Wt Physica Gold Discussion Threads

[v11slr] 29/1/2009 16:23

BobP. Yes, but why? Gold is valued in dollars not Sterling. To buy it in pounds the dollar amount is converted to Sterling and you pay with pounds. To buy it in dollars your pounds are converted into dollars and you pay with those. Vice-versa when selling, so each transaction has one currency conversion.

I don't know the answer just trying to find out.

[bobp] 29/1/2009 16:18

v, currency movements

[v11slr] 29/1/2009 16:15

abundance99 - I hear what you're saying about ultimately buying the same thing in both but could you then explain the divergence in the charts from August last year.

On a 1 year basis the charts show PHAU down about 3% and PHGP up over 30%. I'm using the charts on MoneyAm.

[abundance99] 29/1/2009 16:03

Just reading back the last few posts. Does everyone realise that PHAU and PHGP are the same thing? Which ever you buy you buy a certain amount of physical gold. The price that your investment is worth (in sterling since we live here) depends the price of gold in sterling. I own PHAU but its value in my account is denominated in sterling.

Some people seem to be confusing owning a commodity (where its value is commonly discussed in dollars) with owning a share. With these investments you buy a volume of the commodity and it has a value in pounds sterling if you live in Britain. Personally, as the world thinks of gold in dollars I like to keep an eye on that chart (just broken out above a resistance line by the way!)

[bluebelle] 26/1/2009 14:00

Ash/fortyfive

Thanks for that : my interest in gold this time round was based on the then intrinsic demand from the two fastest growing economies - India and China - and my distrust of paper (i.e. non-intrinsic value) currencies, none of which - no matter how far you go back - have survived for very long once they have become detached from the metal which was backing them. The dollar will go the same way, I suspect, although it will take some time, just as it did the £.


like your comment on £:$ since 1785.....lol...

..and if I remember rightly that was when the pound looked as it it was heading towards $2 !!!

[fortyfive] 26/1/2009 13:23

Bluebelle -just looking today at my broker account, the PHGP is up 33.84% and PHAU is up 20.51% since about last Oct/Nov. Its just due to currency movements, so if you think the £ is still dropping (as I do, with this bunch of idiots in Downing street) overall versus the $, buy PHGP. I've just made back the loss I took on LLOY shares now....Phew ! Not sure how long the Obama bounce will last for the $ but I'd rather have any type of Gold than a paper currency these days.
like your comment on £:$ since 1785.....lol...

[ashbox] 26/1/2009 12:45

Bluebelle - today is another good example of the PHAU / PHGP relationship. PHAU is up 1.5% in line with the rise in gold but PHAG is only up 0.2% because sterling has strengthened 1% against the dollar.

[bluebelle] 26/1/2009 09:43

No problem whatsoever : again, thanks for the comments.

[machoolahan] 26/1/2009 09:28

Apologies! ;)

[bluebelle] 26/1/2009 08:40

machoolahan - 24 Jan'09 - 01:05 - 80 of 80
SERIOUSLY though Bluebelle, I sense you are a new investor...

You're well wide of the mark there, mac, but the comments here have been very helpful.

[machoolahan] 24/1/2009 01:05

SERIOUSLY though Bluebelle, I sense you are a new investor...

If you are comfortably off, happy in life and you and yours are well, I would just not bother at all with this. It's a short hop many of us have taken on these boards (just ask them) from a wee-dabble to an all-consuming (life altering) mess. There are people on these boards who are stupider and cleverer than you or me. And the vast majority of them don't do that well, regardless. But every one of them started off believing (hoping) they could see something that the average Joe couldn't.

It's not worth your time, money or peace of mind. Every eejit in the world, on the bus, at work, your uncle, your brother, (and particularly the "press") has got an "opinion" about the economy or the price of this-and-that - and none of them have got a clue.

Gamblers only tell you about the times they won.

Friendly advice, but meant.

[machoolahan] 24/1/2009 00:55

Really Bluebelle they are both equivalent, and will reflect (for UK investors) the £/$ rate AND the POG.

Its just that to buy PHAU you will (or more likely your broker will) convert your £s into $s and then buy it. Then when you sell it will be sold in $s - then converted to £s and given back to you.

