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Diary of a dumb investor: ETFs, gold and India

Now I’ve finally got an online trading account, I’ve got to decide exactly where I want to put my £10,000 windfall. Before I make my first investment, readers have said I should nose into exchange traded funds.

 
Diary of a dumb investor: ETFs, gold and India

With a few phone calls and a couple of clicks, it finally happened: I have an ‘active’ online trading account through which I can a purchase a cocktail of financial assets.

The only problem is that now I actually have to make up my mind about exactly where I want to put my £10,000 windfall – given to me to invest by my great uncle in a fit of generosity (and as part of a bid to beat the taxman).

As I prepare to make my first investment, it’s all getting very real for me; and I really don’t want to mess this up! The few friends I’ve told about my plans have started to look at me with a newfound respect. Although I think they’d be secretly happy for me to fail.

There was some really useful advice in readers' comments to my entry last week about investing in investment trusts. Hotrod’s suggestion that I don’t just pour everything in immediately made a lot of sense. And I have tempered my appetite for investment trusts in light of the extreme contempt they evoked (avoid them ‘like the plague,’ urged Theophanis Pantzaris). Although I'm still pretty sure that I'll invest in one or two.

Before I make my first foray into investment next week, I thought I would look at one area I have not mentioned yet, and that a number of readers said I should nose into: exchange traded funds (ETFs).

Fruity frontiers

ETFs, I understand, are basically shares that provide access to an array of assets and markets – including all sorts of fruity stuff like commodities and ‘frontier’ markets. In fact, it is the fruitier stuff that they are meant to be good for. And they are passively managed – without any industry insiders to reach inside my pockets – which helps keep a lid on costs.

Like many other people, I’ve been gripped by the events in Egypt: it is truly moving to see people rise up against oppression like this, even though I’m slightly worried about their future. I actually went there on holiday a year ago – and it’s wild to think that Tahrir Square, the focal point of the protests, is where I had a protracted argument with a taxi driver (for ripping me off).

In addition to repression and corruption, a lot of pundits have attributed the unrest to the rising cost of living. And I know that inflation is a growing problem elsewhere in the world, too, meaning that gold may resume its rally this year.

The reasoning is that while currencies are eroded by rising prices, the precious metal has inherent value, making it a good safeguard against inflation.

'An essential part of any portfolio'

A number of readers have suggested gold as a means of diversifying my investments, and the Ruffer Investment Company, an investment trust that is a Citywire Selection ‘star pick’, said recently that gold is ‘an essential part of any portfolio,’ despite losing some of its lustre of late.

Obviously the small part of my £10,000 will not be enough to purchase a gold bar, or even an ingot. But this is where ETFs come in. I can buy shares in an ETF that owns bullion (stashed away in a warehouse somewhere I wonder?), such as ETFS Physical Gold. Again, I chose this based on Citywire Selection's recommendations.

This fund is aimed at giving investors returns that mimic movements in the price of gold, minus management fees – which come to 0.39% per year. In the year to date, it has risen more than 24%. But there are no dividends or coupons to collect from gold, since the ETF holds a commodity unlike other types of assets.

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55 comments so far. Why not have your say?

JK

Feb 14, 2011 at 13:15

Although gold does have some inherent value in industry and to a lesser extent in a decorative fashion; the current price of gold is way above that inherent value. The current price is caused by scarcity & greed. Like all such speculative investments you will make money by getting in and out before the bubble bursts, but make no mistake - in the long term paying over the odds for assets that are overpriced by any reasonable or historic measure will return negative returns over time. The same advice was true of housing in the last decade and telecom/dotcom stocks leading up to 2001. Lots of people made easy money but far more naive greedy investors came in late and lost a fortune. I have no idea when the gold bubble will burst but if you want to gamble stick the money on roulette. Casino gambling pays better than investing in bubbles, its transparent and instantaneous as well. The only advantage gold speculation at this late stage in a bubble has over casino gambling in fact - is that you can pretend you're not gambling and believe you were unlucky when you lose your money.

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Myron Martin

Feb 14, 2011 at 13:29

ETF's are certainly a better tool than mutual funds, lower fees, ability to sell at any time the market is open, no front end loads or trailing commissions etc. besides the ETF's are more focussed so you can target specific countries or sectors.

