First of all, apologies. The title of this column is misleading. Because of publishing turnaround times, I’m really dealing with last week’s market in gold, not this week’s.
No matter. Last week, this week: gold is gold. Gold excites passions. Some folk are enamored of the metal. Others regard it as a “barbarous relic.” Then there’s a more fair-minded contingent of investors who just regard gold’s utility as a diversifying portfolio allocation.
So, fair warning: this column aims to speak to those disinterested investors looking to derive the maximum benefit from gold’s current rally.
Spot bullion prices spiked 2.5 percent last week which doesn’t really sound like much of a move. Put that in context, though. See the chart below? It’s a weekly graph of the SPDR Gold Shares ETF (NYSE Arca: GLD), a proxy for gold bullion’s price. Last week’s action finally nudged GLD above its six-year downtrend line.
So gold’s a buy now, right? It’s early days, but the case for gold has certainly brightened technically. Keep in mind, though, that people buy gold for different purposes and in different ways. Bullion’s a sterile asset. It doesn’t spin off dividends or interest and, for many, it costs money to store and insure. Most people buy physical gold because they lack faith in the ongoing value of paper currency. Others are not so much interested in gold itself but like the way the metal interacts with their portfolio’s assets. Gold is a classic noncorrelated asset.
If you’re considering gold as a portfolio position, you’ve got a number of choices. Here’s a handful of the most popular investments:
