Buy Gold, Sell Stocks Is the ‘Trade of Century’ Says One Hedge Fund

ironchef · Mar 24, 2019

sle said:
Prior to the next recession, gold was very expensive, as the inflation fears were rampant (remember the uber-bullish oil forecasts?). You would still have done better from peak to through than you did if you held S&P but then again, you would have missed the rally too. Anyway, my point is that maybe gold is not that expensive this time around if you think in asset-growth adjusted terms. Maybe look at the total gold market cap vs global equity market cap and compare that to history?

FWIW, I never understood people that buy gold miners to get exposure to gold. These are companies that, on average, are poorly managed and have zero innovation edge.

It's hard to say, really depends on the reaction of the central banks. I honestly don't think gold is a good all-around safety asset in the modern times. Buying gold makes sense if you think that the CBs around the world will be able to counteract the contraction via some form of easing.
More...

Maybe buy Bitcoin instead?

Money Trust · Mar 25, 2019

People have been saying this for like 10 years. It would have been good advice towards the end of last year, though.

clacy · Mar 25, 2019

These things tend to run in very long cycles.

In the 70's Gold crushed stocks.

80's & 90's stocks clobbered gold

2000-2011 Gold clobbered stocks

Since 2012, Stocks have been back in charge.

Not sure when the cycle ends, but I suspect stocks have a couple more years at least.

Scataphagos · Mar 25, 2019

Lemme suggest... "Gold is not a savior, it's just a trade".

ET180 · Mar 25, 2019

srinir said:
Gold Etf has tax issues if you are US investor, Futures or Gold options would be my bet, if i want to be in long Gold.
More...

What tax issues does the gold ETF (GLD) have? It's treated as a 1256 contract which I think means 60% is taxed as long-term capital gains regardless of the holding period. I'm not 100% sure about that though so maybe someone else can confirm or deny...I've never really looked into it because my only other option would be to hold physical gold and avoid the taxes. But then I worry about security and storage.

Scataphagos · Mar 25, 2019

ET180 said:
What tax issues does the gold ETF (GLD) have? It's treated as a 1256 contract which I think means 60% is taxed as long-term capital gains regardless of the holding period. I'm not 100% sure about that though so maybe someone else can confirm or deny...I've never really looked into it because my only other option would be to hold physical gold and avoid the taxes. But then I worry about security and storage.
More...

Not sure, but I think you've got that wrong. GLD is taxed like physical gold... 35% tax regardless if held long term... not sure how that plays into your tax situation of your tax bracket is lower on holding short-term.

If you want "1256 treatment", I presume it's available if you trade gold futures.

(If I've got this wrong, I'm sure sombody will chime in.)

srinir · Mar 25, 2019

ET180 said:
What tax issues does the gold ETF (GLD) have? It's treated as a 1256 contract which I think means 60% is taxed as long-term capital gains regardless of the holding period. I'm not 100% sure about that though so maybe someone else can confirm or deny...I've never really looked into it because my only other option would be to hold physical gold and avoid the taxes. But then I worry about security and storage.
More...

Not true for GLD, IAU etf.
https://www.journalofaccountancy.com/issues/2015/jan/investing-in-gold-tax-considerations.html

Taxes and investing in gold

Gains from investments in physical gold and physical gold ETFs outside an IRA are taxed as collectibles. If a gold investment is held more than one year, any gain is taxed at the same rate as ordinary income, except with a maximum tax rate of 28%.

ET180 · Mar 27, 2019

I think you might be correct on that. I was thinking of this thread:

https://www.elitetrader.com/et/threads/gld-options-treated-as-1256-contracts-by-e-trade.330234/

I think the options are taxed as 1256 contracts, but not gains on the underlying ETF.

maxinger · Mar 27, 2019

" Buy Gold WAS the ‘Trade of Last Century’, " says one non Hedge Fund.

" Gold has already reached its peak 8 years ago.".

maxinger · Mar 28, 2019

yesterday Palladium went down significantly.
In fact, over the past 1 decade, it had longest red candle yesterday.

Is gold following Palladium pattern?