Better country choices than India would be IMO Norway because of Statoil and its strong currency, Singapore as proxy for Asian economic activity and also strong currency and if you really want to tap into emerging markets one of the newest funds to take a look at would be the Global X Andean 40 Fund whose investments are in the combined countries of Columbia, Peru and Chile which taps THREE HOT sectors. copper and lithium in Chile, oil and gold in Columbia and silver and gold in Peru as primary exposure to growing Latin economies.

The easiest way to benefit from gold and even more impressive, SILVER, is to be exposed to the miners that are the most highly leveraged to bullion itself, which you can do with just TWO funds. Global X Gold Explorers GLDX which holds 10 of the miners with the largest undeveloped reserves in the world, and SIL the comparable silver ETF focussed on the miners with the biggest reserves and production.

THe other area to consider would be agriculture given looming world food shortages and resulting rise in price of numerous commodities from corn, sugar, wheat, cocoa, cotton etc. and here again commodities can effectively be tapped with ETF's like MOO or DBA and Greenhaven Continuous Commodity Index Fund GCC, and there may be others specific to Britain that I am not aware of. Just stay away from anything that is tied to bank paper and dependant on fiat currency fixed income.

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Timothy Skinner

Feb 14, 2011 at 13:35

I reckon you must be an American using the word "dumb" to mean stupid not the British meaning of being unable to speak. For goodness sake with just £10,000 leave gold and frontier markets alone and anything else like ETFs you cannot immediately understand.

Go to www.trustnet.com then investment trusts then global growth. Reject those like the BaillieG stable who have recently been into the BRICs (they will be bottom for the next year). You should find half a dozen giants with consistent long-term performance. And, drip £250/month into Templeton Emerging Markets for 6 months. The Alliance ISA platform is good.

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Bagash

Feb 14, 2011 at 14:07

With just £10000 to invest, you need to be with blue chips only. Gold, currencies, commodities, emerging markets, etc. are all too risky, volatile and unpredictable and are not for widows, orphans or children. You can choose any vehicle you like...individual stocks, UTs, ITs, whatever, they all have differences but its performance that counts in the end. Think objectively and make your choice and then watch and learn and enjoy the ride!

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Dave P

Feb 14, 2011 at 14:31

Some excellent advice already. Go slowly. Gold (and better silver) may have huge upside potential, but they have had a very long run over the last months. A bit of conservative dipping of one's toes in more conservative areas might be the better first few steps.

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an elder one

Feb 14, 2011 at 14:39

Ten grand ain't a lot to play with it doesn't provide enough for a decent diversification in equities and the like, personally for that amount I'd put it in the best savings accounts I could find; I've no suggestions as to which there is plenty of advice to be found - Google is a mine of info. I say this as a person boasting no great wealth though I am invested in equities and gold - largely miners but also an ETF; interest rates are low at present; but they will recover.

To take up JK's point luck isn't in it except for the casino where the odds are deliberately stacked against the punter, though there are some who claim to have systems. There are no certainties nor permanence in investment it is simply a matter of judgement whether you gain or lose, a matter of judging when to buy and when to sell and that is something only experience can guide you with, ergo if 10,000 pounds was all I had to play with, I'd want to keep it safe. If you want to add an element of speculation then go for a pair of funds, then you rely on someone else's judgement.

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an elder one

Feb 14, 2011 at 14:53

I should have added that if you are the complete ignoramous then you should read some books first, Benjamin Graham's tome "The intelligent investor" is an excellent primer to start with, I'm sure you'll find copies on ebay.

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an elder one

Feb 14, 2011 at 14:54

Sorry I meant Amazon, but ebay might do.

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nicholas gold

Feb 14, 2011 at 14:56

I am by no means an economist, but I am a reader of history. My reading of history tells me that it is not gold that is overpriced, currencies are. I can assure you that inflation will become hyper-inflation, and that what is happening on the periphery will soon infect a majority of sovereign sectors. Since I am no prophet, I have no definitive sense as to timing, but what is coming is nonetheless inevitable. Despite all of the sophistry coming out of the mouths of London and New York types, I strongly warn you to do whatever is necessary to protect yourself and your investments. Good luck.

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GD-C

Feb 14, 2011 at 14:57

I would split your £10000 by investing it in 3 companies.

