Monday, 26 November 2007

Investing in Gold

The gold price has doubled in the last five years. Between 1998 and 2002 the price of the precious metal to 300 dollars mark. Within the last five years, the gold price by 150% to currently 800 dollars or is increased to 20% per year.

As an explanation for this is not only the general rise in prices for raw materials, but also the political uncertainty that the crisis regions in Iraq, Afghanistan and Iran out. Moreover, there is a negative correlation between the gold price and the dollar. In other words, a weaker dollar implies a stronger gold price. So is the gold price in the previous period to Euro-only basis by almost 75% (12% per year).

The investor can take a number of ways to invest in gold. He can invest in physical gold, or in funds, which invest Gold Mines shares. There is a fundamental difference. If the investor's money in a gold mine fund, which acts like a lever on the gold price.

The price movements of the gold price will be increased competition. The gold companies depend heavily supported by the gold price. The price rises, it could eventually reduce the cost to date of gold deposits worth the price falls, it also reduces the cost reserves.

Also, the quality of corporate leadership and the resources for the development of new resources play an important role. A second bitter is the geographic location of the gold mines. Mines in South Africa, Canada and Brazil mean that a revaluation of the local currency gold revenues and profit margins can be influenced. Gold will be shown in United States dollars, but sales in the domestic currency balance sheet. With an investment in a gold mine Fund has also a company, and a currency risk.

Gold Investments for Private Investors
Here, we have three investment options: a gold mine Fund, a passive involvement in physical gold and an actively managed fund, which in physical gold and gold futures contracts on stocks.

The stock funds:
The MLIIF World Gold is the largest gold mine funds with a volume of 4 billion euros. The fund manager Graham Birch and Evy Hambro invest mainly in large growth companies, the gold and other precious metals down. The portfolio consists of 60 levels, with the focus on the 10 largest stocks with 57% very high.

Fund managers based on the strong stock selection in the AMEX Goldminers index. The selected enterprises are mainly medium to large growth stocks. Newcrest Mining is 8.5%, the highest position in the portfolio. Then follows Barrick Gold with 8%, the World market leader in the production of gold. Barrick is for good 10% of world mine production and is almost 7% of the total annual gold supply. The company has Morningstar estimates a PER of 22 and will therefore be its sector, with a P / E of 25 for the expected gains aufweist, traded at a discount.

Canada is in the portfolio with 30%, South Africa with 25% and Australia with a 18% weighting. Compared to the AMEX Gold Miners Index is the fund in South Africa and is committed disproportionately underrepresented in Canada. During the year, the fund has a yield of 30% and is down 7.5 percentage points better than its comparison category. The AMEX Gold Miners Index, was up 17 percentage points. Comparing the funds over 5 years with his comparison category, and the AMEX Gold Miners Index, he excels with 22.5% pa The category compared to 2.5 percentage points, and the AMEX Gold Miners Index to 7 percentage points. The maximum surcharge issue, with 5% to Beech, while the administrative fee 1.75%. The average management fee of the category is 1.68%.

The Commodity Exchange Trade / Certificate:
The Lyxor Gold Buillon Service (GBS) is an index Certificate, the gold price on the spot market belongings. A share certificate represents 1 / 10 of an ounce of gold (1 ounce = 31105 g). Thus, the investor an almost complete participation in the development of the gold price in euros. The more money in the fund flows, the more gold will be purchased and held in trust in the safe areas of HSBC in London stores.

The Lyxor GBS is not a special fund, but a bond. This means that the gold can be used by the certificate holders theoretically at the trustee of the institute. Currently, nearly 98 tons of gold held in a gold price of 555 euros (12.11.2007) in about 1.7 billion euros worth. The fund holds 4% of the world's gold production of the year 2006. The certificate is in Germany only since April.

The index is calculated as a Certificate Management fee 0.4% per year. The charges fall day, but only at the end of the year and through the sale of physical gold pays. This reduces the share purchased annually to 1 / 10 of the ounce of gold. The cost for the acquisition of the certificate shall be composed of-purchase sales-difference (spread) of the Exchange dealer commission and the Order of the bank or the online broker.

Direct investment in gold with active approach:
The DWS Gold Plus investing in physical gold. The fund has a total volume of 397 million euros. The gold fund is 53% in short-term bonds with credit ratings of first-invested. The bonds will serve as backup for the forward contracts on gold, silver, platinum and palladium. The prices of precious metals are in the current year increased enormously. Gold has a share of 32% of total portfolio.

This makes it 130 million euros invested in gold. The other precious metals with 11% of the portfolio weighted. Currently, the fund 229,500 ounces of gold and holds futures contracts on further 32,800 ounces of gold. The overall performance of the portfolio is in the current year 20%. The gold price is based on the euro just 16% since the beginning of the year. About 5 years resulted in the fund a return of 15% and above 10 years 10% per year. The price of gold rose to euro-only basis at 12% pa Over 5 years. The management fee is 0.85% and the maximum output surcharge 3%. The TER (total expense ratio) was for 2006 0.9%.