Gold as Commodity?

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Gold as Commodity?

Lane Lester
I recently opened an account with goldmoney.com. The money I paid was used
to purchase a certain weight of physical gold, which is held in one of
their vaults.

Is there a way I can create an account in GnuCash in which the register
amounts vary with the price of gold?

Lane

*Peace Doctor <http://www.peacedoctor.org/>*
*If it is possible, as far as it depends on you, live at peace with
everyone.*
Paul's letter to the Christians at Rome 12:18
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Re: Gold as Commodity?

Tuomo Hartikainen
On 2017-01-23 08:38, Lane Lester wrote:
> I recently opened an account with goldmoney.com. The money I paid was used
> to purchase a certain weight of physical gold, which is held in one of
> their vaults.
>
> Is there a way I can create an account in GnuCash in which the register
> amounts vary with the price of gold?
>
> Lane

How about treting it as a currency? Would that work for you? You can
then update the quotes for it as you wish.

--
Tuomo Hartikainen
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Re: Gold as Commodity?

John Ralls-2

> On Jan 23, 2017, at 3:13 PM, Tuomo Hartikainen <[hidden email]> wrote:
>
> On 2017-01-23 08:38, Lane Lester wrote:
>> I recently opened an account with goldmoney.com. The money I paid was used
>> to purchase a certain weight of physical gold, which is held in one of
>> their vaults.
>>
>> Is there a way I can create an account in GnuCash in which the register
>> amounts vary with the price of gold?
>>
>> Lane
>
> How about treting it as a currency? Would that work for you? You can
> then update the quotes for it as you wish.
Might work for the OP, won't work for GnuCash. Only ISO-4217 currencies can be currencies in GnuCash, everything else is a commodity. Sorry, BitCoin and competitors.

But Gold will work fine as a commodity. Best to read the discussion from a week or two back about how gold prices aren't, really; they're gold *futures* prices, which isn't at all  equivalent.

Regards,
John Ralls

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Re: Gold as Commodity?

Plutocrat
John Ralls wrote on Tuesday, 24 January, 2017 12:09 PM:
> Might work for the OP, won't work for GnuCash. Only ISO-4217 currencies can be currencies in GnuCash, everything else is a commodity.

Not trying to contradict you here, but according to Wikipedia, ISO 4217 does include gold (XAU)?

        https://en.wikipedia.org/wiki/ISO_4217

Bitcoin (XBT) hasn't been approved yet, but is under consideration.

P.
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Re: Gold as Commodity?

John Ralls-2

> On Jan 23, 2017, at 8:26 PM, Plutocrat <[hidden email]> wrote:
>
> John Ralls wrote on Tuesday, 24 January, 2017 12:09 PM:
>> Might work for the OP, won't work for GnuCash. Only ISO-4217 currencies can be currencies in GnuCash, everything else is a commodity.
>
> Not trying to contradict you here, but according to Wikipedia, ISO 4217 does include gold (XAU)?
>
> https://en.wikipedia.org/wiki/ISO_4217
>
> Bitcoin (XBT) hasn't been approved yet, but is under consideration.

Sorry, you're right. XAU is a legit currency and it's included in GnuCash's iso-4217-currencies.xml, so it will indeed work in GnuCash.

Regards,
John Ralls

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GWB
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Re: Gold as Commodity?

GWB
Here's the recent thread about gold on lists.gnucash.org:

http://lists.gnucash.org/pipermail/gnucash-user/2017-January/068415.html

XAU is indeed the currency symbol for Gold in foreign exchange (FOREX)
trading, and is often used as a currency pair with the US dollar:
XAU/USD.  However, if you are not tracking the currency fluctuations
for a Forex contract, then you might consider getting the dollar/gold
rate from one of the bullion dealers' websites once a week, month, or
quarter.  If gnucash handles XAU internally as a currency that values
against others (AUD, USD, CAD) that might be best, but I have not had
a chance to test that out.

If you dislike knowing how excessively volatility currencies can be,
you may not want to follow the FOREX values.  The volatility won't
affect you if you hold it more than a day or a week, but it can be a
valuable signal (along with the VIX, or "Fear Index").  My guess (and
it's just that, a guess) is that GoldMoney.com is going to determine
(from whatever combination of markets and "spot prices" they use) what
a gram of gold is worth in any other currency, and that's what you
will get for a price no matter what.  So perhaps just use their
valuation, which they conveniently give you on their website:

https://www.goldmoney.com/live-prices

I would be curious how your experience with them goes.  The currency
pairs with precious metals have been largely removed from Forex
exchanges in the US due to the ass-clownery of legislation such as
Dodd-Frank and FACTA.  So goldmoney.com might be an alternative.