Sylvania Resources(LSE SLV)

A platinum miner in S. Africa whose production should increase significantly during the next 3 years. The latter will coicide very nicely with a forecast this W/E by Credit Suisse of a shortfall in supply until at least 2015 as follows:-

Troy ounces

2011 3000

2012 137,000

2013 247,000

2014 40,000

2015 20,000

The forecasts by brokers Evolution Securites(31/1/11) are

Ptx Eps

2011 £8.17m 1.87p

2012 £14.72m 3.18p

LMS Capital(LSE:LMS) 53.25/54.5p(up 0.75p)

Tipped today by the IC companies Editor - Simon Thompson,an anaylst with an enviable track record and a very keen following of private investors.I won't say more for fear of copyright infringement.A purchase of the IC this Friday could prove very rewarding !

OPG Power Ventures(LSE:OPG)106/109p

An Indian power company set to increase its generating capacity to 1250MW by 2015. It has recently signed a MOU with the government of Gujarat one of India's most industrialised states for the development of 5400MW generating capacity.

4/2/11. Placed 64,515m shares @ 93p. Major holders account for 75% of shares in issue.

Cenkos Securities forecasts -

Ptx Eps

2011 13.1m 2.6p

2012 21.6m 5.1p

In circa 20 years, India's population is forecast to match that of China's today. Energy - particularly electricity, will be critical in maintaining growth in employment and GDP.

As always, please DYOR.

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Andrew Barwick

Feb 14, 2011 at 15:01

I like the cost saving argument for ETFs but I haven't found a good website that allows one to browse through the various offerings easily. I would like to compare their coverage, expense ratios, yields etc,. Can anyone recommend a source for this info?

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Hunter James

Feb 14, 2011 at 15:30

Firstly Alliance Trust Savings platform provides a low cost and easy to use investment platform. I would invest £2,500 in each of the following Investment trusts RIT Capital Partners, British Empire Securities, Perpetual Income& Growth and lastly Polar Capital Health Care. With the exception of Polar Health Care have good track records. Always re-invest the dividends and if you will a sensible return over a 5 year period.

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Robert Price

Feb 14, 2011 at 15:56

Andrew,

I'm a great fan of ETFs but like you find it very difficult to get full & detailed information. For example trying to find yields & ex div dates for ETFs that pay a dividend is not easy. Even some issuers sites don't provide this detail.

I favour the iShares range of ETFs simply because its web site is very good

(www.ishares.com) and gives me everything I need.

I have tried Trustnet, the London Stock Exchange ETF data, Investors Chronicle , Telegraph funds listing & have not found any source that gives me this the type of data that with normal equities would be a doddle to obtain.

Another moan is the problem of getting an epic code for a given ETF. Financial journalists could do with quoting this code anytime they mention/recommend an ETF.

ETFs could do with having simpler & shorter names. With one charting package I use for example the displayed name shown for any ETF in the iShares range is well, iShares, so not much use then.

Come on someone create a site that really stands out.

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Roy C

Feb 14, 2011 at 16:25

Having read your previous comments Dumbo, I was lead to believe you had already invested some in a property fund, not stating how much, and if it was in an ISA. Where are you coming from?

Next, ok, ETF's but why go through Hargreaves, the charges for these type of funds, are high, like also ITs and shares. If you want to reinvest dividends gained you will be paying at a premium.

The markets are in an unusual situation at the moment, interest rates low and inflation rising and will be announced even higher tomorrow. So target investments to beat, RPI

Chris looked at the Sino site, not impressed, appeared to promote, a discretional service. With more overseas exposure.

Stick with Hargreaves,Jarvis and Fidelity.

I do.

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Roy C

Feb 14, 2011 at 16:44

PS.Yes 3 funds with £10,000 as GD-C mentioned, don't buy into Bolton IT China, the old geezer is bailing out in a couple of years, and will leave punters high and dry, maybe.

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Mill Green

Feb 14, 2011 at 16:51

I wouldn't use the Alliance Trust platform- their terms and charges are not favourable to the small investor. For example, if you need to withdraw money from your account it will cost you £10. And if you want them to credit your bank account instead of sending you a cheque, it will cost you an additional £10. Sharp practice, in my opinion.

I would recommend F&C. Low charges, and good service, too. I am speaking from experience.

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Maverick

Feb 14, 2011 at 17:03

Dumb Investor, answer me two questions :

Do you understand how an ETF operates?

Should anyone invest in anything they do not fully understand?

ETFs and hedge funds remind me of the 18th-century South Sea Bubble company advertising itself as "carrying on an undertaking of great advantage; but nobody to know what it is."

