The gain strength, but many fear the Bank's aggressive moves eventually could lead to a serious backlash.has been pulling out all the stops to help the U.S.
Of course, buying and storing gold and silver bullion is no simple task. That's why many investors prefer to own these two commodities through exchange-traded( ).
There are a wide range of options, and here's a quick primer on the topic.
ETFs focus on both gold and silver mining , as well as the commodities themselves. If you want to own the mining companies, you need to differentiate between two camps: Industry them "senior miners" and "junior miners." The senior miners already own many productive mines, and sell tons of gold and silver every year. They are fairly mature and already generate prodigious streams of cash flow, so investors are able to analyze these in a more traditional way, using measures such as price-to-earnings ratio (P/E) and price-to-book ratio (P/B).
The junior miners are smaller, development-stage companies and own mines that have yet to be developed. These companies typically have little or no sales yet, so investors are left to assess the value of those mines and try to anticipate what future cash flows might look like.
Why take a chance on junior gold miners if they are absorbing ongoing losses? Because investors tend to discount their value while mine development gets under way -- and if the mines turn out to have a mother lode of gold, the company'scan soar far higher.
There are a wide number of options for investment management firm Van Eck, for example, offers both the Vectors Gold Miners (NYSE: GDX) and the Vectors Junior Gold Miners (NYSE: GDXJ). The first focuses on big miners such as Barrick Gold (NYSE: ABX) and Goldcorp (NYSE: GG), while the latter focuses on development-stage mining companies.investors looking at this sector. The
In a similar vein, the Global X Silver Miners SIL) owns of many of the leading silver mining companies in Canada, the United States, Mexico and South America.(NYSE:
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Skip The Miners?
Mining companies don't always rise or fall in value in tandem with gold and silver prices. These firms incur hefty expenses to complete their mining efforts, and their profits are therefore not directly correlated with the underlyingprices.
That's why some investors prefer to own the precious metals themselves, which you can also do through ETFs. For example, the IAU), carries a very reasonable 0.25% expense ratio and moves in lockstep with gold prices.Gold Trust (NYSE:
Perhaps the most popular GLD), which trades a hefty 9.6 million shares a day. Each share represents roughly 1/10th of an ounce of gold. However, the slightly higher 0.40% expense ratio for the Gold Shares may make the Gold Trust the wiser choice if you plan to trade in and out of these .is the Gold (NYSE:
If you're really DGP). It is a leveraged 2X (it's called 2X because it moves up and down double the rate of the price of gold) based on the price of gold, helping it to post stellar gains as gold has rallied in recent years. Yet you should be looking at this only if you are anticipating a solid upward move in gold, as the fairly high 0.75% expense ratio eat into returns.on gold, check out the PowerShares DB Gold Double Long ETN (NYSE:
Think gold is due for a pullback after multiyear gains? Check out the PowerShares DB Gold Double Short ETN (NYSE: DZZ), which moves in the opposite direction of gold prices.
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Several silver-focused ETFs also are tied to the commodity price, and not the results of silver mining firms. The Silver Trust (NYSE: SLV) is the most popular, trading more than 10 million shares per day and with nearly $10 billion in assets under management.
Yet if you're especially bullish on silver prices, check out the ProShares Ultra Silver (NYSE: AGQ). This fund trades more than 1 million shares daily and moves at twice the rate of the underlying spot price of silver. A quick glimpse of the price chart for this shows a steady decline ever since silver prices peaked in early 2011.
The current price, near multiyear lows, might prove to be a great entry point for far-sighted investors who think silver pricestrend higher again in coming .
The Investing Answer: These ETFs provide exposure to both the metals and the miners and typically carry expense loads that are far lower than mutual focused on this . If you think the Federal Reserve's aggressive actions are generating too much risk for the U.S. , then these ETFs should provide a solid .