Gold and commodities
Why hold something that earns nothing — and what does owning it actually cost?
6 of 6 chapters published
Chapters
Beginner
- Why gold is held at allGold produces nothing. No coupon, no dividend, no rent — so its entire return is what the next buyer pays. Understanding why anyone holds it means understanding what it is for, which is not growth.
- The five ways to own itJewellery, coins and bars, gold ETFs, gold funds and Sovereign Gold Bonds. They differ enormously in what you pay to get in, what you pay to hold, and what you lose getting out.
Intermediate
- Sovereign Gold Bonds and what happened to themThe best-designed way an Indian household could own gold — the price exposure, plus 2.5% a year, plus favourable treatment on redemption. Which is precisely why fresh issuance stopped.
- Making charges, purity and the real costThe gap between what you pay for jewellery and what you would receive for it is the largest cost in this subject. Hallmarking fixed the purity half of the problem; nothing fixes the other half.
Advanced
- Gold's actual record as a hedgeGold is called a hedge against four different things, and it is good at some of them and poor at others. Separating the claims is what turns a slogan into a position you can size.
- Other commodities, and why individuals mostly should notThe last chapter of the subject and of Phase 4. Commodities other than gold are reached almost entirely through futures, which means roll cost, leverage and an expiry date — three things that turn a correct view into a loss.