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Current DateTime: 11:30:01 23 Nov 2009
LinksList Documentid: 30328029
Precious Metals Plays: 3 Gold, 2 Silver
Published: Thursday, 10 Sep 2009 | 3:39 PM ET
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By: Tom Lydon
Editor, ETFTrends.com

This post is part of a series written by ETF Trends editor Tom Lydon, special for CNBC.com.

Gold exchange-traded funds (ETFs) have vastly simplified the ways retail investors gain exposure to the precious metal.

Gold Bars
AP

As the price of gold teeters on the brink of $1,000 an ounce, the metal is benefitting from heightened appeal on several sides:

- Gold is a popular hedge against inflation, a situation that many investors fear is just around the corner as the government pumps more money into the economy to goad a recovery

- Gold is also a safe haven against turmoil; many in the market remain skeptical of the rally off the March 9 lows and have turned to gold to protect themselves, in the event their fears prove to be correct

CNBC's Commodities Intelligence:

- A number of emerging markets have a rapidly growing middle class, and they’re demanding gold; there’s only so much to feed the demand

- Christmas is just around the corner — some stores already have up displays, believe it or not — and some anticipate that jewelry demand will pick up in some measure

- Gold isn’t as volatile as many may believe, according to the World Gold Council; at the height of the market turmoil, gold was less volatile than the MSCI World Index, the S&P 500, oil and the GSCI

Gold ETFs are an easy and cost-effective way to gain direct exposure to the price of the metal without need for rolling futures contracts, taking physical delivery or the hassle and cost of finding storage for the bars. There are several options in this realm:

- iShares COMEX Gold Trust [IAU  Loading...      ()   ]: Holds physical gold bullion and tracks the spot price of gold, minus expenses

- SPDR Gold Shares [GLD  Loading...      ()   ]: Holds physical gold bullion and tracks the spot price of gold, minus expenses

- PowerShares DB Gold [DGL  Loading...      ()   ]: Holds gold futures contracts and seeks to track the Deutsche Bank Liquid Commodity Index — Optimum Yield Gold Excess Return

While gold garners the bulk of the headlines, investors shouldn’t forget about silver ETFs, which have been on an even bigger gaining streak in recent weeks. While silver is more volatile than gold, it has an even wider range of applications. Much like gold ETFs, silver ETFs have made it a snap to access this market.

Two ETFs that give silver exposure are:

- iShares Silver Trust [SLV  Loading...      ()   ]: Holds physical silver bullion and tracks the spot price

- PowerShares DB Silver [DBS  Loading...      ()   ]: Holds silver futures and tracks the Deutsche Bank Liquid Commodity Index – Optimum Yield Silver Excess Return

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Tom Lydon is the editor of ETF Trends and author of iMoney: Profitable ETF Strategies for Every Investor.

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