Choosing a Gold ETF

[ThisDinosaur]

I'm inclined to allocate roughly equal amounts to GLD, IAU, SGOL, and maybe OUNZ for my gold allocation. Curious if any of you have strong opinions about one over the others and why. Also, whether you own in a taxable or tax advantage account. Gold ETFs are taxed as collectibles when sold (as ordinary income up to max of 28%) instead of the lower LTCG rate.

http://www.investopedia.com/articles/et ... gold-etfs/
http://www.journalofaccountancy.com/iss ... tions.html
http://www.etf.com/GLD
http://www.etf.com/IAU
http://www.etf.com/SGOL
http://www.etf.com/OUNZ

[Dragline]

Most of my ETF gold holdings are in IAU, but I use GLD for more short-term trading because of its greater liquidity and its options are pretty liquid too. Not sure about the others -- I try to look for the lowest overall fees for longer-term holdings.

[Tyler9000]

I second the IAU suggestion. It has the lowest expense ratio of the group.

GLD and SGOL are also perfectly fine options. GLD is popular for its liquidity, while SGOL is popular because its gold is held in Switzerland and that reassures some people that it is trustworthy. I like the concept of OUNZ, but it's a little too small for my tastes.

[ThisDinosaur]

I already have some GLD, so, maybe the rest should be in IAU. In addition to the expense ratio, the fact that they have multiple, international storage locations seems appealing to me. I'm not sure how important the difference in liquidity is. If I'm only selling when my %gold is ~40% above what it "should" be (based on PP rebalancing bands), then there would be high demand/plenty of buyers, yes? It's only now, in the buying phase, that I should worry about being on the wrong side of the bid ask spread, correct?

[Dragline]

Bid/ask for IAU and GLD these is usually a penny or a few -- just use limit orders. Also if you are scaling in, I would recommend entries at the lower halfs/thirds of the current ranges. Right now they are right in the middle of their 52-week ranges. Gold ETFs have generally been range-bound for the past 3 or 4 years.

[ThisDinosaur]

@ Dragline
But if I'm buying gold and treasuries to hedge against the next stock market drop (whenever that is) how much will it matter if I bought it below its 52 week average? (My last gold thread was all about convincing me gold isnt overpriced, or that it doesnt matter if it is.)

[Dragline]

Then it probably won't matter much for you, given that most stocks are in the high end of their ranges and you would be selling them now if you are moving towards creating a more balanced portfolio.