You know what an investment trust does. Buying (say) ten holdings of £1,000 in ten investment trusts will give you diversification, because each trust invests in 50-150 companies. When you have a bit of experience (i.e. a year or two!) you can move on to individual companies, but that needs a load more research.

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Lisa P.

Feb 14, 2011 at 17:06

I too was intrigued by investing in gold and in doing some research I came across some info by a company called Atyant Capital [for reference:

http://atyantcapital.com/investing-in-gold-mining-industry/

It seems based at content at the very bottom of the page, that investing in gold [ or even gold mining as this content prescribes] is not for the faint of heart. This company's whole point seems to be about managing the associated risk - not saying it doesn't exist. However, they only work with qualified investors [ which I guess means people with a lot of funds to invest]

My point is...that until you determine how much risk you want to take on or how aggressive you want to be [which a lot of times is based on how far away you are from wanting to retire], it's really hard to evaluate a single type of investment.

I am certainly no expert but I have always been advised to consider how aggressive I want to be and then to diversify as much as possible.

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Myron Martin

Feb 14, 2011 at 19:46

The very first submission by "JK" says in relation to gold; "the current price is caused by scarcity & greed." so my first point is that SCARCITY is a good thing, have you never heard of "supply and demand" being the factors that send any commodity up or down? If gold is "scarce" that is part of what gives it its value.

Now an answer to the second part, is it GREED to protect yourself from the machinations of politicians and irresponsible bankers by buying what has been REAL MONEY that has maintained its purchasing power for 5000 years while the the FIAT CRAP put out by bankers typically LOSES its value in no more than 100 years historically! They have the audacity to still call it a DOLLAR or a POUND when it no longer has ANY intrinsic value since Nixon abolished the gold standard in 1971.

Then JK" finishes off with this gem of misinformation: "I have no idea when the gold bubble will burst, but if you want to gamble, stick the money on roulette. Casino gambling pays better than investing in bubbles, its transparent and instantaneous as well. The only advantage gold speculation at this "late stage in a bubble" has over casino gambling in fact - is that you can pretend you're not gambling and believe you were unlucky when you lose your money." How is it "gambling" to hold "REAL MONEY" instead of the 3rd party risk of someone else's promise to pay you more worthless paper at some point in an unknowable future?

HOW can gold be in a "late stage bubble" when in inflation adjusted terms it is still roughly $1000. BELOW its 1980 high? This guy is looking through the wrong end of the telescope, he is viewing prices of goods as if the POUND was stable and the gold price was inflating, and nothing could be further from the truth. He has got it exactly ass backward, gold is MAINTAINING its purchasing power while that of the pound (and other fiat currencies) are LOSING, so it requires more of them to buy an ounce of gold or silver.

Do some research and see how many ozs. of gold it takes to buy any major good, a barrel of oil, a bushel of wheat, a car, a house over the past 100 years compared to its price in fiat currencies and you will soon learn which better preserves purchasing power, (that being the key metric) GOLD or paper promises to pay you nothing but more devalued paper promises.

Since the inception of the Federal Reserve in 1913 the dollar has LOST from 95% to 97% (depending on whose statistics you accept) of its purchasing power so in effect they are now calling THREE CENTS a dollar, and if that is not FRAUD and deception then I don't know what is. What else can you expect from a Ponzi scheme fractional reserve banking system that is allowed to create DEBT instruments out of thin air?

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an elder one

Feb 14, 2011 at 20:40

Amen to that Myron Martin, the financials think that they have invented perpetual motion - creating a capitalist machine that generates its own energy to drive itself, when it is really us poor suckers providing the input.

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an elder one

Feb 14, 2011 at 20:57

Yep Myron, at my age I can remember paying one shilling and ten pence (that is a tad less than ten new pence) to buy a gallon of petrol - no need to go back to 1913, I'm getting on but not quite that old.

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mike88

Feb 14, 2011 at 23:21

I thought your remit was to act sensibly. And you are thinking of investing in gold? Doh!

The sensible approach would be to invest conservatively or at least invest in funds where the manager has the option to invest in anything and anywhere depending on market conditions.

My conservative suggestion would be to opt for two Absolute Return Funds - Artemis Strategic Assets and Newton Real Return. While there might not be huge upside the return is likely to be greater than anything you will get from cash with the added benefit of limited downside. Isn't that the sensible approach you were expected to take by your bennefactor?

