Is Gold ETF Set for Another Spike As Inflation Fears Rise? | ETF Trends

Gold investment in bullion and exchange traded funds (ETFs) has remained strong through the market turmoil. Now some wonder whether the metal could once again test the $1,000 mark.Could it be possible that gold prices are pushing the $1000 mark yet again? Current prices are around $923 an ounce. The precious metal is the perfect hedge against government inflation, and is also a nice haven for traumatic markets, but what are some of the other driving force behind the success of this metal? Eric J. Fry on Bullion Vault reports some of them.

  • Physical demand for gold is at record levels this year. Global mine output is taken, and smelting and refining operations are running out, while mints around the world are booked full.
  • The demand for gold is high, even while the U.S. dollar remains in demand and strong. The drop in demand within other commodities such as copper, lead and zinc has also helped the demand for gold remain solid.
  • The popularity of gold-focused ETFs has also spurred demand, as well as popularity. Investors value the ETFs because of the nature of these commodity funds, since they don’t have to deal with the trouble of holding or storing it.
  • The entire drive toward safety within world markets has driven the demand for gold. In the current environment of massive government spending worldwide, many savvy investors and institutions see a fearsome, systemic threat to the broad financial markets. Gold is their haven.
  • The inflationary factor is looming, especially since the recent injection by the Federal Reserve of new currency into the money supply. Gold and silver could get a lift from this and reinforce demand.

A few ETFs to choose from:

  • SPDR Gold Shares (GLD): up 5.3% year-to-date

  • PowerShares DB Gold (DGL): up 4.5% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of GLD.

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.