 Good day fellow investors! I recently made a video about how Ray Dalio says that we should sell stocks and buy gold, have some gold in your portfolio. So in this video I'll explain all you need to know when it comes to investing in gold backed ETFs, gold miners or gold mining ETFs and then you will see how that fits your portfolio. The topics for today are why gold as a hedge, what makes gold a hedge, investing in physical gold, investing in physical gold ETFs, gold miners, gold mining ETFs, gold investing strategy and then my gold investing strategy. In the past month I have looked at more than 90 gold miners, narrowly done to 50 that I really looked in debt and I found one, two that are interesting as an investment for me. So that is a very complicated investing strategy. So you will see whether you will invest in physical gold, gold miners, gold ETFs or none of that and you'll know that exactly after this video. Let's start with why gold is a hedge. The idea behind investing in gold is the following. Global central banks have increased their asset base on average five times over the last decade, let's say 15 years. Here you have the Fed, the European Central Bank and the Bank of Japan and these are their assets. At the same time gold went up four times from 300 in 2003 to the current 1200 with a speculative exuberant spike to 1800 in 2011. So we can say that in part gold has been a hedge against loose monetary policy. Gold is the golden line here and the ECB and FEDS balance sheet. So that's logical, gold is fixed in supply, it costs a lot to dig out of the ground and it as a fixed material it provides a hedge against things that can move like our currencies that can expand as a bank prints them. So that is the rationale behind having gold as a hedge in your portfolio. So we are now nine years into an economic expansion that is rising, that is piling. There will be a recession somewhere in the future and what will central banks do? Again, they will print money because that's the only thing they know how to do and the ECB and Bank of Japan are still printing money. So that is something to keep in mind that that might happen in the next five, 10 years and what would be a good hedge to protect yourself against possible hyperinflation in the future? We were lucky we didn't have inflation in the last 10 years, perhaps in the future we will hit inflation. If that happens, gold is a good hedge. However, there is always the risk reward when investing, the economy is doing good, interest rates are going up, which is not good for gold. So everything is very positive and this has negatively affected gold prices in the past few months. You can see here that gold prices are under pressure and going below 1200 in the last what month, two months, from being above 1300 just a few months ago. So gold can go higher, can go to 2000, 2500 if we have a recession, if we have monetary, new monetary lose policies, but it can also go to below 1900, 800 and that would be terrible for those who own gold, but especially for gold miners. So that's something to keep in mind when allocating part of your portfolio to gold. Let me start with physical gold investing. As I already said, if there is more loose monetary policy, I wouldn't be surprised to see gold above 2000 in the next five, 10, 15 years. So if you own gold, you will see it double perhaps in your portfolio, that part of gold in your portfolio over the next 10, 15 years. That is a possibility. However, if nothing happens, if people say gold is just the material that has no value, gold prices can go to 700, 800, 900 that will be used then for jewelry and everything else. So if that happens, you would lose 40% of that part of your portfolio. There is a strategy I'll talk about that a little bit later when it comes to rebalancing around that might provide you a yield, whatever happens, but more about that later. So physical gold, the risk is 40%, 50% down. The upside is 100%, 200% up, depending on the situation that we have with inflation. Now, owning physical gold costs, you have to store it, pay the fees, transport, et cetera. The second option is to own physical gold backed ETFs. The SPD year gold shares with an expense rate of 0.4%. I shares ETFs physical Swiss gold. So are just examples of an ETF that has gold in specialized volts and they charge you an expense rate of 0.4%, 0.25% on holding that gold per year. So that's how they make their money. You can trade these shares as a normal stock and have it as a normal stock in your portfolio, which makes things very, very easy. Just a warning, please read the prospectus before buying an ETF because then there you have explained the risks because you don't want to find yourself when it matters to get to that gold that you cannot get to it or you cannot get the value for it. So that's something to read the prospectus and see how that fits your personal preferences and portfolio exposure. I'm not recommending ETFs, I'm just saying that as a potential exposure. Some people have physical gold and physical gold backed ETFs. Physical gold is the safety net. Physical gold ETFs is for trading and rebalancing as gold goes up and down. More about that again later in the investing strategy. Over the past months I have been looking at more than 90 miners as I said 15 in debt because miners are businesses that's different than physical gold. To own physical gold you have to pay a fee and you don't get any dividend. If you own miners, you get a dividend, they have a cost and they have the price of gold which is their revenue. So if the price of gold goes up their cost doesn't go up proportionally. So they make more and more money if the price of gold goes up which means they are more leveraged to the price of gold at least in theory. If the price of gold goes down however their margins go to zero and even below zero which might make them worthless. So there is much more upside risk but also much more downside risk and it always boils down to value. I'm a value investor so I'm looking for value okay what I'm buying now is the price I'm paying should be below the intrinsic value of what I am buying and I analyzed 90 gold miners 15 in debt and just two gold miners had okay their intrinsic value at current gold prices it's close to the price I should pay for them. They have some different risks but only two out of 90. So the mining environment is very very tricky to invest in. You have a complete playlist of my videos on YouTube so check that out if you're more interested in gold mining exposure to your portfolio. However it's much much more leveraged to gold prices and there is also other risks I don't know some country can say okay this mine is now mine they can nationalize it and then buy buy value of the stock you own in the gold miner. So apart from those risks there is obvious overvaluation because 88 miners of the 90 I checked were overvalued at current gold prices. So people are already overpaying for that gold upside option and that is something as a value investor I don't really like however I'll talk a little bit later about my investing strategy. Just an example I made a video on gold corp I also made a video about the dangers of investing in the mining industry so please check them out it will be all in the playlist and for example my valuation of gold corp is 500 million the market cap is 8 billion so that's the difference at current prices however if gold goes to 2000 gold corp's value