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david m rogers

Feb 15, 2011 at 01:08

There have been several comments about the Alliance Trust Savings platform to which I have in the last year transfered most of my ISA investments. It has positive features and negative ones. On line trading works well and is reasonably cheap. The list of Fund houses is good but not as good as for instance Interactive Investor ( Motley Fool?). It does however include Vanguard which I think no one else does. It seems to have negotiated a zero entry fee for most of the funds it lists and while this is very helpful it does not list some popular funds even with managers with whom it lists some . An example is First State. It offers half a dozen funds (with zero entry fee) but not the successful Global Emerging Markets nor South Eastern Asian or South East Asian Leaders. These are offered on the Interactive Investor ISA platform but with an entry fee. Another on this platform for example Sarasin Agrisar which I have had to buy via my stockbroker. I would be most grateful to hear of anyones experience of Interactive Investor or any other with a wide choice of funds. Not please Hargreaves for several good reasons!

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a benington

Feb 15, 2011 at 04:22

Ignore all the above advice. It's for the middle aged.

There isn't a good investment out there unless you're willing to fund a startup. Gold is a bubble driven by fear. Commodities and developing equities are inflated by speculators. Western equities are near the top of the range in this secular bear market. and not a buy until after 2015, or you could wait until the next recession in 2012/13 and buy the dip.

Better by far is to spend the money traveling the world, get a yatchmaster qualification, set up your own business.

If you are still insisting then open a spread bet account, chose one index and stick to it. Watch for trends that will last a few months and have a stop equivalent to 8-10 percent of market value. Everytime you earn the stop on 1 point, up your position by 1 point. If the market goes against you get out immediately. The name of the game is preserving capital.

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Pat

Feb 15, 2011 at 09:12

One broker's tip for current ETFs - palladium, aluminium and soybeans

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an elder one

Feb 15, 2011 at 10:08

Mr Benington, you are clearly an inveterate gambler - no harm in that if it suits - what you propose is not investment, but for most,a guaranteed way to get broke; on the other hand your suggestion is, just spend the money; which is not the matter in hand.

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Tomleo

Feb 15, 2011 at 10:25

There seems to be a general consensus that Hargreaves Lansdown is a good place to buy funds, but not for ITs or ETFs. Can anyone recommend a cheaper reliable platform for buying ITs and ETFs within an ISA?

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Roy C

Feb 15, 2011 at 13:52

Take a look at Jarvis x-o, Trades £5.95, ISA holding is free.

I use this site. There are others and you will no doubt read in this article.

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Scorpio15

Feb 15, 2011 at 18:32

Roy C - I need your advice as to which funds beat RPI please. I have funds various funds in Europe, UK, Asia, America but I do not know if the funds that I hold will beat the RPI. Any advice you orf anyone can give me will be greatly appreciated. I am not a young person so I need to make some money before it is too late. Thanks for your help .

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Roy C

Feb 16, 2011 at 16:22

Ok Scorpio, that' s a broad, question to answer.

First of all, are we talking about income gain over RPI or growth.

RPI is calculated every month along with CPI it's lesser brother.

So are we envisaging over a year annulised RPI, Which I think is where you are coming from, with your fund choice. There is nothing to say that you won't hit, RPI by the end of the year with your fund choice as it varied and some will do well and some not so.

Well if the government, introduce Index Linked saving certs again from April, go for those. Although I suspect, if they do, it will be CPI related.

I invest in Provident Financial Corp Bonds, that will pay 7% over 10 years. Issued last april, and I bought through Hargreaves, so I suggest you wait a week after April 12th when the net divi is paid, then it should fall close to £1.00, i t's now trading at £1.05 or so. This gives me 6.5% per annum after Hargreaves charges, which stand above the latest monthly RPI. There are also some bonds that trade with RBS that attempt to achieve above or level with RPI, Again there is the risk with all these funds if the suppliers go bust.

There will also be other bonds that hit the market, so look in the investors chronicle. Again may I stress,"To Target above RPI.

I personally recommend ETF,s that specialize in Agriculture, and Rare Metals, oil, and index linked global bonds(ishares do this). BRIC funds.

Ok. but REMEMBER, there is risk attached when your goals go richer.

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GAZKAZ

Feb 16, 2011 at 20:49

Gold & Silver markets (paper) are heavily manupulated by governments - why ? - they have to supress the price, otherwise people spot how much their fiat paper is falling. Read www.gata.org.

Now if you accept they are supressing the price of precious metals, look at a 1o7r chart of Gold, its like an escalator, and it only goes one way accross the chart - UP.

