Gold ETFs
The ancients loved gold, that bright, shiny, malleable metal and considered it to have extraordinary value. The allure of gold persists to the present day. It has countless uses in medicine, jewelry, commerce, industry, computers, electronics, dentistry, coins, space, and art. Because of its manifold uses, it is considered the world-over as a storehouse of value. In the investing arena, people want to own gold for a variety of reasons. Many believe it to be a hedge against inflation. Some wish to add diversification to a stock- and bond-heavy portfolio. Investors generally buy gold as a safe haven against any political, social, or monetary crises. Interesting to note, the decline in the value of the US dollar has corresponded to an increase in the price of gold over the past few years. In addition to its overall upward trend, the gold prices can be volatile as well. No wonder such an interest in this precious metal! There are a number of ways to invest in gold: You can buy gold bullion or gold coins, speculate in the futures market, invest in gold mining stocks, or diversify with gold mutual funds and exchange traded funds. All can be valid depending upon your circumstances and objectives. Here we are going to look at gold ETFs and their potential use in the conservative options strategies of selling cash-secured puts and covered calls. There are actually quite a few gold exchange traded funds. The most popular is SPDR Gold Trust (GLD). Also available are Market Vectors Gold Miners (GDX), Market Vectors Junior Gold Miners (GDXJ), ETFS Physical Swiss Gold Shares (SGOL), Ultra Gold ProShares (UGL), PowerShares DB Gold (DGL), iShares COMEX Gold Trust (IAU), Al of these have listed options and can be used for cash-secured puts and covered calls. It is important to keep in mind that gold is an asset class unto itself. Gold does not generate consistent cash flow, dividends or coupon payments like stocks and bonds. Its price can move fast in either direction. Consequently, you may wish to paper-trade any positions with these ETFs before putting real money on the line. For additional information about gold as an investment, including buying and selling the shiny metal itself, visit
www.goldbeginners.com.
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