Gold for the Really Bold
A new exhange-traded fund tracks the shares of gold-mining companies.
Fans of exchange-traded funds have a new way to bet on gold. For some time, they've been able to invest in two ETFs -- iShares Comex Gold Trust (symbol IAU) and StreetTracks Gold Trust (GLD) -- that track the price of gold bullion. Now they can buy an ETF that invests in gold stocks, which are even more volatile than the price of gold.
The Market Vectors Gold Miners ETF (GDX), launched in May, tracks the shares of 45 gold-mining companies. Six big miners -- Barrick Gold (ABX), Newmont Mining (NEM), Gold Fields (GFI), Goldcorp (GG), AngloGold Ashanti (AU) and Freeport-McMoRan Copper & Gold (FCX) -- make up about half of the index.
Historically, mining share make out better in a gold rush than bullion but fare worse in lean times. The gold miners ETF is based on the Amex Gold Miners Index, published by the American Stock Exchange. For each one-percentage point movement in gold-bullion prices, the index tended to move more than 2 percentage points between April 1, 1996, and March 31, 2006.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Gold peaked in May at $730 an ounce before retreating to $620 recently. But it is still up 148% from its 20-year low of $250 an ounce in August 1999. Fear boosts gold prices. Behind the bull market in gold: Worries over inflation and conflicts in Afghanistan, Lebanon and Iraq, as well as strong demand from developing countries that use the yellow metal in jewelry. Because gold is priced in dollars, it tends to perform well when the greenback weakens.
It sounds like this might be a good time to consider adding a smidgen of gold to your portfolio. But if you do buy into the Gold Miners ETF, be prepared for teeth-chattering volatility. And don't forget that gold, like most commodities, is notoriously unpredictable.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Five Common Credit Mistakes and How to Avoid Them
Mistakes are an often inevitable fact of life, but knowledge truly is power when it comes to financial wellness.
By Rod Griffin Published
-
Should You Change Your Estate Plan Before the Election?
You might need to modify your estate plan before the election — or at least before a new administration.
By Tom Taulli Published
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune Last updated
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson Published
-
Best Bond Funds to Buy
Investing for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
By Jeff Reeves Last updated
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang Published
-
Do You Have Gun Stocks in Your Funds?
ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
By Ellen Kennedy Published