The USA is going to borrow an ADDITIONAL ONE TRILLION more each and every year (and thats what they admit to) - the electronic equivalent of the printing press.

Everyone is bailing out of US Treasuries - so much so that the FED itself is buying them, to the extent the FED now owns more US treasuries than China does.

Check out these 10 VERY VISUAL graphs

http://tinyurl.com/4tm9wz6

Thats the mighty dollar, the worlds reserve currency - Fooked as you might say.

All the western governments are in a similar position.

Currency is paper, share certs are paper (or numbers on a screen), even GOLD ETFs and that includes the physical backed ones - have counterparty risk and the prospectus has every get out clause you could ever think of, and then some.

As Rothschild said - "Gold & Silver are money, everything else is just credit"

Take a hint from what Soros Does (he buys gold) not what he says (Gold is in a bubble). If you want to buy gold, you want to keeep the price down, so you tell everybody else to buy it.

Sovereigns are free of capital gains tax, in barterable amounts £200 ish each, and a casing point re "print fiat to infinity and beyond",

- I bought 500 Trillion Zimbabwe dollars for a fiver (delivered) - what did traders only accept at that time GOLD

Gold IS money - always has been for thousands of years.

Take one of the "I promise to pay the bearer on demand the sum of ten pounds" pieces of paper to the Bank of England and ask them to honour that promise - you get a £10 note piece of paper back.

DYOR

Try http://tinyurl.com/4aenhwk

& http://tinyurl.com/4vrbypl

& http://tinyurl.com/6ch4wmr

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Guy Cohen

Feb 19, 2011 at 09:36

Good comments all around - thank you. Could anyone recommend a good agriculture ETF? Secondly, if the BRICS are not going to be doing brilliantly this year what about places like Turkey?

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Roy C

Feb 19, 2011 at 10:13

Guy, Agriculture try ETFS (EPIC) AGAP, I have invested in it since last March, done well. Infact, it,s featured in this weeks "Share mag" Go to ETFS site and down load the AGAP splurge.

What about Turkey, give it a miss for now until the Midd East unrest dies away.

Personal opinion and advice

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Derek Potter

Feb 19, 2011 at 12:15

That's right. I wouldn't touch gold with a bargepole. It only gained 31% last year. And silver's even worse with a piddling 85%.

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Scorpio15

Feb 19, 2011 at 13:03

Roy C

I do not know if you have received my reply to your invaluable advice, but I repeat here anyway. To say that I am very grateful to you for it regarding RPI. What IS RPI anyway? This shows how ingorant I am, but I am learning and am not sure of all these 3-letter words. How can I be sure to target above RPI? As you are aware that I have income funds in UK, Europe, Asia and growth funds in UK, Europe, America and Emerging markets, what are the latest funds you would recommend for this year please. I know I am asking too much, but you are at liberty to either gi e me advice or ignore it.

Thank you very much Roy and God bless you.

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Guy Cohen

Feb 19, 2011 at 14:29

Thanks Roy - much appreciated

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Roy C

Feb 19, 2011 at 16:00

Scorpio' I'll give you a slight benefit of the doubt here. Since you have the nouse to get to the Citywire site let alone here. You might want to key in RPI(Retail Price Index) in your search engine, and CPI(consumer Price Index) and hey presto, there for you to read, the subtle differences between the 2. RPI being the highest at 5.1 is why I suggest is your target.

Your funds seem to be fine for an end of the year assessment, against RPI, maybe a few specialist funds thrown into the mix maybe, as your funds are geographically defined at the moment. Who knows what and when, as a world market slump could throw this all off course, and I don't believe in crystal balls either. There is a risk to all ideas and suggestions.

Also try to buy goods at the best price, I use "Quidco" for all manor of things, get a credit card that gives you cash back. I use an Egg card, I purchase my fuel from Sainsbury's, to get nectar points, and pay with my Egg card to get an extra 1% cash back.Also I use on "Quidco" purchases(a great site for car insurance discount" This helps to reduce my outgoings thus a tad towards reducing RPI. I hold Sainbury shares, the divi gives me another bit of cash back. Do you get it?

Before you ask, specialist funds, like Commodities, property,Agriculture.and so on.

