2009: The Coming Out Year for Gold ETFs

July 9th at 3:00pm by Tom Lydon

A gold exchange traded fund (ETF) investment can be one of the most conservative ways to provide a safe haven, especially during times of inflation.

Analysts and financial advisors are predicting a substantial rise in gold prices over the next few years. With the prospect of inflation looming, gold investors are hoping that the commodity will give the necessary shelter. This isn’t a new trend – over the last 2,000 years, gold has been a popular way to shelter capital from inflation, reports Larry Light for The Wall Street Journal.

There are many ways to invest in gold, but during uncertain financial times, many turn to gold bullion in the form of either futures or physical bullion. ETFs simplify this exposure on both fronts; funds that hold gold handle the storage for you, while funds that hold futures take care of rolling them.

Gold tends to increase in value when the U.S. dollar declines against other currencies and when the economy experiences high inflation, two trends that are viewed as likely to occur in the next two or three years. The overall global economic climate paints a positive picture for gold, as times are uncertain and inflationary pressure looms, reports Bullion Vault.

It’s important to have a strategy and stick to it despite the predictions – gold can be volatile, so watch the trend line. Some gold ETFs are a hair above their 200-day moving averages, but if it drops 8% or below the 200 day-moving-average, it will be time to let go.