A Gold ETF for Inflation Protection

04/14/2016 9:00 am EST


Doug Fabian

Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

Among various exchange-traded funds, I find gold to be one of the most interesting sectors available to investors, suggests Doug Fabian, editor of the Weekly ETF Report.

Well-known as a safety play and a hedge against inflation, your view on gold and owning it probably depends on what you think about the state of the global economy and inflation in general.

One way to invest in gold with a fund that offers good liquidity for an ETF is through SPDR Gold Shares (GLD).

Specifically, GLD holds shares in companies that prospect for or produce gold. The fund allows investors to invest in physical gold bullion without the somewhat daunting responsibility of having to buy and sell it themselves.

Basically, this fund exists to purchase different types of gold bars and hold them in repositories, meaning that's assets are physically backed up.

In terms of assets, is the largest gold fund, with some $32 billion in assets. In terms of performance, it tends to buck the trend of the market.

GLD currently is up nearly 17% year to date, as you can see below. It does not pay dividends, and its expense ratio sits at a modest 0.40%.

If you believe, as I do, that the world’s central banks are in an experimental monetary policy of epic proportions and the whole mess could come tumbling down, then your answer is that situation could be to own gold.

On the other hand, if you believe all is right in the world, central banks take action with our best interest at heart and all of the bankers are good people, then you probably won’t want to bother.

If recent market turbulence has shaken your faith in the economy or you are worried about inflation, SPDR Gold Shares could be a good contrarian play.

From an investment point of view, in terms of liquidity and upside growth potential, I believe ETFs that feature precious metal investments make a lot of sense.

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Meet Doug Fabian at the upcoming Las Vegas Money Show, May 9th-12th. Doug will be sharing his top five ETFs for income investors and top five ETFs for growth investors. Register here.

By Doug Fabian, Editor of the Weekly ETF Report

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