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ETF News And Commentary

Gold ETFs shined once again in 2012 as the price of the metal rose for its twelfth consecutive years (Gold ETFs: Is the Sell-Off Overdone?). With uncertainty in the economic environment, investors generally opt for safe havens such as gold, to invest in, even though the stock market generally saw a solid performance for the trailing one year period.

Apart from acting as a safe haven at times of economic uncertainty, gold has been performing well in the past few years as central banks across the globe strive to stimulate economic growth and investors seek gold acts as an inflation hedge or a safeguard against a debased  currency.

Gold is generally considered to be a commodity that maintains its purchasing power even when the economy is under inflationary pressure, so for investors concerned about rising prices in the long term it has been a solid pick (A New Breed of Gold ETFs on the Horizon?).

Gold’s Year in Review

The commodity started 2012 at a level of about $1580/oz. and touched a level of $1800/oz. by the month of October. Prices then fell to close out the year as a number of risk events came off the table, dulling the appeal for the yellow metal.

Still, the product finished 2012 above$1,680/oz. representing another solid year for the product. Overall, it looks as though gold added about 4.7% in the time period, marking a dozen calendar years of price increases, something that few asset classes can say for the same time frame.

How to Play

There are many ETF choices in the physically backed gold space, however, the most popular among them is the SPDR Gold Shares (GLD - ETF report) which tracks the spot price of gold. The fund manages an asset base of $72.2 billion and trades at volume level of more than 11 million shares a day (The Comprehensive Guide to Gold ETF Investing).

The fund charges investors 40 basis points on annual basis delivered a return of 9.2% over a period of one year. On the last trading day of the year, the ETF closed at $162.02, ending the year at a growth of around 4.65%. The fund has touched a low of $148.53 and a high of $174.07 over a 52-week period.

Beyond this ultra popular choice, investors also have a few others to pick from in the gold market. These include the following solid options, any of which also offer physically backed and liquid exposure to the gold market:

iShares COMEX Gold Trust (IAU - ETF report)

 ETFS Physical Swiss Gold Shares (SGOL - ETF report)

 ETFS Physical Asian Gold Shares (AGOL - ETF report)

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