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Take a Stand against Inflation with This Gold ETF

Exchange-traded fund (ETF) expert Doug Fabian examines a popular fund that invests solely in gold bullion, and explains why gold is a good investment option.

Among various exchange-traded funds (ETFs), I find gold to be one of the most interesting sectors available to investors. 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 is an ETF that is pegged to the spot price of gold bullion. 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 GLDâ??s assets are physically backed up. In terms of assets, GLD is the largest gold fund, with some $32 billion in assets.

In terms of performance, GLD tends to buck the trend of the market, giving it mixed returns over various periods of time. It currently is up nearly 17% year to date, as you can see below. GLD does not pay dividends, and its expense ratio sits at a modest 0.40%.


All of the fundâ??s top holdings are simply different types of gold bars, and an exhaustive list of precisely what it holds can be found here.

View the current price, volume, performance and top 10 holdings of GLD at

If you believe, as I do, that the worldâ??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 wonâ??t want to bother.

So, if youâ??re with me, how do you own gold? The purest play possible on the yellow metal would be to go out and purchase physical gold. But, as our ancestors figured out, it is a lot easier to carry and store thin paper money rather than weighty blocks of precious metals.

If recent market turbulence has shaken your faith in the economy or you are worried about inflation, SPDR Gold Shares (GLD) 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.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbertâ??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.