PMGOLD - Pros and cons of trading this product!

Aurora et luna

Aurora et luna

Well-Known Member
Silver Stacker
Guys, if anyone is currently invested in this product, I would appreciate some feedback about the pros and cons of trading it!
 
Liquidity can be a bit crap, leaving you with a wide buy / sell spread.

Also, there is counterparty risk. As an SS regular I don't need to remind you - If you don't hold it, you don't own it :)

This is a good video to watch. The GOLD ETF in the US has a different counterparty but you'll get the idea :-

 
Fees are okay at 0.15% annually. The advantages over physical are:
  • It's easy to trade and very similar to trading shares, and can be done in a few minutes
  • You can buy and sell from anywhere and you don't have to physically collect it.
  • You don't need to worry about storage or security cost.
The disadvantages are:
  • Not sure of the counterparty risk as PMGOLD claim they keep the physical gold equivalent to what's held by investors.
  • The market can be a bit thin, but there always seems to be a market, so I guess you could get $1M of gold in a few minutes.
  • You can't touch it, so no good for those who just like to hold their gold.
 
PMGOLD is basically Perth Mint's unallocated in an ETF form, if you don't like unallocated then you wouldn't like PMGOLD. While it has a market maker to ensure a fair bid and ask, the spread they work on is wider than that for GOLD, but GOLD has a 0.40% management fee. If you are a short-term trader, GOLD would be better as spreads matter more than management fees.

However, IMO I don't get the benefit of ETFs over a direct account with ABC Bullion or Perth Mint for the following reasons:
  • direct relationship, no stock exchange or broker involved, if you are worried about financial system troubles you want to minimise counterparties involved
  • if you are OK with unallocated, why pay 0.15% when a direct unallocated account is 0%
  • can hold allocated bars, or quicker to switch to physical if you're holding unallocated
  • not locked into ASX trading hours only, most gold action happens in UK/US hours, with ETFs you miss opportunity to trade on spikes or dumps
When I worked on PMGOLD 15 years ago online trading was not available or easy so there was a market for it. That has changed so I don't see the point of gold ETFs beyond the convenience of trading it through your existing stock trading account (but then you are paying 0.15% pa for that convenience) or if you can't justify a SMSF and so can only invest in ASX listed products in your super account.
 
bron.suchecki said:
  • not locked into ASX trading hours only, most gold action happens in UK/US hours, with ETFs you miss opportunity to trade on spikes or dumps
Click to expand...
ASX trading hours (10.00am to 4.00pm Eastern Time) are different from Perth Mint due to time zones. Anyone know if ABC allow trading out of normal business hours?
 
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