSE:PHYS: 10 year CAGR = 3.3% // invests in gold bullion
- TSE:XGD: 10 year CAGR = 5.4% // tracks approximately 50 senior gold miners
- NUGT: 10 year CAGR = -36.7% // uses derivatives and other funds to track senior gold miners | 2X leveraged
- JNUG: 10 year CAGR = -45.5% // uses derivatives and other funds to track junior gold miners | 2X leveraged
- UGL: 10 year CAGR = 1.7% // uses derivatives and futures contracts to invest in gold | 2X leveraged
The two plays we like are GLD for the long term and NUGT for the short-term when you are confident gold’s stars appear to be aligning.
Note: For Canadians who want to use their own currency to buy a gold ETF can opt for PHYS instead of GLD.
Double Note: There are also inverse ETFs but lets save those for when gold goes into bubble territory.
GLD // Purple 9 // Strike Price = {subscribe}
// WHY BUY
This ETF tracks the price of gold bullion and holds gold bars but at the end of the day it is paper gold. Gold is basically a hedge for when SHTF as it tends to go down less than the rest. A lot of the time the price goes nowhere and every once in a while gold bugs have some glory days and make a bunch of cash. Many people think this may be golds time to shine again like it did from 2008-11. If you want, buy it so you can sell it after the SHTF event and buy great companies at great prices.
// ChatGPT: WHY BUY … ?
GLD is an exchange-traded fund (ETF) that tracks the price of gold. Investors may choose to buy GLD as a way to gain exposure to the price of gold without actually owning physical gold. Gold is often seen as a safe-haven asset that can provide a hedge against inflation, currency fluctuations, and geopolitical uncertainty. Additionally, gold has historically performed well during times of market volatility and economic uncertainty. However, it’s important to note that like any investment, the value of GLD can go up or down and investors should carefully consider their investment objectives and risk tolerance before investing in any asset.
NUGT // Green 9 // Strike Price = {subscribe}
// WHY BUY
This ETF tracks through derivatives and through other funds in stocks of companies operating across gold, materials, metal and mining, gold mining sector. This ETF is 2X leveraged so much more volatile. Double the fun, but triple the pain if you’re wrong. Only buy when you are confident it is gold’s go time. You don’t want to HODL this for years as the annual CAGR is usually well into negative territory. But when gold rips every decade or so, hang on and enjoy the ride. Gold is basically a hedge for when SHTF as it tends to go down less than the rest. A lot of the time the price goes nowhere and every once in a while gold bugs have some glory days and make a bunch of cash. Many people think this may be golds time to shine again like it did from 2008-11. If you want, buy it so you can sell it after the SHTF event and buy great companies at great prices.
// ChatGPT: WHY BUY … ?
NUGT is an exchange-traded fund (ETF) that seeks to provide leveraged exposure to the daily performance of the NYSE Arca Gold Miners Index. This means that NUGT is designed to magnify the returns of the underlying index, which consists of companies involved in gold mining. Investors may choose to buy NUGT as a way to gain exposure to the potential upside of gold mining stocks. However, it’s important to note that leveraged ETFs like NUGT can be complex and carry a higher level of risk than traditional ETFs. They are designed for short-term trading and may not be suitable for all investors, particularly those with a long-term investment horizon. Additionally, the value of NUGT can be impacted by various factors such as changes in gold prices, mining industry trends, and global economic conditions.
However, at the end of the day we prefer Bitcoin to gold
Yes Bitcoin uses energy, and a fair amount of it, but it is on a path to using all renewables and stranded fossil fuels. And think about how much energy gold mining uses? Google says 131 TWh for gold mining and 1,449KWh for Bitcoin mining. 1,449 KWh = 0.001449 TWh.
Bitcoin is kinda like Gold 2.0. The five characteristics of money are durability, portability, divisibility, limited supply and acceptability. Gold used to get 3 out of 5 but today it is more 2 out of 5. Try paying your bar tab with gold coins. Bitcoin is on the cusp of having all 5.
Bitcoin appears to have more to offer in terms of working towards making the world a better place for all its inhabitants 🦋🧜♀️👽🤖🦄🌻👣
