4 ETFs Reaping The Benefits Of Gold’s Luster (GLD, DGL, SGOL, GDX, ABX, GG, NEM)

As sovereign debt concerns continue to emerge and the US continues to implement a loose monetary policy which results in increased money supply, gold continues to glimmer surpassing the $1,400 per ounce mark giving support to the SPDR Gold Shares (NYSE:GLD), PowerShares DB Gold Fund (NYSE:DGL), ETFS Physical Swiss Gold Shares (NYSE:SGOL) and the Market Vectors Gold Miners ETF (NYSE:GDX).

Gold futures contracts for December delivery hit an intraday price of $1,410.40 per ounce in electronic trading and the front month November contract rose to $1,402.80 per ounce as investors fled to the precious metal’s safe haven appeal.  Costs of insuring against bond defaults on the sovereign debt of Ireland, Portugal and Spain continue to rise amplifying the enhanced risks in the region and the likelihood of default, which provided positive price support to gold.

Furthermore, concerns of currency devaluations around the world are boosting gold.  The recent announcement by the Federal Reserve to launch a $600 billion program to purchase Treasuries is expected to increase money supply and further devalue the US dollar.  Additionally, many investors are concerned that banks will remain reluctant to lend which could potentially backfire against the Fed and have an even further devastating effect. 

At the end of the day, fear in the global markets and currency devaluation are driving the price of gold bullion and are likely to remain prevalent in the near future.  As a result, the aforementioned ETFs are likely to witness positive price support.

  • SPDR Gold Shares (NYSE:GLD), which is the most actively traded gold ETF and moves in tandem with the price fluctuations of gold bullion
  • PowerShares DB Gold Fund (NYSE:DGL), which gives exposure to gold through futures contracts
  • ETFS Physical Swiss Gold Shares (NYSE:SGOL), which is backed by physical gold bullion
  • Market Vectors Gold Miners ETF (NYSE:GDX), which is an equity play on gold and includes holdings of companies that primarily derive their revenues through the mining and exploration of gold and other precious metals.  Some holdings include Barrick Gold Corporation (NYSE:ABX), Goldcorp Inc. (NYSE:GG) and Newmont Mining (NYSE:NEM).

Written By Kevin Grewal From ETF Tutor  Disclosure: No Positions 

Kevin Grewal is the founder, editor and publisher of ETF Tutor and 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 a quantitative analyst at a small hedge fund where he constructed portfoliosdealing 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. He is a contributing author on The Street – his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville.

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