This elegantly omits the fact that Gold had a -54% drawdown that took nearly 25 years (!) to recover from ('83 to '07).
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Since the goal of a diversified portfolio is to minimize overall portfolio drawdown, it is interesting to compare gold in relation to stocks and bonds. The less closely correlated the performance of different asset classes is, the greater their stabilizing effect on your portfolio will be (if portfolio stability/wealth preservation is a priority). Hereâs a comparison on Curvo.
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So whatâs the verdict?
UBS GOLD ETF physically backed is the cheapest Swiss ETF. Right?
But am I right to understand that buying Gold ETF doesnât give investor any rights over the physical gold owned by UBS.
Another question -: I see that banks like ZKB sell physical bars too. It seems spreads are around 1.2%. Does it seem accurate and you can just walk into a bank and buy a gold bar? Other than holding costs , is there and real advantage of owning physical gold vs. Gold ETF?
Just trying to understand if one were to start a position in gold whatâs the best way to do so.
Yes the UBS is the cheapest, and if youâre smarter than me around currencies (you probably are) youâd get that. Something in my head doesnât accept a Swiss physical gold in Switzerland denominated in USD, so I went with ZKBâs CHF one, which is also redeemable (though in gold bars, apparently, which I make to cost over a million CHF) 
Iâd imagine you can do it by appointment, regarding the owning of physical goldâŠI think itâs for highly paranoid people, and has a risk of theft which Iâd be wary about. Also as you said theyâre pretty illiquid with moronically high spreads.
I donât know whether youâre aware but the unhedged UBS Gold ETF is traded in both, USD and CHF. While the internal fund currency is technically USD, the only place you notice this is in the fund documents. As there are no dividends, you donât have to do any currency exchange.
Actually the UBS ETF is trading in CHF too.
Ticker AUUSI
What do you mean redeemable?
The underlying currency in all but ZKBâs is USD, all my equity ETFs are in USD, I wanted to have something in CHF. Redeemable means you go to the bank and exchange your ETF for gold bullion, which you take home and hide. The Swiss ones arenât practical though AFAIK as they only give 12.5kg bars.
It always puzzled me why these funds are distributing, since gold is unproductive, I wonder if itâs something regulatory.
I donât see any taxable income in ICTAX for UBS ETFs. Maybe they sometimes have some lending income etc and they need to distribute
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Yes, and if you want something special (like bars of 50g, 100g or 1 kg), you might want to call ahead.
When buying physical gold, there is a question of safeguarding it. There are private safes also at non-banking institutions, in case you are worried about non-access due to imposed banking holidays in times of crisis.
Indeed it is not gold 2.0.
As we can see, Gold and Bitcoin have responded in two very different ways. Bitcoin is not a straight substitute for Gold.
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Thanks
Whatâs your view of UBS ETF vs physical bars.
Other than holding costs, can I assume to be equivalent ?
Best to shop around for spreads (a bit), for once the product should be the same everwhereâ:sweat_smile: I expect about 1% for 250g (my experience a few years ago). Youâre very thorough, so do post your findings if you go that way 
Order by phone or in person, and collect a day or two later. Easypeasy.
I donât do bitcoin, but with my gold-bar(s), I enjoy that similar âoff-systemâ feeling. Itâs so difficult having something outside the system these days, not having something via multiple middlemen like ETF-provider, broker and custodian, but crypto is one, gold is the other.
So, my mantra is ânot your safe, not your (gold)barâ (yes, i stole it).
Probably cheaper after a few years holding-time too. YMMV.
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One of the emerging discussions around gold derivatives (I count ETF to this category) is whether the corresponding physical gold is really there. In a crisis, this could become a game of musical chairs where the last institution claiming the gold is left holding an empty bucket.
With physical gold held in a big vault (edit) for multiple parties, it could be a similar story. Only segregated physical gold is really yours! Unless the government decides to expropriate you (happened in the US in 1933).
Sorry for the bad news. I hope it never happens in Switzerland.
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For physically backed ETFs which have redeemable gold , why would real gold be not available?
This can only happen when there is fraud. Right?
Because there might be a third party taking care of your gold. Now, did you pay for segregation or store your gold with other parties for lower prices? How often does said third party check inventory against the books? The issue could be as simple as delivering 10x the amount of gold when another party sells to overseas (fat finger mistake). If thatâs not caught on time, issues will compound over time. Manual processes have error rates in the low 1-digit percentages.
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Even for manufacturing companies there is a physical audit for inventory every quarter
I am confused why would gold not be audited
Because there is this uncertainty around the gold at Fort Knox. DOGE will take care of it, Elon says.
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The folks in US have habit of exaggerating and sensationalising everything
Can you explain this as my interpretation of âwall of worryâ was âassets moving up despite negative sentiment/news/predictionsâ. I could be wrong in this interpretation though.
I thought that gold should be doing very well in this environment, and it is. If anything Iâd call 2024 a period where there was no real reason for it to do well, until the US election. I admit I bought gold part due to FOMO part due to expecting it to continue doing well.
Gold price is at record highs and almost at all time inflation adjusted highs. You have the threat of Trump selling part of the biggest gold reserve in the world and we are at maximum uncertainty which may mean that the only way is down with tariffs being dropped or deals being done. Maybe RU/UA war is about to be ended.
All this could rapidly reverse goldâs fortunes.
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