Gold futures dropped below a psychologically significant barrier yesterday, adding to its losing streak and taking exchange traded funds (ETFs) lower with it.
The yellow metal dropped below $750 an ounce for the first time in nearly a year, reports Morning Zhou for MarketWatch. But now analysts are saying the price may have finally bottomed after its longest losing streak in eight years.
Gold hasn’t closed a single session higher this month, and has fallen more than $90 since Aug. 28, and it’s now $250 below its record high above $1,000 that was reached in March.
Gold ETFs are a convenient, accessible way for investors to dabble in the precious metal, without actually purchasing physical futures.
There is no doubt that a gold-focused ETF offers an inexpensive way to town gold without buying physical gold or futures, and there is no need to learn how physical futures operate. Noble DraKoln for Forbes reports that what many investors do not realize is that the price to trade gold-tracking ETFs may actually exceed their convenience and that trading gold future contracts could be a better alternative given the right conditions.
One example is SPDR Gold Shares (GLD), the most widely traded gold fund. The world reserves up to 140,000 tonnes, and the liquidity in this fund is unbeatable. Each share in GLD represents one-tenth of an ounce of gold meaning only a small amount of money can give you gold exposure.
Despite the tax issues that are involved, we think ETFs can’t be beat – especially when it comes to dealing in precious metals. Futures are complicated and not for the average investor to mess around with, which is part of the reason ETFs have become so popular with individual investors to begin with. One has to admit: ETFs make life a lot easier.
GLD is down 11.2% year-to-date, and down 9.2% in the last month.
Other gold ETFs:
- iShares COMEX Gold Trust (IAU): down 11.5% year-to-date; down 9.5% in the last month
- PowerShares DB Gold (DGL): down 12.9% year-to-date; down 9.4% in the last month