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American Century Global Gold Inv Message Board

  • cdanajackson cdanajackson Nov 21, 2012 3:47 AM Flag

    Low historical return + high risk

    Using the adjusted annual closing prices from the Yahoo! Finance database, this fund has had a compounded annual return 5.80% and a geometric standard deviation of 34.46 percentage points.

    Very high risk for very low return.

    This fund really isn't a good idea.

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    • Dec 13, 2011 1.368 Dividend
      Dec 28, 2010 1.596 Dividend
      Dec 14, 2010 1.633 Dividend
      Dec 29, 2009 0.126 Dividend
      Dec 29, 2008 0.001 Dividend
      Dec 16, 2008 1.945 Dividend
      Dec 28, 2007 0.111 Dividend
      Jun 12, 2007 0.121 Dividend
      Jun 13, 2006 0.047 Dividend
      Dec 31, 2003 0.161 Dividend
      Jun 17, 2003 0.045 Dividend
      Dec 13, 2002 0.018 Dividend
      Jun 28, 2002 0.019 Dividend
      Jun 30, 2000 0.026 Dividend
      Dec 17, 1999 0.026 Dividend
      Jun 25, 1999 0.026 Dividend
      Dec 18, 1998 0.023 Dividend
      Jun 26, 1998 0.026 Dividend
      Dec 19, 1997 0.239 Dividend
      Jun 27, 1997 0.055 Dividend
      Dec 18, 1996 0.696 Dividend
      Dec 21, 1995 0.009 Dividend
      Dec 22, 1994 0.048 Dividend
      Dec 22, 1993 0.012 Dividend
      Dec 23, 1992 0.013 Dividend
      Dec 31, 1991 0.018 Dividend
      Dec 19, 1990 0.078 Dividend
      Dec 27, 1989 0.048 Dividend
      Dec 28, 1988 0.032 Dividend

      Hope you adjusted for the dividends that have been paid out and deducted from the price--usually reinvested by American Century holders.

      Gold stocks can be risky--if you look at the GOLD:XAU--gold stocks are near their lowest point in many years. This could have to do with the gold ETFs that now proliferate, whereas they never did a few years back. But BGEIX is still about as cheap as ever in comparison to the shiny stuff.

      I've been using this fund for since 1997 and feel that it furnishes the leverage you would expect to get out of gold stocks and is convenient to average into. I'm averaging into it now.

      There are downsides, like the 1% fee if you hold less than 60 days and the fact that you only get the day end price. But it performs well when compared to GDX and GDXJ, especially when taking into consideration the dividends, which the Yahoo charts don't reflect as a reinvestment--they just get lost in the squiggles.

      I am not a hold forever type and when the GOLD:XAU gets down toward its 200 day moving average in 2013, I presume, I'd be at least selling some of this.

      • 1 Reply to jshaef1
      • Dividends are one thing, but volatile price swings are quite another. Are you sure you know what the fund's geometric standard deviation means?

        Let me remind you.

        It means that statistically - that would be one geometric standard deviation, which is about 68% of the time - the fund will have a yearly range of returns of between -29% to 40%. If two geometric standard deviations is used - that would 95% of the time - the fund's return will be between -63% to 75%. As a comparison, for the same time period, the S&P 500 Index has a annual compounded return of 6.79% and a geometric standard deviation of 20.76% So, really, by investing in this fund, you would have taken on 66% more risk for 15% less return. In other words, the S&P 500 Index is the better investment - risk versus return speaking.

        Note, when it comes to price volatility - which is used as a proxy for risk - I'm more concerned about the downside risk, rather than the upside. In other words, I want to know how much I could lose.

        Now, if one's risk tolerance is high, maybe this fund is something to consider. The potential investor just needs to know that for such a small long term return, he or she would be taking on a lot of risk. On the other hand, if the person is a trader - rather than an investor - none of what I've just said applies, as traders buy on price and not value.

        Oh, and by the way, I'm not a buy and hold forever kind investor either. I'm a buy and hold and THEN sell when the asset becomes fairly valued kind of investor.

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