Gold Is Shining in 2009

A gold ETF investment can be one of the most conservative ways to provide a safe haven, especially during times of inflation.

Analysts and financial advisors are predicting a substantial rise in gold prices over the next few years. With the prospect of inflation looming, gold investors are hoping that the commodity will give the necessary shelter. This isn’t a new trend – over the last 2,000 years, gold has been a popular way to shelter capital from inflation, reports Larry Light for The Wall Street Journal.

There are many ways to invest in gold, but during uncertain financial times, many turn to gold bullion in the form of either futures or physical bullion. ETFs simplify this exposure on both fronts; funds that hold gold handle the storage for you, while funds that hold futures take care of rolling them.

Gold tends to increase in value when the U.S. dollar declines against other currencies and when the economy experiences high inflation, two trends that are viewed as likely to occur in the next two or three years. The overall global economic climate paints a positive picture for gold, as times are uncertain and inflationary pressure looms, reports Bullion Vault.

It’s important to have a strategy and stick to it despite the predictions – gold can be volatile, so watch the trend line. Some gold ETFs are a hair above their 200-day moving averages, but if it drops 8% or below the 200 day-moving-average, it will be time to let go.

• SPDR Gold Shares (GLD): up 3.5% year-to-date, holds gold bullion

• PowerShares DB Gold (DGL): up 2.4% year-to-date, holds gold futures

Comments

[darrenlobo:]

Freya,

Your comment inspired me to do some math. Since gold started the year declining I think this example applies:

Start at 100 subtract 10% you get 90. Add 5% & you get 94.5. This would be GLD price movements.

Now start at 100 subtract 20% you get 80. Add 10% & you get 88. That would be DGL price movements.

Jul 11 04:52 PM

[one eye:]

darrenlobo: Damn!

I guess you have to time DGL more than I thought, I'll have to look at UGL and see how it compares.

PS. I respect Wolves.

Jul 12 05:22 AM

[factandveritas:]

Paper gold is as bad as any CB printed money. When it is not as yet, I assure you they will make it so fairly soon!

ETF gold is now getting more suspicious by the hour because the main manipulators of the price of gold happen to be the safe-keepers of Gold ETFs.

May God help us all when the gold ETF scandal eventually breaks out. To be safe, buy physical and nothing else!

Jul 12 05:50 PM

[GazTops:]

I'm a Goldbug myself, so don't get upset, but....

Gold is NOT a hedge against inflation, it is a hedge against unanticipated inflation caused by instabilities in government, natural disasters or supply shock.

Would journalists stop being lazy and typing up the same old inflation mantra, it's just not true. If you really think it's a hedge against inflation, why did Gold drop from $800 to $250 between 1978 and 2000 despite rampant inflation?!

Jul 13 04:06 AM