Gordon

On Tue, Jan 24, 2017 at 8:56 AM, John Ralls <[hidden email]> wrote:

>
>> On Jan 23, 2017, at 8:26 PM, Plutocrat <[hidden email]> wrote:
>>
>> John Ralls wrote on Tuesday, 24 January, 2017 12:09 PM:
>>> Might work for the OP, won't work for GnuCash. Only ISO-4217 currencies can be currencies in GnuCash, everything else is a commodity.
>>
>> Not trying to contradict you here, but according to Wikipedia, ISO 4217 does include gold (XAU)?
>>
>>       https://en.wikipedia.org/wiki/ISO_4217
>>
>> Bitcoin (XBT) hasn't been approved yet, but is under consideration.
>
> Sorry, you're right. XAU is a legit currency and it's included in GnuCash's iso-4217-currencies.xml, so it will indeed work in GnuCash.
>
> Regards,
> John Ralls
>
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Re: Gold as Commodity?

GWB
Hello, Lane,

If gnucash is crashing, then that's a problem the gnucash user list
might be able to solve, so let's also post emails to
[hidden email]; I can't remember the method the list uses,
either in the To: or Cc: field.  What operating system are you using,
and which version of gnucash?  Someone else may have more experience
with price editor than I do, and might be able to figure out the
problem.

The earlier replies from Tuomo, John and Plutocrat might point you in
a better direction, that is, treating Gold as a currency.  I would be
interested as well if that were possible.  It would be less accurate,
but easier, than using a Forex account to determine the value of gold
(or silver, bitcoin, etc.).

Anyone else have ideas on this?

Gordon

On Wed, Jan 25, 2017 at 8:59 AM, Lane Lester <[hidden email]> wrote:

>
> On Wed, Jan 25, 2017 at 12:08 AM, GWB <[hidden email]> wrote:
>>
>> Here's the recent thread about gold on lists.gnucash.org:
>>
>> http://lists.gnucash.org/pipermail/gnucash-user/2017-January/068415.html
>
>
> Thanks for the reply, Gordon. The above link and your words were very
> helpful, and I was finally able to set up an account for Goldmoney. I
> selected Stock as the Account Type and Assets as the Parent Account. I
> clicked OK and got the error: You must choose a commodity.
>
> I couldn't find the word "commodity." I clicked Select for Security/currency
> and got a little window with Type and Security as fields. Type offers me
> only stock exchanges, and Security offers me no choices, just a blank field.
> If I type in "Gold," the OK remains grayed out. I typed New and created an
> item with Gold for all fields and FUND for the Type. I was then able to
> click both OK's and create the account.
>
> I then was able to create transactions of my initial purchase and the 5%
> bonus Goldmoney gave me for signing up. I put the grams in for Shares and
> gold price to get the Buy dollars correct. The Balance shows my total grams
> of gold.
>
> The linked thread talked about using the Price Editor to track the value. I
> followed the directions as well as I could, but clicking OK there caused
> GnuCash to crash.
>
> Lane
>
>
> Peace Doctor
> If it is possible, as far as it depends on you, live at peace with everyone.
> Paul's letter to the Christians at Rome 12:18
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Re: Gold as Commodity?