If your broker operates £s->$s and $s->£s at the spot rate there will be exactly no difference - but I'm not sure you're average broker/sharedealing service does that. If you buy PHGP none of this matters - you are just dealing with the price of gold in £s and you don't have to face any hidden charges that arise from two bouts of changing your money.

LBUL is doing its stuff today - up twice as much as PHAU. But of course if PHAU had gone down LBUL would have fallen twice as much - so DYOR and see how it fits your risk appetite (bearing in mind it has the same currency exchange issues as PHAU)..

[bluebelle] 23/1/2009 17:21

Thanks Ashbox

[ashbox] 23/1/2009 16:30

V11 / Bluebelle - gold is only priced in USD so the GBP price of gold is a constantly moving target based on the exchange rate. PHGP will increase in value even if there is no movement in the USD price of gold when sterling loses value against the dollar. In other words, PHGP is probably a better buy as there are no currency change costs. I believe this is why PHGP is up 1.1% more than PHAU today.

[bluebelle] 23/1/2009 15:07

Thanks V11 : that's the basis on which I originally opted for PHAU.


But what if the $ falls against the £?

I'll lose out, but that's my judgement call, and, of course the gold price could drop as well. on balance, I tend to agree with the American who said to me a few years ago "The pound's been in long term decline against the dollar since 1785 : what's going to change in the future".

Thanks for your help.

[v11slr] 23/1/2009 14:58

As I understand it you'd be better off in PHAU. Buying now at a nominal rate of $1.3/£1 a thousand pounds would be converted to dollars and then be used to buy gold. $1300 worth. If gold stayed the same price in dollars but the exchange rate moved to $1.2/£1 and you sold the gold then your $1300 would convert back to £1083. £83 profit from the currency change (ignoring costs of course).

If gold rose 10% in dollar terms then you'd have the equivalent of $1430 giving a Sterling equivalent of £1191 at $1.20/£1.

But what if the $ falls against the £?

[bluebelle] 23/1/2009 14:54

mac

Yes, but what about long term ? I already hold PHAU and my long term view both is that the £ will continue to weaken against the $ and that the gold price, in USD, will increase.

Will check LBUL : many thanks.

[machoolahan] 23/1/2009 14:52

PHGP if you are buying in £s, as you won't incur any "currency dealing charges". This is unless the spreads are different between the two. But right now the spreads are v. similar at ~0.3%

[bluebelle] 23/1/2009 14:49

So, if I'm an intended long term holder who expects the £ to decline against the $, and the gold price (in $) to increase, am I better of with PHAU or PHGP ?

[machoolahan] 22/1/2009 23:39

Correct, PHGP has got the added benefit of the decline in the pound (i.e. can buy less gold per pound) driving it up...

When actually dealing PHAU you could also get hit by the $/£ exchange rate provided by your broker not matching the spot exchange rate (likely) - which PHGP doesn't suffer from. IMO no point in buying PHAU over PHGP for that reason, assuming your stake is in £s - unless the spreads are radically different.

Then again if you are bullish gold look at LBUL. 2x % gain or loss (cf LOIL the Nymex equivelent), but again is priced in $. No £ (PHGP) equivelent as far as I can see.

[v11slr] 22/1/2009 17:10

I've recently been looking at these. Isn't PHAU pricing the gold in dollars and PHGP pricing in Sterling. Therefore with PHGP you get fluctuations based just on the price of gold and with PHAU you get that plus the currency changes.

[bluebelle] 22/1/2009 17:04

fortyfive - 22 Jan'09 - 15:58 - 68 of 68
My PHGP has done better over the past 4 months, than PHAU.

forty five
That was my point, but do you know why ? Are both not based on the same thing ?

[fortyfive] 22/1/2009 15:58

My PHGP has done better over the past 4 months, than PHAU.

Alun RM - UK IS now a big Iceland.....our 'nationalised banks' overseas foreign currency debts total 4.4 trillion..........our GDP is c. 1 trillion.........and each drop in the £ makes that balance worse..... How bad is Brown's gold sale looking now ! All we can do is protect ourselves by buying gold.

[bluebelle] 22/1/2009 14:18

Alun

Any views on the disparity in recent price performance between PHAU and PHGP ?

[bluebelle] 20/1/2009 17:54

Thanks Alun : very useful. Bought a reasonable slug of these about 18 months ago which have done very well and am seriously thinking of increasing my exposure to gold.