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David Fry
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David Fry writes a subscription newsletter focused on technical analysis of exchange-traded funds, called ETF Digest (www.etfdigest.com). Dave founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and... More
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  • Top 10 Precious Metals ETFs 0 comments
    Mar 16, 2012 2:39 PM | about stocks: PALL, PPLT, JJP, DBP, SIVR, SLV, DGL, SGOL, GLD, IAU

    With inflation pressures either rising or falling, the dollar can be negatively or positively affected. Precious metals, particularly gold, have acted as a hedge against the decline in purchasing power due to a declining dollar. Therefore most investors have sought refuse using precious metals. Currency debasement and paper money in general have thus caused gold and other precious metals ETPs (ETFs & ETNs) to become an essential part of any portfolio.

    The issuance of a wide variety of precious metals based ETPs has made owning adding these to portfolios relatively easy. Previous to their existence it was cumbersome, time-consuming and off-putting to deal with these products for most investors. Then you either bought gold coins, ingots, futures or options, and, when all else failed gold stocks. Gold coins are an inefficient market with illiquidity and serious price spreads for buyers and sellers. Futures and options involved more leverage, qualified investors and a lot of paper work not to mention more trading.

    Easy monetary policies which began shortly after the equity market dotcom collapse (2000-2003) combined with the launch shortly thereafter of GLD in November 2004 (IAU shortly thereafter January 2005) gave us our first precious metals products. Here we finally had a simple way to deal (buy or sell) gold in an unleveraged security with low costs and good liquidity. The financial crisis of 2008 and beyond led to central bank ZIRP (Zero Interest Rate Policies) and QE (Quantitative Easing-or, money printing) which left the value of the dollar as the primary casualty. To gain protection it was essential investors would gravitate to gold and other precious metals. As a result since the launch of GLD along with easy monetary policies the ETF has gained 263%.


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