There are two major factors driving the price of gold higher: the sovereign debt problem in Greece that is affecting the eurozone and speculation that the global monetary stimulus measures of the past year and a half are going to result in inflation.
SPDR Gold Shares (NYSEArca: GLD ) has been surging, hitting five-month highs this week despite the announcement of a $146 billion bailout package for Greece, reports Sheryl Nance-Nash for Daily Finance . [ Gold Miner ETFs are Basking in the Glow. ]
Today, gold prices are inching toward the $1,200 mark as concerned investors continue to seek out safe havens.
Why investors love gold:
- Because it is a tangible asset which does not lose its value. It is also a great way to diversify a portfolio.
- It's free from counterparty default risk, but unlike real estate, it trades in a deep, liquid international market.
It's easy to sell: Gold has performed extraordinarily well as an investment over the past decade. The price of gold has risen for nine straight years and was up 24% in 2009. [ ETFs That May Feel Interest Rate Hikes. ]
For more stories about gold, visit our gold category.
There are lots of ways to play gold with ETFs - physically backed funds, futures funds and the gold miners. Physical gold ETFs are taxed as collectibles, meaning long-term gains are taxed at 28%.
- SPDR Gold Shares (NYSEArca: GLD )
- ETFS Physical Swiss Gold Shares (NYSEArca: SGOL )
- iShares COMEX Gold Trust (NYSEArca: IAU )
Futures gold ETFs can generate K-1s. Gold miners are treated like any other equity-based ETF and are less sensitive to the day-to-day price moves of gold.
- PowerShares DB Gold (NYSEArca: DGL ) holds gold futures
- Market Vectors Gold Miners (NYSEArca: GDX )
- Market Vectors Junior Gold Miners (NYSEArca: GDXJ )