April 18, 2014

Gold ETFs Still a Good Investment, Even With Price Drop

Gold recently saw a price drop, mostly because of the ongoing concerns in Europe, particularly Greece. However, gold ETFs are still a good investment, even with the current price drop.

Why? Simply put: because it is gold. Even with the price drop, investors are still continuing to scramble to get their money into gold, because gold provides a guaranteed safe haven for their money right now.

The price of gold is up 30 percent in just the last six months. That return looks all the more enticing at a time when investor fears are growing in the stock market, and there’s little to be made from U.S. Treasury’s or money-market funds. Basically, get your money in gold or other precious metal ETFs.

When to Buy

Excerpt taken from The Associated Press

The big question right now is when to jump in. As demonstrated in recent weeks, gold prices react very quickly to economic news.

“The pendulum swings one way on fearfulness and back the other way on complacency,” said Tom Winmill, portfolio manager of $105 million Midas Fund, which owns gold and stocks in gold miners.

Also affecting gold prices are purchases by the world’s central bankers. This amount more than quadrupled this April through June, compared with a year ago, according to the World Gold Council. That continued source of demand bodes well for sustaining gold’s value.

But looking at the purchase from a personal level, gold provides a hedge against inflation and it’s a reliable store of wealth since investors don’t have to worry about credit risk. It also adds diversification to a portfolio because its price doesn’t move in tandem with the stock and bond markets.

“It all makes the argument for establishment of a gold position as a core holding (in your portfolio),” Winmill said.

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How should you buy gold? Obviously most of us don’t have the option to just go buy gold bullion. However there are some alternatives. While a 1-troy ounce American Eagle gold coin may cost as much as $1,900, investors can get into a mutual fund or ETF for a fraction of that. That is why gold ETFs are still so valuable. They offer the chance to invest in gold without breaking the bank. The gold ETF’s total return year-to-date is 28.7 percent, compared with a 5.5 percent decline of the S&P 500 ETF (SPY).

Remember, always exercise caution and do your homework when it comes to investing in any sort of ETF. While gold ETFs are a good investment, you should still always know what you are getting into.

ETFs for Gold and Silver Are Continuing to Trade Strong

ETFs for both gold and silver continue to trade strong, as they are a great investment for those looking for a new ETF to get involved with.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust , said its holdings dropped 1 percent to 1260.2 tonnes Friday from 1272.90 tonnes on Thursday.

Yet today SPDR Gold Trust registered its biggest one-day gain in more than a year, rising 1.8 percent, as investors flocked to seek refuge in bullion of gold and silver because of the continuing economic concerns that are being triggered by a debt downgrade of the United States from a AAA to a AA+credit rating.

Holdings of the world’s largest silver-backed exchange-traded fund, iShares Silver Trust dropped 0.7 percent to 9705.90 tonnes by Friday, from 9772.56 tonnes on Thursday. Again, numbers were up today, as silver is volatile anyway so you can expect to see these price spikes often and not be alarmed.

Gold and Silver ETFs Are a Good Investment

There are a ton of good ETFs out there to get involved with. However, if you want a quick return on your money in the current global market, then you will be hard pressed to find a better ETF investment than that of gold and silver ETFs.

While silver ETFs are currently down a bit due to the cutback of silver demand in industries, they are still an excellent buy, as most experts still think that silver will continue to rise over the foreseeable future because investors want to put their money into some stable.

On the other hand, gold ETFs are now sitting at an all-time high, and do not look like they are going to slow down anytime soon, especially if the economy continues to falter. Even when gold does decide to drop, you may have already sold off you ETFs and are now looking at quite a nice gain. You can then always re-buy because gold will always carry a nice price with it.

Exchange Traded Funds can be a tricky beast sometimes. If you are looking to invest in something that will at least hold the value of your money for a while, then gold and silver ETFs are something to look into.