“Investors have turned to gold for centuries in times of trouble, and as panic over the global financial crisis took hold in late 2008, gold prices started heading up from around $700 an ounce. While panic has abated, fear remains — of inflation building in the global economy, of an armageddon for the U.S. dollar, of Armageddon, period. But at some point late last year, as gold touched $1,200 an ounce, greed seemed to take over from fear as the main motivation to buy. Mark Hulbert, who tracks investment newsletters, notes gold scribes have become so enamored of their subject that they’re telling subscribers to devote more than two-thirds of their portfolios to it. SPDR Gold Trust, an exchange-traded fund that invests in the metal, is now the second-largest ETF in the country, after one that tracks the S&P 500,” Stephen Gandel Reports From Money.

That’s not so surprising. “When something goes up as quickly as gold has, the main thought is, Why am I not in it? And how can I get in it quickly?” says behavioral economist Dan Ariely, author of Predictably Irrational. “That’s the same thing that happened with housing.”

“Can fear and greed keep gold prices climbing? In the short run, perhaps. But the case for gold as an investment? That’s built largely on straw, as you’ll see from the discussion that follows. And it’s only in fairy tales that one can spin straw into gold. Inflation is a looming threat, and gold offers you better protection than stocks or bonds. The reality: The price of gold is the only thing that seems to be rising. Inflation is the most common reason gold bugs give for why you need this metal in your portfolio. After all, gold is a hard asset, and real things are expected to hold up better to inflation than paper assets like stocks,” Gandel Reports.

“The fear of rising prices is why Peter Schiff, chief global strategist for Euro Pacific Capital, thinks gold could eventually climb to as high as $5,000 an ounce. But consumer prices aren’t actually rising. At least not yet. Gas, for instance, costs less than it did a year ago. So does a gallon of milk — down about 20%. A Big Mac costs a bit more, but not by much. You get the point. Prices on a number of consumer goods peaked in the summer of 2008 and have been falling or stabilizing ever since,” Gandel Reports.

“To be sure, ramped-up government spending could lead to higher inflation. But that’s not a sure thing in recessionary times — especially in downturns as bad as this one, when consumer demand for goods and services is so depressed. “For inflation to happen, the government would have to spend more than the trillions of dollars that were lost in home values and bad loans in the credit crunch,” says Frank Holmes, CEO of U.S. Global Investors. “We are not near that.” And this comes from a guy who manages his firm’s gold fund. Even if Schiff is right and inflation is about to flare up, that’s still no reason to be hoarding gold. The investment management firm Research Affiliates studied the last period of sharply rising prices — the late 1970s — to find out what was the best investment to own back then. The answer: not gold,” Gandel Reports.

See The Full Story: HERE

We have listed some options for investing in gold through ETFs below:

LONG:

The investment (GLD) seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.

The investment (GDX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the AMEX Gold Miners index. The fund generally normally invests at least 80% of its total assets in common stocks and American depositary receipts (ADRs) of companies involved in the gold mining industry. The fund is nondiversified.

The Funds (GDXJ) investment objective is to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index (the “Junior Gold Miners Index”). For a further description of the Junior Gold Miners Index, see “Junior Gold Miners Index.”

The objective of (SGOL) the newly listed shares is to reflect the performance of the price of Gold bullion, less the Trust’s operating expenses. The Trust is open ended and is designed for investors who want a cost-effective(1) and convenient(2) way to invest in Gold as well as diversify their Gold holdings.

The investment (UGL) will seek to replicate, net of expenses, twice the performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics twice the return of the index. It may employ leveraged investment techniques in seeking its investment objective.

The investment (DGL) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Gold Excess Return. The index is a rules-based index composed of futures contracts on gold and is intended to reflect the performance of gold.

The investment (DGP) seeks to replicate, net of expenses, twice the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.

The objective (IAU) of the trust is for the value of its shares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust’s expenses and liabilities. The trust is not actively managed. It receives gold deposited with it in exchange for the creation of baskets of iShares, sells gold as necessary to cover the trust’s liabilities, and delivers gold in exchange for baskets of iShares surrendered to it for redemption. The trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act.

SHORT:

The investment (DZZ) seeks to replicate, net of expenses, twice the inverse of the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.

The investment (GLL) will seek to replicate, net of expenses, twice the inverse daily performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics inverse to the index. It may employ leveraged investment techniques in seeking its investment objective.

 

Get 10 Trading Lessons FREE Click Here

GET A FREE TREND ANALYSIS FOR ANY ETF HERE!

Related posts:

1. Commodity Trading Trends: Gold Stuck In A Correlation Rut (GLD, IAU, KGC, ABX, SPY)
2. Inverse Gold ETFs: How To Bet On A Precious Metals Bubble (GLD, DGZ, DZZ, GLL, DUST, TBAR)
3. Are Gold ETFs Creating a Bubble? (NYSE:GLD, NYSE:IAU)
4. Price Drop Concludes Gold Is Entering Bubble Phase; Expect $7,000 To $20,000 Gold By 2014 (GLD, SLV, IAU, GDX)
5. Gold And Silver In A Correlation Bubble? (GLD, SLV, SPY, AGQ, GDX)

ETF BASIC NEWS, NYSE:GLD