12 Ways To Play Gold With ETFs (GLD, IAU, SGOL, GDX, GDXJ, DGL, UGL, GLL, UBG, DGZ, DGP, DZZ)
As fear continues to loom in investor’s eyes and the Federal Reserve expected to maintain its short-term nominal interest rate target near or at zero, the appeal for gold is expected to continue to soar.
Gold has appeal for numerous reasons and will likely continue to be the “go-to” precious metal. The shiny metal offers protection from inflation, which is a fear that many investors have, a hedge against a falling dollar and has long been a safe haven for Central Banks. Additionally, a growing middle class in developing nations will likely support its demand. Good ways to gain exposure to gold include the following:
- SPDR Gold Shares Trust (NYSE:GLD), carries an expense ratio of 0.40%.
- iShares COMEX Gold Trust (NYSE:IAU), carries an expense ratio of 0.40%
- ETFS Physical Swiss Gold Shares (NYSE:SGOL), carries an expense ratio of 0.39%
All three of these ETFs physically holds gold bullion and therefore are treated as collectibles by the IRS and taxed at 28% regardless of holding periods.
To get direct equity exposure to gold, one could consider the following gold mining ETFs:
- Market Vectors Gold Miners ETF (NYSE:GDX), which carries an expense ratio of 0.53% and focuses on large-cap companies that are primarily involved in mining of gold and silver
- Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), which carries an expense ratio of 0.59% and focuses on small and mid-cap companies that are primarily involved in mining of gold and silver
For exposure to futures contracts in gold, one can take a look at the following:
- PowerShares DB Gold (NYSE:DGL) which carries an expense ratio of 0.75%
Gold can also be played using leveraged and inverse ETFs in the following manner:
- ProShares Ultra Gold ETF (NYSE:UGL), which gives double the exposure to the price movements of gold and carries an expense ratio of 0.95%
- ProShares UltraShort Gold ETF (NYSE:GLL), which seeks to five twice the inverse daily performance of gold bullion as measured by the U.S. dollar p.m. fixing price for delivery in London and carries an expense ratio of 0.95%
Lastly, gold can be accessed through exchange traded notes, which are senior, subordinated debt instruments. The following are gold ETNs:
- UBS E-TRACS CMCI Gold TR ETN (NYSE:UBG)
- PowerShares DB Gold Short ETN (NYSE:DGZ), which bets against gold and carries an expense ratio of 0.75%
- PowerShares DB Gold Double Long ETN (NYSE:DGP), which seeks to replicate double the performance of gold bullion and carries an expense ratio of 0.75%.
- PowerShares DB Gold Double Short ETN (NYSE:DZZ), which gives leveraged exposure betting against the gold markets and carries an expense ratio of 0.75%
As long as uncertainty in the sustainability of a global economic recovery and fear remains prevalent in investor’s minds, gold will likely to remain attractive.
Kevin Grewal serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor’s degree from the University of California along with a MBA from the California State University, Fullerton.