Are Gold ETFs Set for Another Spike as Inflation Fears Rise?

Gold investment in bullion and ETFs has remained strong through the market turmoil. Now some wonder whether the metal could once again test the $1,000 mark. Could it be possible that gold prices are pushing the $1000 mark yet again? Current prices are around $923 an ounce. The precious metal is the perfect hedge against government inflation, and is also a nice haven for traumatic markets, but what are some of the other driving force behind the success of this metal? Eric J. Fry on Bullion Vault reports some of them.

• Physical demand for gold is at record levels this year. Global mine output is taken, and smelting and refining operations are running out, while mints around the world are booked full.
• The demand for gold is high, even while the U.S. dollar remains in demand and strong. The drop in demand within other commodities such as copper, lead and zinc has also helped the demand for gold remain solid.
• The popularity of gold-focused ETFs has also spurred demand, as well as popularity. Investors value the ETFs because of the nature of these commodity funds, since they don’t have to deal with the trouble of holding or storing it.
• The entire drive toward safety within world markets has driven the demand for gold. In the current environment of massive government spending worldwide, many savvy investors and institutions see a fearsome, systemic threat to the broad financial markets. Gold is their haven.
• The inflationary factor is looming, especially since the recent injection by the Federal Reserve of new currency into the money supply. Gold and silver could get a lift from this and reinforce demand.

A few ETFs to choose from:

• SPDR Gold Shares (GLD): up 5.3% year-to-date

• PowerShares DB Gold (DGL): up 4.5% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of GLD.

Comments

[ryshay2:]

Ack--your GLD and DGL charts are switched.

"The popularity of gold-focused ETFs has...spurred...popula...
Sounds circular to me.

Article looks good, though.

May 15 10:57 AM

[Jeff Nielson:]

Bullion-ETF's are just another form of fraud in the gold (and silver) market. Bullion-ETF's claim they can buy gold and silver CHEAPER than anyone else in the world - in INFINITE amounts - and store it all at ZERO costs.

Anyone fooled by this blatantly fraudulent business model, deserves to be scammed. Buy ONLY real "physical" bullion.

By the way, the last I heard, SLV was SHORT 6 MILLION oz's of silver, in relation to the units sold, and was UNABLE to obtain a new "custodian" deal for that additional silver.

Caveat emptor !!!!!!!!

May 15 11:05 AM

[ryshay2:]

"SLV was SHORT 6 MILLION oz's of silver"-

any link for that?


On May 15 11:05 AM Jeff Nielson wrote:

> Bullion-ETF's are just another form of fraud in the gold (and silver)
> market. Bullion-ETF's claim they can buy gold and silver CHEAPER
> than anyone else in the world - in INFINITE amounts - and store it
> all at ZERO costs.
>
> Anyone fooled by this blatantly fraudulent business model, deserves
> to be scammed. Buy ONLY real "physical" bullion.
>
> By the way, the last I heard, SLV was SHORT 6 MILLION oz's of silver,
> in relation to the units sold, and was UNABLE to obtain a new "custodian"
> deal for that additional silver.
>
> Caveat emptor !!!!!!!!

May 15 11:12 AM

[Jeff Nielson:]

Here you are Ryshay2: www.bullionbullscanada...


On May 15 11:12 AM ryshay2 wrote:

> "SLV was SHORT 6 MILLION oz's of silver"-
>
> any link for that?

May 15 11:18 AM

[Erick Tippett:]

You cite impressive facts and cute looking charts, but because
of the lack of real ownership of physical gold and the fact that
as stocks these gold and other precious metal ETFs have gone
basicly nowhere in price movement, why bother with any of this
highly questionable 'paper stuff'!

EDT
Chicago, Illinois

May 16 02:42 AM

[old101:]

The problem with buying "physical" gold - gold bars, coins - is that they are taxed as collectibles at your regular tax rate. It will still cost you something to store the stuff safely.

May 16 06:53 PM

[Asitoughtobe:]

Jeff:

Any recommendation for alternative gold investments for one who's basement is without security and a hand truck?

Healthy Investing!


On May 15 11:05 AM Jeff Nielson wrote:

> Bullion-ETF's are just another form of fraud in the gold (and silver)
> market. Bullion-ETF's claim they can buy gold and silver CHEAPER
> than anyone else in the world - in INFINITE amounts - and store it
> all at ZERO costs.
>
> Anyone fooled by this blatantly fraudulent business model, deserves
> to be scammed. Buy ONLY real "physical" bullion.
>
> By the way, the last I heard, SLV was SHORT 6 MILLION oz's of silver,
> in relation to the units sold, and was UNABLE to obtain a new "custodian"
> deal for that additional silver.
>
> Caveat emptor !!!!!!!!

May 17 03:41 PM