Buy by

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Scorpio15

Feb 19, 2011 at 17:39

Hello Roy C

What an intelligent and kind gentleman you are! You have been a great help to me, who is learning day by day from people like you. I thank you immensely for explaining things to me so clearly. I did not know sites like Quidco. I do have M&S card who give me points in buying their food and clothes. Also I shop at Sainsburys and Tesco but do not have their shares. I have been dealing with Individual Savings Account for years but they transfer all my funds to Co-funds and Co-funds charge a lot of money when I switch funds. Hargreaves on the other hand, do not charge me anything for switching my 19K worth of funds I have with them. My funds are about 136K with Cofunds. I shall invest my this yearf's ISA with Hargreaves.

Roy, please accept my sincere thanks and may your fortunes grow threefold. for helping others.

Bye for now.

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Mag1

Feb 19, 2011 at 23:55

The idea that gold is in a bubble in ludicrous! Gold is not merely a commodity...why do you think central banks trade it? The gold price represents the amount of currency in circulation and with the western governements' printing presses glowing hot the price is set to increase dramatically.

It is real money...always has been, always will be...so is silver.

I would recommend silver over gold at the moment as it's more affordable plus historically it usually trades at a ratio of 15:1 with gold and currently is around 45:1 so will continue to outperform gold.

ETFs aren't backed up with physical metal GATA has proof of this so when the price starts to represent it's true Market value you may well find yourself holding only worthless paper.

It's interesting to note that JP Morgan will take physical gold as collateral but not GLD ETF shares even though they're the custodian! Perhaps they're privy to something?

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Myron Martin

Feb 20, 2011 at 00:15

Excellent comment by MAG1, anyone who believes the "establishment disinformation" that gold is in a bubble, should give their head a good shake, they have been saying that fo r nigh on 10 years in spite of gold and silvers steady rise with minor pullbacks along the way.

There may indeed be a short term sell off, there will ALWAYS be corrections in the market on ANYTHING, nothing goes straight up, it is not the zigs and zags that people should be fixated on, rather the PRIMARY TREND, which has been UP for over 10 years and a correction is simply a BUYING OPPORTUNITY, in fact the next pullback may well be the last major entry point BEFORE a major bull run.

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Dennis .

Feb 20, 2011 at 10:16

I remember in 2000 having about 5,000 BT shares and they were worth about £12 each. I was going to sell but someone told me to hang on since the analysts were predicting they would go to £17. They didn't and they are now worth about £1.85. Now tell me again about being greedy and investing in bubbles.

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DrG

Feb 20, 2011 at 10:38

How do I buy physical silver in Europe?

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Mag1

Feb 20, 2011 at 11:19

Coininvestdirect,bullionbypost,bullionuk and guernseymint are all excellent. In the uk you have to pay 20% vat on silver but the general resale price includes this. If you can get to guernsey there is no vat charged but you are liable to pay upon entry to uk. The best place to buy is Germany as vat on numismatics is 7% and then there is no extra vat to upon entry to the uk. This doesn't work if you buy from Germany and expect them to ship it to you as they are legally obliged to charge 20% vat. In all honesty with the price heading where it is, I wouldnt worry too much about the uk premium on silver. In the end it won't be how much did you spend, it will come down to how many ounces have you got.

There is some excellent information out there, just search; why physical silver/ silver price manipulation/ silver short squeze/ GATA/ King World News plus what the following people have to say on the subject; Peter Schiff/ Gerald Celente/ David Morgan/ Mike Malloney/ Eric Sprott/ James Turk/ Ron Paul for starters! Good luck, it's a bit of an eye opener

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David Meyer

Feb 20, 2011 at 12:32

With just £10k to invest, stop breaking your head over the markets.

Knock £10k off your mortgage. With interest rates on the rise, this is your most reliable "investment" - and its tax free!

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Ines

Feb 20, 2011 at 14:55

I wouldn't buy RIT at the moment, it is at a premium. Wait until a discount develops as it inevitably will and invest then - it is a very good trust. Or you could drip money in on a monthly basis, which is free if you do it directly with RIT.

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snoekie

Feb 20, 2011 at 15:12

DI (dumb Investor),

I have previously mentioned that a few good investments (as several have mentioned) are a must, but I have always retained a small percentage of money (mad money) for risky stuff.

I will be the first to admit I have made a few 'mistakes'. A couple have been taken over for no loss and are now showing a profit (on paper) whilst others are way over the horizon (way down), and long, long shots. Usually from my 'small change'.

There is much talk about agriculture. Consider the agriculteral goods coming from Africa. Look at Lonrho. This was a dog for quite a while but the present management have turned this around and they are, amongst other things, shippers of agricultural goods to markets and/or transport hubs. Finally back in profit (after years of losses) and the current management have long term goals and they are expanding.