should be around 46 billion 40 40 billion so gold corp's upside is 200 percent if gold goes up 50 60 percent while the downside if gold goes down is much much bigger and is practically 100 percent if gold goes down 40 50 percent a lot of miners will be worthless so that's the risk reward and you have to see how that fits and whether it fits your portfolio. Now another thing to talk about are gold mining ETFs and this is somehow tricky because as all gold most gold miners are overvalued so will the ETF be overvalued and that's exactly also what happened in the past the Van Ek vectors gold miners ETF went public at 40 dollars in 2006 reached a high of 65 dollars in 2011 and now it is at what 25 30 percent of it when we are in 2018 however 2006 gold was at 600 then it went up three times two times to 1800 in 2011 and now it's still 100 percent above the 2006 level so gold went up 100 percent the vector Van Ek gold miners ETF is down 50 percent and this is because when the Van Ek ETFs was launched in 2006 Barrick, Newmont and all those gold miners were already three four times up from their 2002 lows so it's very important to get to those gold miners when they are not overvalued and that is unfortunately the case that they are very very often overvalued because everybody is looking at the higher upside from gold again see how that fits your portfolio but there can really really be bad times if gold prices continue to go lower the key thing is to have a clear investing strategy and that's what Delio is focused on when it comes to gold if gold goes to 200 500 you will be up 100 percent while it goes down to 600 you will be down 50 percent the key is to rebalance every 20 or 30 or 15 or 10 percent up and down so let's say you have 10 percent in gold of your portfolio now if gold falls to 1000 suddenly you are at 8 percent of your portfolio in gold so you take some of the cash you have or something that went up and you rebalance that portfolio exposure back to 10 percent when gold goes again up to 1200 then you have 12 percent of your portfolio in gold and you bring it back down to 10 percent and around that you take advantage of the volatility in gold prices that is always there and you get some yield on that portfolio hedge if it happens that gold explodes then you have some protection in your portfolio plus the yield from rebalancing so it's very important to rebalance and that's the key the core of Delio's message you have exposure to gold and you rebalance accordingly when everybody is going away from gold when nobody wants to touch it with a 10 foot pole you buy gold when your taxi driver is talking about the gold you stay away from gold and then you rebalance accordingly in your portfolio to hit your target portfolio exposure so you get some yield and you get some protection with gold miners it's very difficult to do that because there is the risk of permanent capital loss for example Tejo resources gold silver miner was at $25 in 2014 now it was acquired recently for $3.3 so no upside for those that bought from 25 down to 3.6 and this is the risks of miners and also something to keep in mind when investing in gold miners when it comes to my investing strategy in gold and this is something I find very hard to explain to 98% of the people out there investing is dynamic people think okay I have to build a portfolio let's sit down with my banker have an hour chat and I have a perfectly diversified portfolio it doesn't work like that investing is a dynamic process that lasts a lifetime decades to build a portfolio so you buy gold when it is cheap you buy real estate when those are cheap you buy this sector when it is cheap and then over time you build a well-diversified portfolio of various assets that have all been bought when those have been cheap not going around okay and buying whatever like 99% of people are doing and buying whatever the importance is to be diversified no it is important to constantly look at value and then be diversified so I have looked at 90 miners I am biased a little bit towards businesses I like to get a dividend I like to own a business rather than own just physical gold however I will probably limit my portfolio exposure to gold to 4% now and then with time perhaps in six months perhaps in five years I will increase it decrease it depends on what's going on I have other ways to protect myself from inflation I will look for and I'm constantly looking for businesses that have pricing power protection against inflation if there is inflation if they can rise prices alongside inflation that's a protected business buying real assets so that's how I'm building my portfolio and you can check everything that I do full disclosure on my stock market research platform there is a 40 day money back guarantee so if you want to learn more in depth how I invest then you can just check it out I'm no questions asked if you want your money back but it's something really I recommend to do because you get a better picture of this investment channel and also a reminder from 2019 the price of the platform will go up so please lock in this price forever if you like it so think about that before the end of the year going back to gold miners perhaps somewhere later in the future perhaps some something will become an opportunity perhaps something a copper miner will have gold exposure like the stock I liked very much in 2018 2017 nevson resources people forget it was not just a copper miner it had huge gold optionality as 30% of their team of project was gold so I was buying also my gold hedge true low-cost copper miner that later exploded when it was taken over because there was value so I'm really focused on value and I diversify over time I have now database of 15 miners overview of 90 miners and that's what I'm going to keep for myself also of course on my research platform but that's what I'm keeping looking and when it hits okay now it's time to buy gold nobody wants to touch it with a 10-foot poll okay let's see what we have let's see where's the value and let's increase our portfolio from four perhaps to eight ten percent depends on other things and depends on what's going on so that's my strategy I will have probably two gold miners in my portfolio in the next couple of months because I'm very patient and like like to get value so to conclude gold can go much much higher however it can go much much lower physical gold is much easier to balance so the risk of permanent capital loss is much lower there and if you are avoiding risk if you have no risk tolerance then physical gold is the way to go if you want perhaps you have physical gold but you want some more excitement in the portfolio then you might want to test a few miners but please buy them when they are at par with their value not overvalued don't overpay for the gold option then it's better to go to gold physical gold because that's it then you are not overpaying because overpaying even if gold goes up and you overpaid then the upside is limited while the downside is much much bigger so also check gold ETFs see how that fits and don't get exuberant a good portfolio diversification means I think Ray Dalio said eight percent now of a portfolio in physical gold because that's a good risk reward perspective in light of what might happen when it comes to monetary policies in the future thank you for watching looking forward to your comments check my stock market research platform and I'll see you in the next video