John Ralls-2

> On Jan 25, 2017, at 12:26 PM, GWB <[hidden email]> wrote:
>
> Hello, Lane,
>
> If gnucash is crashing, then that's a problem the gnucash user list
> might be able to solve, so let's also post emails to
> [hidden email]; I can't remember the method the list uses,
> either in the To: or Cc: field.  What operating system are you using,
> and which version of gnucash?  Someone else may have more experience
> with price editor than I do, and might be able to figure out the
> problem.
>
> The earlier replies from Tuomo, John and Plutocrat might point you in
> a better direction, that is, treating Gold as a currency.  I would be
> interested as well if that were possible.  It would be less accurate,
> but easier, than using a Forex account to determine the value of gold
> (or silver, bitcoin, etc.).
>
> Anyone else have ideas on this?
>
> Gordon
>
> On Wed, Jan 25, 2017 at 8:59 AM, Lane Lester <[hidden email]> wrote:
>>
>> On Wed, Jan 25, 2017 at 12:08 AM, GWB <[hidden email]> wrote:
>>>
>>> Here's the recent thread about gold on lists.gnucash.org:
>>>
>>> http://lists.gnucash.org/pipermail/gnucash-user/2017-January/068415.html
>>
>>
>> Thanks for the reply, Gordon. The above link and your words were very
>> helpful, and I was finally able to set up an account for Goldmoney. I
>> selected Stock as the Account Type and Assets as the Parent Account. I
>> clicked OK and got the error: You must choose a commodity.
>>
>> I couldn't find the word "commodity." I clicked Select for Security/currency
>> and got a little window with Type and Security as fields. Type offers me
>> only stock exchanges, and Security offers me no choices, just a blank field.
>> If I type in "Gold," the OK remains grayed out. I typed New and created an
>> item with Gold for all fields and FUND for the Type. I was then able to
>> click both OK's and create the account.
>>
>> I then was able to create transactions of my initial purchase and the 5%
>> bonus Goldmoney gave me for signing up. I put the grams in for Shares and
>> gold price to get the Buy dollars correct. The Balance shows my total grams
>> of gold.
>>
>> The linked thread talked about using the Price Editor to track the value. I
>> followed the directions as well as I could, but clicking OK there caused
>> GnuCash to crash.

Lane,

If you want to use the XAU currency for Gold then the account must be of type Asset or Bank. Types Stock and Fund force you to use a user-created commodity, which you would create with the security editor (Tools>Security Editor). You can do that by clicking the "new" button on the "Select Security" dialog box, the one that has only stock exchanges in the "Type" selector. You'll find instructions in http://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-setup1.html#invest-setup-stockaccounts2 <http://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-setup1.html#invest-setup-stockaccounts2>. "Type"
is a bit misnamed, "category" would be better. It's there solely to help you organize your securities and it's free  text. There are some default already in place but you can create others if you like.


If you can get the Price Editor to crash again I'd like to hear the details of how you did it.

Regards,
John Ralls

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Re: Gold as Commodity?

Mike or Penny Novack-2
In reply to this post by GWB
On 1/25/2017 3:26 PM, GWB wrote:

> Hello, Lane,
>
>
>
> The earlier replies from Tuomo, John and Plutocrat might point you in
> a better direction, that is, treating Gold as a currency.  I would be
> interested as well if that were possible.  It would be less accurate,
> but easier, than using a Forex account to determine the value of gold
> (or silver, bitcoin, etc.).
>
> Anyone else have ideas on this?
>
> Gordon
>
Yes I do. The fact that gnucash has the facility for treating SOME forms
of a "commodity" that is a "currency" in some other jurisdiction than
the one for which the books are being kept differently than other forms
of a "commodity" that are less easily converted seems to me to be
confusing the issue in accounting terms.

Yes, there are people who consider "gold" or "bitcoins" to be
"currency",  but this is more in the sense that more easily traded than
say a share in one of those large stone disks on Yap or cows << I mean
not in the sense of meat on the hoof but in the sense of those societies
where those are the only "currency" for a purpose like a marriage
contract >>

In other words, I would argue that for a set of books (whether kept by
gnucash, other software, pen and ink on paper, etc.) there would be ONE
"currency" << the one that is legal tender for the jurisdiction >> and
anything else a "commodity" holding. Yes of course, foreign currency,
gold, bitcoins, etc. might be more easily traded/converted than other
commodities, but that is a continuum of ease of trading, not a sharp
line distinction.

How would we propose to draw the line? What would be the basis of that
line? That there was some official "quote"? But would conversion
transactions necessarily be taking place at that quoted exchange rate?
My personal experience (limited as it might be, just in Canada) is that
not always the case, though the differences in that case relatively
small. But friends who have traveled to remote parts of the world have
told me that there could be huge differences between the "official rate"
and what their US dollars might fetch on "the street".

Michael D Novack

Michael


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Re: Gold as Commodity?

