Gold ETFs
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January 6th, 2008 by AdvisorAnalyst
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Don Coxe recommends being overweight gold, pg 34 in the December 2007 Basic Points.
4. Remain heavily overweight gold—both stocks and the ETF. Gold is almost as good a protection against banking problems as SKF—the UltraShort Financials ETF—a security which may not be a suitable investment in some portfolios.
If you’re looking for effective exposure to gold, look into streetTracks Gold Shares (GLD). Wall Street Journal’s Jan. 5, 2008 article, provides more detail:
The biggest is the streetTracks Gold Shares ETF, sponsored by the World Gold Council, a mining-industry group. Its holdings are valued at more than $16.8 billion, more than the valuation of General Motors Corp.
Each share in GLD is backed by about 1/10 of an ounce of metal held in vaults in London by HSBC Bank USA, a unit of HSBC Holdings PLC. The streetTracks ETF issues more shares as brokers see more demand in the market, and brokers receive shares for the metal they buy and transfer to the fund.
The fund sat on about 628 metric tons of gold last month, according to the World Gold Council, more than the 600 or so metric tons in Chinese central bank reserves and 604 metric tons with the European Central Bank.
In all, the eight ETFs held 834 metric tons of gold through November, according to the World Gold Council.
For Canadians looking for Canadian dollar or US dollar denominated exposure, Millenium Bullion Fund offers open-ended funds for pure bullion play in both currencies.
You can see that the Canadian version has had quite a different kind of performance due to the strength of the C$ against the Greenback.
Both the ETFs and the funds are a way for investors to get effective exposure to the yellow metal.
Read more from the author/contributor here.
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