Archive | Ask the Spud

Ask the Spud: iShares Gold Trust

Q: The iShares Gold Trust (IGT) trades on the Toronto Stock Exchange, but I can’t find it on the iShares Canada website. Can you tell me why? — Jim O.

The iShares Comex Gold Trust is an exchange-traded product that tracks the price of gold. Like its competitor, SPDR Gold Shares (GLD), the trust is backed by gold bullion held in a vault by a custodian.

But although IGT is listed on the Toronto Stock Exchange, it is not a Canadian product. It’s simply a cross-listing of the iShares Gold Trust (IAU), which is domiciled in the US and traded on the NYSE. That’s why it isn’t included on the iShares Canada site.

If you’re not familiar with cross-listing, it’s a common practice among large corporations that want their shares to trade in more than one currency (and sometimes more than one time zone). For example, while Research in Motion is a Canadian company traded on the TSX, you can also buy its shares in US dollars on the NASDAQ. There are many other examples of companies with dual listings,

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Ask the Spud: Can You Time the Markets?

Q. Have you ever done any calculations into the optimal time to purchase index funds or ETFs based on broad market indicators? I’m essentially talking about buying during market dips and corrections, perhaps based on moving averages. — Joe S.

Canadian and international stocks are now in negative territory for 2011, and even US equities have fallen more than 5% since the beginning of May. If you’re an index investor with a global strategy, does it make sense to wait on the sidelines for opportunities like this? Can you enhance your returns by identifying the right time to buy?

Let’s call a spade a spade here: this is market timing. It is always possible to look in the rear-view mirror and identify what would have been the optimal time to buy into any asset class. But trying to spot buying opportunities ahead of time, based on moving averages or other technical indicators, is likely to be futile and costly.

Besides, the Couch Potato strategy already includes a technique for buying into asset classes when they’re “cheap.” It’s called rebalancing.

About once a year—or when your portfolio’s target allocations are out of whack by a certain amount—it makes sense to trim the best performers and use the proceeds to prop up the winners to get the portfolio back to its targets.

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