Last year, gold was the hot topic investors couldn’t stop talking about. And then, gold’s rally petered out. Should you hold your breath waiting for a comeback or look at other exchange traded funds (ETFs) that may do you better?
People are having a hard time letting go. Even as the metal has begun to taper off of its highs, investors are still thinking of it. After all, SPDR Gold Shares (NYSEArca: GLD) and other gold ETFs returned almost 30% last year. With returns like that, it’s hard not to wistfully dream of the old days and what once was… [Gold ETFs: After A Run, Now What?]
This year, though, gold ETFs are off by 4.2%. It’s not doomsday, but other metals may serve you better.
Russell Pearlman for The Wall Street Journal reports that although gold has had a lackluster start this year, that hasn’t deterred investors, who are still using it as a hedge. Over the past year, Americans have bought more than 100 tons of gold, spending an average of $81 million a week on the stuff. That doesn’t include the billions more spent on ETFs.
Fundamentally, there’s still a case:
- Gold’s value also is tied to the U.S. dollar: The weaker the greenback is, the higher gold’s price will be.
- Gold’s proponents feel that the government’s huge deficits, combined with the Federal Reserve’s policy of keeping interest rates extremely low, will cause the dollar to plummet, spurring inflation.
Robert Lenzer for Forbes reports that overall there was more selling than buying of GLD in January 2010, but this is not necessarily a deterrent.
If you’re still in gold and have been disappointed, consider that other metals are doing far better these days. Think “industry”:
- Silver. iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver (NYSEArca: SIVR) are up nearly 10% in the last two weeks after initially struggling earlier this year.
- Palladium. ETFS Physical Palladium (NYSEArca: PALL) is up 3.6% year-to-date, benefiting from rising industrial demand.
- Copper. Copper’s down today, but First Trust ISE Global Copper (NASDAQ: CU), which owns a basket of copper miners, is still up 2.8% year-to-date.
Tisha Guerrero 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.