Gold has been a reliable store of value for centuries and today it’s no different. Investors looking to help keep their wealth intact during troubled times should consider a 21st century option in investing in gold: exchange traded funds (ETFs).
When the economy looks shaky, jittery investors typically fall back on to gold to preserve their wealth, remarks Matt Krantz for USA Today.
Gold is seen to be perfect for any number of occasions. For instance, gold bugs say the precious metal is a good way to invest when the government’s deficit results in runaway inflation and pessimism shakes the foundation of the dollar’s strength. It is suggested that an investor may allocate 5% of his or her portfolio in gold if one is worried about possible depreciation in the dollar. [7 Things to Know About Gold.]
However, gold has been lagging behind almost every other asset class over the extended periods of time. Gold is also very risky, but its reputation as a volatile asset may be overstated. It’s less volatile than stocks. [Gold Approaching 2010 Highs; Will ETFs Follow?]
For those who are more interested in gold as a hedge against a weakening dollar, ETFs are an easy and cost-efficient way to invest in gold. Gold ETFs are a great tool to get access to the metal. Not only do they carry the inherent benefits of ETFs, but you can take your pick when it comes to how you get your exposure: gold mining stocks, gold futures or physical gold bullion. [The Benefits of Equity Commodity ETFs.]
- SPDR Gold Shares (NYSEArca: GLD): Holds physical gold
- ETFS Gold Trust (NYSEArca: SGOL): Holds physical gold; also worth noting is that ETF Securities released the results of an independent audit of its vaults at UBS Zurich. You can read them here.
- iShares COMEX Gold Trust (NYSEArca: IAU): Holds physical gold
- PowerShares DB Gold Fund (NYSEArca: DGL): Holds gold futures
- Market Vectors Gold Miners (NYSEArca: GDX): Holds gold miner stocks
- Market Vectors Junior Gold Miners (NYSEArca: GDXJ): Holds small- and mid-cap gold miner stocks
For more information on gold, visit our gold category.
Max Chen 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.