I'll take this opportunity on a day when U.S. markets are closed to recap my philosophy behind holding two different gold instruments in my Alpha-D Portfolio.
iShares COMEX Gold Trust owns physical gold stored in a vault in London. One share = one tenth of an ounce of gold. I own IAU because its price is directly correlated to the daily bullion spot price; i.e. it's real gold.
Market Vectors Gold Miners ETF owns shares of publicly traded gold mining companies. I own GDX for several reasons: in case the government confiscates gold bullion from private owners as it did in 1933 (the miners' gold reserves are in the ground and can't be so easily grabbed); because GDX's returns aren't perfectly correlated with the spot price of bullion (owning non-correlated assets is the key to a well-diversified portfolio); and because it pays a small dividend (gold bars don't kick off cash like mining stocks do).
Please do NOT take this as a recommendation. This is merely a summary of my personal rationale for owning some gold. I have a portion of my assets in gold but I would never put the majority of my money into any one type of investment. I personally believe that the U.S. will experience serious inflation in the near future, and I expect gold to rise along with inflation. I could always be wrong, of course.
iShares COMEX Gold Trust owns physical gold stored in a vault in London. One share = one tenth of an ounce of gold. I own IAU because its price is directly correlated to the daily bullion spot price; i.e. it's real gold.
Market Vectors Gold Miners ETF owns shares of publicly traded gold mining companies. I own GDX for several reasons: in case the government confiscates gold bullion from private owners as it did in 1933 (the miners' gold reserves are in the ground and can't be so easily grabbed); because GDX's returns aren't perfectly correlated with the spot price of bullion (owning non-correlated assets is the key to a well-diversified portfolio); and because it pays a small dividend (gold bars don't kick off cash like mining stocks do).
Please do NOT take this as a recommendation. This is merely a summary of my personal rationale for owning some gold. I have a portion of my assets in gold but I would never put the majority of my money into any one type of investment. I personally believe that the U.S. will experience serious inflation in the near future, and I expect gold to rise along with inflation. I could always be wrong, of course.
