Gold ETF & Cable
Discussion
I went 100% into a physical Gold ETF (ISIN IE00B4ND3602) last Sep 19, and it has been doing what I wanted it to do - namely, provide insurance against QE [cash] and a market downturn.
However, I was a little perplexed at performance whereby my total return has dropped a couple of % over the last few weeks (still 5.81% up) when the Gold price has been on an upward trend.
I then recalled a number of DA's posts where he states that investing in Gold is really an investment decision on Cable (GBP/USD). The actual ETF Key Information Document [KID] states that Gold is priced in USD and that return may be impacted by exchange rates [FX]. Am I right in thinking that the following scenario is desirable:
BUY: Strong GBP / weak USD
SELL: Strong USD / weak GBP
If this is correct, then I need to factor in the differential between Gold price and Cable price. In other words, a bullish GBP will impact upon returns from Gold. Is this broadly correct?
However, I was a little perplexed at performance whereby my total return has dropped a couple of % over the last few weeks (still 5.81% up) when the Gold price has been on an upward trend.
I then recalled a number of DA's posts where he states that investing in Gold is really an investment decision on Cable (GBP/USD). The actual ETF Key Information Document [KID] states that Gold is priced in USD and that return may be impacted by exchange rates [FX]. Am I right in thinking that the following scenario is desirable:
BUY: Strong GBP / weak USD
SELL: Strong USD / weak GBP
If this is correct, then I need to factor in the differential between Gold price and Cable price. In other words, a bullish GBP will impact upon returns from Gold. Is this broadly correct?
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