Also look at miners, not so much at the valuable minerals, gold and silver (the latter is said to be scarce and has medicinal properties and will be very scarce in 30 odd years time). Here I have been watching, and dribbling into for a cpuple of years now, Int Ferro metals, a base ore miner for chrome. Price way down from a couple of years ago, but debt, near deabt, free and they have paid 1 dividend, a couple of years ago.

A must for stainless steel and the demand is again beginning to build. Currently 21p. They have some immediate problems, furnace repairs (finished within a moth or two) but then can get back to full production and the base price is rising again. China a big buyer.

These two are for long term, and really worth a serious look at.

I suggest you make you selections and sit back and watch, all the while reading the papers and making your own watch list, and follow these. Inevitably some of those you are watching will rise, and you can only rue not having the money to invest at the time. Others will drop, or just hang there.

This alone will give you the beginnings of understanding the markets and where you want to go. Odds on you will take some of your own 'spare' money and invest in the odd investment.

In about 5 years you will have another smallish amount to invest, the yields from your base investments (those you buy into now) for further investment. The yields should not be for spending on day to day wants, but for further investments, and if followed, in 15 years your portfolios will have expanded a fair bit, and be worth a lot more.

Don't try trading, you will lose, unless you are really lucky, until you have read yourself in and have been watching the vagaries of the market for about 5 years. Not really a long time in terms of getting the beginnings of understanding.

My experience, and my portfolio is now more than 5 times my 'start up' amount, a legacy, from 20 years ago.

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Maverick

Feb 20, 2011 at 15:16

David Meyer - Dumb Investor's rich great-uncle wants to see results at the end of the year, not a reduced balance on Dumb Investor's mortgage statement.

The mathematics of compounding means that Dumb Investor should leave his gains in, and re-invest. A 25% annual gain means he would double his money within four years.

Tax-free? If Dumb Investor invests via an ISA his 25% annual gain will be tax-free too.

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Roy C

Feb 20, 2011 at 16:02

Guy,if you want A good site for ETF,ETC go to Morningstar.co.uk they have an excellent, quick rank. Incidentally take a look at ishares BRIC 50, the top 50 companies in BRIC,s Recommended by David Stephenson in the FT a couple of months ago. Gone up 30%?

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Hilary hames

Feb 20, 2011 at 21:26

As a fairly new investor I have learnt quite a bit from this discussion so thak you everybody.

Further up this thread Simon Thompson of the IC was mentioned as someone who is respected by private investors. What other names from newspapers, magazines and investment websites can be recommnended? For myself, I am more interested in funds, trusts and ETFs than I am in individual shares.

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david m rogers

Feb 20, 2011 at 23:16

For Investment Trusts there is a useful monthly newsletter which I have subscribed to for a couple of years. (McHattie Group website www.tipsheets.co.uk) BestInvest`s website is also good on Individual ITs as is Citywire`s

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Geoff Harrop

Feb 21, 2011 at 09:16

You got £10k for nothing so why spend so much time fussing about it ? Put all your eggs in one basket and watch the basket.. I suggest you put the whole £10k into Angel Biotech [ABH] and sit back and relax.

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Ines

Feb 21, 2011 at 10:52

Wow! Sounds like a promising company but not exactly relaxing when you see the volatility of the share price and the fact they have just had to raise money by paying people in shares etc. Maybe one for those who like spread betting.

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Paul H.

Feb 21, 2011 at 12:02

Actually you can buy a physical gold bar for less thaan £10,000! Currently a 250 gm Bar will cost you £6935.00. Try : www.cooksongold.com

A nice little present perhaps for someone which looks like it will keep on increasing value and can be sold again at any time!

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Dave P

Feb 21, 2011 at 12:13

Buy silver instead with half your funds and sit on the rest for awhile.

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Mag1

Feb 21, 2011 at 20:01

Arian silver (AGQ) may well be worth a look for exposure to the silver bull that shows no sign of slowing. They are ISA'ble plus on current proven resources they're discounted from true Market value by over 40%. That's just the start though, today they released news that they're almost half way through proving up the remaining 90% of the mine (eg increasing resources from 43 million oz silver to 300-600million oz!!!) share price is starting to get going, was the second best performer of 2010 but could easily 10 bag from here. Worth a look most certainly ;)

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