Gold ETFs: Economic Teflon?

When it comes to gold exchange-traded funds, the direction of the economy is apparently no issue. Analysts say that regardless of what happens in the markets, gold is on track to see a full decade of price gains -- its most sustained rally in at least 90 years.

Analysts and investors are upping their stake in gold because the metal is now seen as impervious to economic developments -- good or bad. Don Miller for NuWire Investor reports that new investors and buyers are in the market for gold because it's seen as the ultimate safe haven.

Bonolo Modise for Mining MX reports that demand for gold surged 36% in the first quarter of 2010. In the second quarter, demand improved 414%, mostly because of ETF demand. Analysts say gold will continue its longest rally in at least nine decades and may rise as high as $1,500 next year, about 21% higher than current levels.

There are a number of ways to play the gold rush, but for the purest exposure, physically backed gold ETFs are the way to go because they track the spot price. Know how gold ETFs are taxed before you buy. The three physical gold ETFs available now are:

  • SPDR Gold Shares (NYSE: GLD  )
  • iShares COMEX Gold (NYSE: IAU  )
  • ETFS Physical Swiss Gold Shares (NYSE: SGOL  )
Tisha Guerrero contributed to this article.

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  • Report this Comment On September 13, 2010, at 4:38 AM, ryanalexanderson wrote:

    Let's get PHYSical - PHYSical - I wanna get PHYSical...Let's get into PHYSical!

    Let me hear your Sprotty talk...

    Ok, maybe that last line was a bit dumb. And slightly creepy.

  • Report this Comment On September 13, 2010, at 7:31 AM, KurtEng wrote:

    'Analysts say that regardless of what happens in the markets, gold is on track to see a full decade of price gains -- its most sustained rally in at least 90 years'

    Whenever I read something like this, it raises some serious red flags. Keep in mind that it has only been legal to hold private gold bullion in the US since 1974 so there certainly aren't 90 years of precedents.

  • Report this Comment On September 13, 2010, at 9:40 AM, orangefloyd wrote:

    Well, the gold market is global, so it's not exactly tied to legal holdings in the US... that said...

    If we haven't learned to recognize bubble talk yet, we deserve to lose all our money. Gold may still have some upside, but with talk like this it'll be pushed way beyond it. Silver is a much saner play at the moment, though it's so closely related to gold that it will likely catch some runoff and have some of its own irrational exuberance.

    I also find it amusing that the article states that the purest exposure to gold is through an ETF, rather than, you know, actually owning the metal itself. This whole thing smacks of bandwagon jumping. Another hallmark of "wise investment practices".

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