What Gold to Own With ETFs

March 12th at 1:00pm by Tom Lydon

Gold prices rose after the earthquake in Japan renewed interest in safe-haven investing of the metal and related-exchange traded funds (ETFs).  Matt Whitaker for The Wall Street Journal reports the most actively traded contract for April delivery, rose $9.30, to settle at $1,421.80 a troy ounce.

Investors have options for getting exposure to gold with ETFs.  There are physically-backed ETFs, futures based and gold miner ETFs available. [Alternative Ways To Play Gold With ETFs.]

The largest gold ETF, SPDR Gold Shares (NYSEArca: GLD) has gained an average annualized 20%-plus in the past three years, reports Murray Coleman for Barrons. It buys bullion and physically stores gold for investors, tracking spot markets. [The physical gold ETFs go head-to-head.]

In the same time period, Market Vectors Gold Miners (NYSEArca: GDX) is up 3.6%.  This fund invests in the companies that search for and extract the gold from the ground.  Basically it costs the same to pull gold out of the ground, no matter how much the price of gold is  – so miners can have profit with the higher price of gold.

Investors interested in owning gold futures can turn to PowerShares DB Gold Fund (NYSEArca: DGL).  It’s important to understand how futures work, especially with issues such as contango.  PowerShares’ Optimum Yield method of rolling futures seeks to mitigate any negative effects of contango.

Various plays on the precious metal:

  • SPDR Gold Shares (NYSEArca: GLD)
  • iShares COMEX Gold (NYSEArca: IAU)
  • ETFS Physical Swiss Gold (NYSEArca: SGOL)
  • PowerShares DB Gold Fund (NYSEArca: DGL)
  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ)
  • Market Vectors Gold Miners (NYSEArca: GDX)
  • Global X Gold Explorers (NYSEArca: GLDX)

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.