John Ralls-2
In reply to this post by John Ralls-2

> On Jan 26, 2017, at 7:18 AM, Lane Lester <[hidden email]> wrote:
>
>
> On Wed, Jan 25, 2017 at 10:45 PM, John Ralls <[hidden email]> wrote:
> If you want to use the XAU currency for Gold then the account must be of type Asset or Bank.
>
> I tried setting up an Asset account that way with "XAU (Gold)" as the Security/currency. When I entered the transactions, I put the weight of gold in the Increase column. I clicked to save the transaction, and a new window came up: Transfer Funds. Everything was filled out, but I had to choose Currency Transfer as either Exchange Rate or To Amount. I had to choose the latter to get the purchase amount charged to my credit card account.
>
> Somehow the correct amount got charged to my card, even though the price of gold has changed since I made the purchase. The gold account register doesn't show any dollar amounts, only weights.
>
> It seems there's no way to track the value of the physical gold in GnuCash. It's not a bit deal; I just wanted to see if it's possible.
>

Please remember to copy the list on all replies.

You can retrieve prices for XAU with Finance::Quote. See http://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-stockprice1.html#invest-stockprice-auto2 for instructions on setting it up. Now wether those are useful prices is another matter entirely, and you might prefer to get prices from another source and enter them manually. Instructions for that are in the preceding section.

Regards,
John Ralls

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Re: Gold as Commodity?

GWB
In reply to this post by Lane Lester
Lane,

What John describes does come very close to tracking the value of
physical gold in gnucash, which is actually quite impressive for an
open source project dedicated to the main features of gnucash.  If you
follow the instructions at:

http://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-stockprice1.html#invest-stockprice-auto2

you can have gnucash retrieve quotes from a number of exchanges.
After setting this up on ubuntu, I can see the following:

$ sudo ./gnc-fq-dump

Usage: ./gnc-fq-dump <quote-source> [-v] <stock> [<stock> ...]

Available sources are:
     australia amfiindia asia fool adig yahoo hustock yahoo_brasil...

and many other quote sources.  So it can work, but it takes some
effort to set it up.

I don't know how each jurisdiction handles these things, but I don't
doubt that Michael has it right that in most, if not all of them,
books kept in more than one currency would create a number of problems
(though I do like the old stone currency system in Yap; not entirely
immune to inflation, but very low rate of theft).  So gnucash can do
this, but you should give some consideration as to how you are going
to treat gold for accounting and tax purposes.  If it is an asset,
then you may have to account for it on "cost basis", that is,
appreciation or depreciation from time acquired until time disposed.
If you're in the US, that means figuring out long term and short term
gains and losses.  If you're in a commonwealth country like Canada or
a possession of the UK, then you probably have a more rationale system
than the U.S.

Currencies are treated differently in the U.S. than assets,
commodities, and equities.  In the simplest scenario, they are just
that, currencies, regardless of appreciation or depreciation against
other currencies (USD, CAD, etc.).  But the rules may have changed,
and not for the better.  Forex contracts with a "collar" are more
complicated, but still treated differently than capital gains and
losses.

But I don't know enough to give advice on this, and I'm not qualified
to do so, as an accountant or tax lawyer would be.  So perhaps you
could get gnucash working with quotes as John describes, and then
figure out the reporting aspects later.

Gordon

On Thu, Jan 26, 2017 at 5:16 PM, John Ralls <[hidden email]> wrote:

>
>> On Jan 26, 2017, at 7:18 AM, Lane Lester <[hidden email]> wrote:
>>
>>
>> On Wed, Jan 25, 2017 at 10:45 PM, John Ralls <[hidden email]> wrote:
>> If you want to use the XAU currency for Gold then the account must be of type Asset or Bank.
>>
>> I tried setting up an Asset account that way with "XAU (Gold)" as the Security/currency. When I entered the transactions, I put the weight of gold in the Increase column. I clicked to save the transaction, and a new window came up: Transfer Funds. Everything was filled out, but I had to choose Currency Transfer as either Exchange Rate or To Amount. I had to choose the latter to get the purchase amount charged to my credit card account.
>>
>> Somehow the correct amount got charged to my card, even though the price of gold has changed since I made the purchase. The gold account register doesn't show any dollar amounts, only weights.
>>
>> It seems there's no way to track the value of the physical gold in GnuCash. It's not a bit deal; I just wanted to see if it's possible.
>>
>
> Please remember to copy the list on all replies.
>
> You can retrieve prices for XAU with Finance::Quote. See http://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-stockprice1.html#invest-stockprice-auto2 for instructions on setting it up. Now wether those are useful prices is another matter entirely, and you might prefer to get prices from another source and enter them manually. Instructions for that are in the preceding section.
>
> Regards,
> John Ralls
>
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