3 Gold ETFs to Benefit From Rising Gold Prices

It’s been a turbulent start to 2016 for the global markets. Most point to the weakening Chinese economy as a major culprit — and rightfully so.

Buy These 3 Gold ETFs to Benefit From Rising Gold Prices

The issues in the financial markets, however, is actually bigger than what’s happening in China, even though China is what we’re all rightly pointing to right now.

In fact, the issues in China are only a resultant of one of the issues plaguing the global economy right now.

In an honest bid to build healthy economies following the last financial crisis, central banks around the world have stimulated their economies by pushing in more money. Now, that has seemingly created asset valuation bubbles in emerging markets, as we can see in China currently. As with most bubbles, they’ll eventually burst, or contract at least.

In addition to that, global tension is also building up, and that isn’t good for stocks either. I’ll point you to the recent announcement by North Korea that it detonated a hydrogen bomb combined with other issues in Russia and the Middle East.

The reason stocks are suffering fundamentally is that both of these issues highlighted aren’t good for businesses from which stocks spring up.

So yes, we’re in that period again where the demand for “safe-haven” assets will rise in a bid to preserve wealth. And gold is considered to belong in this class. And since some economic laws must be obeyed, we’re now seeing that gold prices are rising. And it’ll continue to rise as long as these global economic issues persist.

In fact, a company called BitGold is now seeking to help people preserve their wealth by owning physical gold stored in vaults and actually turn the gold into a legal tender based on current gold prices. With this service, people can spend the exact value of their gold through a MasterCard, taking the exposure to fiat money fluctuations out of the way.

This epitomizes how the demand for gold is rising. And it’s time for savvy investors to benefit. The good news is that when gold prices rise, asset classes, like miner stocks and ETFs associated with gold perform brilliantly as well.

But ETFs offer a higher degree of safety. So here are three to consider to benefit from rising gold prices.

ETFs to Buy as Gold Prices Rise: SPDR Gold Trust (GLD)

ETFs to Buy as Gold Prices Rise: SPDR Gold Trust (GLD)Expense Ratio: 0.4%

The SPDR Gold Trust (GLD) is one of the easiest ways to benefit from gold prices without actually going through the stress of owning physical gold.

The objective of this EFT is to track the performance of gold prices minus investment expenses.

And for all the troubles gold prices have experienced in recent times, while the stock market has been prospering, GLD has outperformed the S&P 500 over the last decade, rising by about 70% to the S&P 500’s 55.5% rise.

With such a performance sandwiched into a period during which gold prices seem to have undergone a correction, the GLD is definitely an ETF to consider for the upcoming gold rush and for the long haul.

ETFs to Buy as Gold Prices Rise: iShares Gold Trust (IAU)

ETFs to Buy as Gold Prices Rise: iShares Gold Trust (IAU)Expense Ratio: 0.25%

The iShares Gold Trust (IAU) also seeks to track the daily movement of gold prices just like GLD. So it’s also a good place to look for investors who want to benefit from the upcoming gold rush.

The good thing about IAU is that it comes at a lower price compared to GLD. IAU closed on Jan. 7 at $10.72, compared with GLD closing price of $106.15 on the same day. So there’s more incentive to go for IAU over GLD.

Moreover, IAU presents a lower expense ratio over GLD. IAU has an expense ratio of 0.25% compared to GLD’s 0.4%.

Impressively, all of these advantages don’t come at the expense of the fund performance. Over the last ten years, IAU price has risen by at least 100% — obviously outperforming the S&P 500 and GLD by a country mile. Again, this performance has been sandwiched in a period where gold prices have suffered significantly.

ETFS to Buy as Gold Prices Rise: Market Vectors Gold Miners ETF (GDX)

MarketVectors185Expense Ratio: 0.53%

You might not expect to see the Market Vectors Gold Miners ETF (GDX) fund on this list, given that it has dropped from the $36 range it had at its inception to about $14.88 in the last market day. But here’s why investors might want to have GDX on their watch list.

For starters, the GDX seeks to track the performance of the NYSE Arca Gold Miners Index. So yes, it’s related to miners stocks rather than direct gold prices. Its top three holding are Goldcorp (GG), Newmont Mining (NEM) and Barrick Gold (ABX). Now here’s why investors need to consider the GDX.

First, stocks of gold miners have historically performed when gold prices go up – and vice versa. So as we’re headed for a period of increasing gold prices, it’s safe to expect that gold stocks will perform well, hence the GDX.

Second, when gold prices went through a turbulent period in the last two to three years, gold miners suffered a great deal and hence, their stocks. But the good thing was, this period has injected an operational discipline into gold miners. Many of them streamlined their businesses to focus on their core strengths. The point is gold stocks and the GDX can’t go much lower. This means that we’re in a period where the GDX can recover fully with the pending increase in gold prices, and even transform into an asset for the long haul.

As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/01/gold-prices-gld-iau-gdx/.

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