John Paulson, the famed investor who scored about $20 billion on a bet against subprime mortgages, has recently been placing a huge wager on gold. Interested investors can look to exchange traded funds (ETFs) as a cost-effective way to invest in gold, as well; especially if the dollar remains weak.
Leo Larkin of Standard & Poor’s Equity Research team lays out four reasons for why he is bullish on gold in Investment News.
- He believes short-term interest rates will remain low because of an S&P forecast that the unemployment rate will rise to 9.8% in 2010 from 9.3% in 2009.
- He believes production will not significantly increase to meet demand in the near future, citing that for the past 10 years, global mining production has declined.
- He believes that volatility in major world currencies will increase demand for gold as a monetary reserve asset.
- He believes the value of gold will rise in all currencies as governments implement quantitative easing to stimulate their economies.
Luke Burgess of Wealth Daily is also bullish on gold for similar reasons. Notably, he points to economic uncertainty, supply constraints, growing investment demand and geopolitical uncertainty.
As Burgess points out, investing in gold has never been easier, due to the development of gold exchange traded funds. Gold ETFs trade just like stocks, and come in a variety of different flavors, including those that invest in the actual metal, in gold mining stocks and in gold futures. [Top ETFs to Capture Gold’s Allure.]
For more stories about gold, visit or gold category.
- 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.
- Market Vectors Gold Miners (NYSEArca: GDX): Holds gold miner stocks
- PowerShares DB Gold Fund (NYSEArca: DGL): Holds gold futures
Sumin Kim 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.