ETF Trends
ETF Trends

Gold has a long and storied history as a safe haven, and now that there’s an exchange traded fund (ETF) to track the movements in price, investors have taken even more interest in the commodity.

Gold’s Movements. In general, gold moves in the opposite direction of the U.S. dollar, and will move in a different direction than that of the general stock market. Andrew Leckey for Chicago Tribune reports that this is why gold is used as a hedge against a loss in the buying power of paper currencies. But Leckey points out that it’s not always the most comforting or predictable hedge around.

A Volatile Ride. Gold prices took investors for a ride in 2008, with highs in March at $1,000 an ounce and then falling to end the year at $884.30 per ounce. Gold ETFs that hold the metal are a convenient and easy to access tool that gives instant portfolio exposure to the metal, particularly because investors can gain direct access to gold without worrying about storing the metal, which can get expensive.

Is the Bull Still There? Gold has retreated off its high above $1,000, reached in March 2008. But one precious metals analyst with Standard & Poor’s says that the bull market is indeed still under way, and he expects the price to top $1,000 this year. Mining companies could also do well, says another analyst, because of increased consolidation in the industry. Market Vectors Gold Miners (GDX) gives investors access to this segment. GDX is up 42.6% in the last three months.

Other ways to access gold more directly include:

  • SPDR Gold Shares (GLD) invests into the commodity instead of gold-mining stocks. One share is one-tenth of an ounce of gold. GLD is up 7.1% for the last three months.
  • iShares COMEX Gold Trust (IAU): up 7.5% for past three months; like GLD, this fund also holds gold bullion.
  • PowerShares DB Gold (DGL): up 5.7% over past three months; this fund is composed of futures contracts on gold.

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.