Saturday, July 11, 2009

How to invest in gold.


Gold is of these assets which are mostly used for hedging against falling equities but also used as a safe heaven for political, economic or other kind of crisis. This has been seen during current financial crisis and global economic recession. The gold prices topped all time high $1000 this March when stocks found their bottom. The bottom at least for now.

There are several ways how to invest to gold. One of the possible investment is in physical gold ownership. The gold can be purchase as bullion bars, coins or as a numismatic coins.

Investment without interest in physical ownership are based and on exchange traded products. Here is the list of the most liquid Gold ETFs (exchange traded funds):

SPDR Equity Gold (GLD) - Fund tracking performance of gold bullion prices.
Market Vectors Gold Miners (GDX) - Fund follows performance of AMEX Gold Miners index. ADRs with biggest share included in this index are Barrick Gold (ABX), Goldcorp Inc (GG) and Newmont Mining (NEM).
iShares COMEX Gold (IAU) - In fact the same structure like GLD. Also with the same performance.
PowerShares DB Gold Double Long ETN (DGP) - This ETN reflects double performance of Deutsche Bank Liquid Commodity index. Keep in mind difference between ETF and ETF.
ProShares Ultra Gold (UGL) - Double performance of gold bullion prices.

Except of ETFs you can use gold futures or other derivatives for your investing to gold. It is the riskiest asset you can use. With ETF you can get usually up to 3 times leverage investment where with futures there is no limitation. On the other side there is bigger potential return on your investment.

For safer play with mutual funds I list here the biggest funds underlying gold assets.
List of precious metal (gold) mutual funds
The best ways to buy gold from MSN - precious metal mutual funds

On top of that there are other possibility how to invest in gold like buying jewelery, gold certificates, shares of gold miners or other gold trading companies and so on.

On latest gold trading analysis like "Energy Fields...and Gold?" you can sign up right here.

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