ETF Talk: Gold Fund May Spiff up Your Portfolio

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Central bank monetary policy-easing measures in the United States and elsewhere around the world are raising concerns about inflation and causing investors to begin taking a shine to gold. One fund that I recommended in my Successful Investing newsletter on June 1 is the SPDR Gold Trust (GLD).

The fund is up more than 7% since I recommended it and I expect GLD to rise further in the weeks and months ahead. You do not need to worry about liquidity when investing in GLD, since it is one of the biggest funds in the world with almost $75 billion in assets.

GLD is intended to offer investors a way to participate in the gold bullion market, without the necessity of taking physical delivery of gold. The launch of the SPDR Gold Shares was aimed at lowering barriers, such as access, custody, and transaction costs, which previously had deterred certain investors from buying gold.

SPDR Gold Shares (GLD) was launched in November 2004 by World Gold Trust Services and State Street to offer investors an exchange-traded fund (ETF) backed by physical gold. Indeed, gold is regarded by many investment professionals as a long-term investment which may stabilize wealth by mitigating the risk of dips in other asset classes.

Gold prices have risen sharply this year, with the spot price hovering just above $1,748 this afternoon. The chart here offers proof of the precious metal’s rise at a quick glance.

As you can see, GLD has pulled back in recent weeks, but that retreat may give you a chance to buy shares in the fund at a discounted price. Clearly, inflationary fears are not subsiding anytime soon as deficit-spending in the United States and many other countries are continuing unabated. With central bankers keeping interest rates low or cutting them further, I like gold as a holding that will retain its value and likely rise as inflationary winds pick up.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

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