The coronavirus pandemic has been a boon for gold investors as the safe haven precious metal has provided the necessary shield against falling equities. As for retirees in the golden years of their life, gold exposure still has a place in their portfolios, but they have to be wary of their exposure.
Kristina Hooper, chief global market strategist at Invesco recommends that investors’ portfolios should comprise up to no more than 5% exposure, depending on the individual’s risk tolerance. For retirees, that number is even less.
“I would expect a slightly lower allocation to gold given they typically need to derive more income from their portfolios,” said Hooper.
Another way retirees can get gold exposure without physically holding the gold itself is via exchange-traded funds (ETFs).
Using ETFs for Gold Exposure
Investors who want to shore up their retirement accounts with gold exposure can look at funds like the popular SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.
In addition to GLD and GLDM, here are a pair of other gold funds to look at:
- iShares Gold Trust (IAU): seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
- Aberdeen Standard Gold ETF Trust (SGOL): seeks to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
Leveraged funds aren’t an ideal tool for retirees to utilize, but for short-term traders looking for leverage can use funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).
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