Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Make Money in Gold and Precious Metals the Easy Way

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some gold and precious-metals companies to your portfolio, the PowerShares Global Gold & Precious Metals ETF (Nasdaq: PSAU  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.75 %. That's a bit higher than many ETFs, but also lower than the typical managed stock mutual fund. It yields about 1.6%.

The fund is fairly small, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF doesn't have the best track record, underperforming  the world market over the past three years. But it's still a young fund, and its future is more important than its past. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 9%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

Why gold and precious metals?
Gold is not everyone's cup of tea, but some investors like to include some in their portfolios for diversification's sake. Some also favor precious metals, as some of them have more utility.

More than a handful of gold and precious-metals companies  had strong performances over the past year. Yamana Gold's (NYSE: AUY  ) CEO is handsomely paid but seems to earn it, as the stock is up 15% over the past year. The company expects a boom in production as some investments pay off in the coming years, and it recently reported record production, up 11%  over year-ago levels.

Silver Wheaton (NYSE: SLW  ) , up 11%, is a strong performer with a profitable business model, where it finances other miners in exchange for a cut of their business. It's poised to profit from a rise in silver prices, but some would like to see more of a dividend payout.

Other companies didn't do as well last year but could see their fortunes change in the coming years. New Gold (NYSE: NGD  ) , for example, gained just 1%. Its revenue growth has been solid  in recent years, but earnings less so. Meanwhile, its cash has been shrinking, its debt and share count creeping  up, and its free cash flow negative. Management remains bullish, though, saying in a recent conference call, "We feel fortunate to have a fully funded organic growth pipeline that can see our production more than double in the next four and half years."

IAMGOLD (NYSE: IAG  ) has been volatile lately, surging and then plunging. It's down 39% over the past year, largely on a disappointing earnings report and reduced projections. It's well positioned to make some smart acquisitions, though, and has already made a promising one, expanding its operations in Canada.

The big picture
Long-term demand for gold isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Silver Wheaton provides a unique play on the future of silver. It has grown sales and net income every year since 2008 and also has increased competitive advantages over its limited peer group. More details about our outlook for Silver Wheaton can be found here in our Motley Fool analyst report.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2139611, ~/Articles/ArticleHandler.aspx, 10/26/2016 12:11:36 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:02 PM
AUY $3.84 Up +0.11 +2.95%
Yamana Gold CAPS Rating: ***
IAG $4.23 Up +0.17 +4.19%
NGD $4.08 Up +0.06 +1.49%
New Gold CAPS Rating: ***
PSAU $21.11 Up +0.60 +2.93%
SLW $24.29 Up +0.44 +1.84%
Silver Wheaton CAPS Rating: ****