The Commodity Investor Q&A
With Matt Badiali
October 7, 2009
Q: Fine article on precious metals funds. You asked about unmentioned funds – What about MLCX Precious Metals Plus Total Return Index (PMY)? I bought at $6.25 in 10/08, now can't even find it listed. – B.B.
A: Too many funds cover precious metals. As you saw last week, eight different funds cover gold. There were even more before the bear market hit...
Credit Suisse Securities, which issued PMY, delisted it on April 3, 2009. The fund does not trade anymore. PMY wasn't alone. In the first quarter of 2009, exchange-traded funds lost 13.5% of their value. That was about $58 billion. The funds' sponsors yanked 21 funds off the market.
PMY may be delisted. But it didn't disappear. You can track the fund's value by the CUSIP number (22542D506) or through this website, which lists a share value of $9.04 right now. Your broker should be able to sell your shares back to Credit Suisse.
If you've had a fund delisted, the first place to check is with the issuer. It should have all the information. But you can avoid future precious-metals fund closures with one simple rule: go big.
The SPDR Gold Shares (GLD), for example, is huge – $36 billion and unlikely to delist. It trades about 600,000 shares per day, $60 million worth. E-TRACS Gold Fund (UBG), on the other hand, is just $4 million... It's lucky to trade 1,000 shares, about $28,000 worth. That's a fund on the ropes.
Q: You didn't mention the miners, such as GDX! – M.M.
A: There were so many precious-metals funds, I didn't have room to get into the mining funds.
Besides, buying mining stocks is not at all the same as investing in precious metals. Miners can run into all sorts of problems – the workers could strike, the mine could collapse, costs could rise, and so on. It's a much riskier investment. And it can provide you with a much larger reward.
When the price of gold is going up, gold miners can go up even higher. So for those of you looking for "one-click" leverage to metals prices, here's a short list of mining stock funds.
| Name |
Symbol |
Fees |
Market Value |
Market Vectors Gold Miners |
GDX
|
0.55%
|
$4,900 million
|
SPDR S&P Metals and Mining |
XME
|
0.35%
|
$745 million
|
PowerShares Global Gold & Precious Metals |
PSAU
|
0.75%
|
$22.5 million
|
EGS Emerging Mkts Metals and Mining Titans |
EMT
|
0.10%
|
$7.8 million
|
I'm not a big fan of XME or EMT. Neither focuses enough on gold miners for me... XME only had five gold or silver miners in its top 25 holdings. EMT's only precious metals are platinum miners. I'd also avoid PSAU, because it's pretty small.
The only fund that meets my criteria for investing in precious-metals – and is big enough to be safe is – GDX.
Good investing,
Matt Badiali
P.S. Thanks to everyone for your letters. I can't respond to everyone, but I read them all. If you've got a commodity question, let me know here. |
|
|
| • |
Gold hits all-time record... the yellow metal spikes 2% to $1,045 per ounce. |
| • |
Emerging markets surge higher... fund VWO up 100% since March low. |
| • |
Muni bond funds continue relentless bull market... scores of bond funds at new highs. |
| • |
Q3 earnings announcements begin tomorrow... Alcoa, Costco, Family Dollar, Monsanto. |
|
Last |
Change |
52-Wk |
| S&P 500 |
1062.98 |
+1.78% |
-12.37% |
| Oil (USO) |
34.51 |
+1.50% |
-59.97% |
| Gold (GLD) |
97.05 |
+0.05% |
+12.02% |
| Silver (SLV) |
15.91 |
+1.08% |
+20.99% |
| U.S. Dollar |
77.11 |
+0.26% |
-0.52% |
| Euro |
1.46 |
-0.40% |
+0.97% |
| VIX |
24.88 |
-2.85% |
-28.38% |
| HUI |
398.09 |
+0.10% |
+20.93% |
| 10-Year Yield |
3.30% |
-0.03 |
-0.46 |
|
|
| Company |
Sym |
Industry |
Philip Morris |
PM |
cigarettes |
SPDR Gold Shares |
GLD |
gold ETF |
VimpelCom |
VIP |
wireless telecom |
Cognizant |
CTSH |
outsourcing |
CPFL Energia |
CPL |
utilities |
Priceline |
PCLN |
online travel |
TIM Parti |
TSU |
wireless telecom |
Brasil Telecom |
BTM |
telecom |
Petroleo Brasileiro |
PBR |
oil & gas drilling |
Itau Unibanco |
ITUB |
bank |
EMC |
EMC |
data storage |
Brazilian Telecom |
TBH |
telecom |
Sterlite Industries |
SLT |
copper |
Minas Buena |
BVN |
gold mining |
KT |
KTC |
telecom |
Cerner |
CERN |
health IT |
Paranaense de En |
ELP |
utilities |
Telefonica |
TEF |
telecom |
Banco Bradesco |
BBD |
bank |
Wipro |
WIT |
outsourcing |
HDFC Bank |
HDB |
bank |
Vivo Parti |
VIV |
wireless telecom |
Bancolombia |
CIB |
bank |
Comp Brasileira |
CBD |
grocery stores |
Limited Brands |
LTD |
clothing stores |
Jefferies Group |
JEF |
broker |
Apple |
AAPL |
computers |
Wyeth |
WYE |
Big Pharma |
Apache |
APA |
oil & gas drilling |
Kohl's |
KSS |
dept stores |
Philippine LD |
PHI |
telecom |
Discover Financial |
DFS |
credit cards |
Check Point |
CHKP |
pay systems |
Newfield Ex |
NFX |
oil & gas drilling |
Ivanhoe Mines |
IVN |
mining |
Coca-Cola |
KO |
soft drinks |
Allianz |
AZ |
insurance |
Siderurgica Nacl |
SID |
steel |
Fomento Eco |
FMX |
beer & soda |
Gold Fields |
GFI |
gold mining |
Discovery Comm |
DISCA |
TV programming |
Liberty Media |
LINTA |
mail order |
Ultrapar Holdings |
UGP |
gas distribution |
Tiffany |
TIF |
jewelry |
Vale |
VALE |
steel |
AMBEV |
ABV |
beer |
ICICI Bank |
IBN |
bank |
Diamond Offshore |
DO |
oil & gas drilling |
Invesco |
IVZ |
asset mgmt |
|
| Company |
Sym |
Industry |
Chemspec |
CPC |
chemicals |
Sequenom |
SQNM |
biotech |
Amicus |
FOLD |
biotech |
|
