Commodities can be a very difficult investment vehicle to invest in. The price of gold, for instance, fluctuates for reasons that even economic experts can’t seem to completely agree on. Following analysts trying to predict gold prices makes one think of the old joke about economists. What do you get when you poll 10 different economists about the future? Eleven different answers.
So how does one invest in gold prices without actually having to invest in gold prices? Fortunately, between ETFs and gold mining stocks, there are a variety of more manageable investment vehicles that the retail investor can use to speculate on the gold market.
Commodity Based ETFs
So this isn’t a major move away from just investing in gold futures, but that doesn’t mean that some investors won’t be more comfortable using ETFs as a means for investing anyway. The SPDR Gold Trust (GLD) offers the easily recognizable SPDR brand name, and it’s the most popular gold ETF with an average volume approaching 13,000,000. It tracks the price of gold bullion and moves accordingly. The iShares COMEX Gold Trust (IAU) is also a popular option. For those who want to leverage their bets, the ProShares Ultra Gold (UGL) and ProShares UltraShort Gold (GLL), offer a 200 percent return and inverse 200 percent return on gold prices respectively.
Gold Mining ETFs
Another way of speculating on gold prices is to buy stocks in companies that are the most closely tied to the price of gold: gold mining stocks. And, for those interested in making broad bets on the industry as a whole rather than ferreting out the individual companies with the strongest outlook, ETFs are a solid option. The two most popular choices in this regard both come from Market Vectors, the Gold Miners (GDX), and the Junior Gold Miners (GDXJ), which tracks small and medium cap gold mining companies.
Gold Mining Companies
Finally, some investors may want to simply invest directly in gold mining companies. Four of the six largest gold mining companies in the world are all in Canada, the Barrick Gold Corporation (ABX), Goldcorp (GG), Kinross Gold Corporation (KGC), and Yamana Gold (AUY). However, the United States does hold the third largest gold mining company in the world with Newmont Mining Corp (NEM). Headquartered in Denver, CO, Newmont produces well over 5 million equity ounces of gold a year. It has mining operations throughout the world, including Africa and South America.
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