Investors Pile Back Into Gold

Gold is back in fashion.

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After taking a breather in March, the precious metal has been on a steady climb as the overall demand for commodities has seen a resurgence and investors have begun to flee the safety of the dollar in search of higher returns.

The SPDR Gold Shares ETF (GLD) is up 13% in the past 6 weeks with trading sometimes exceeding $2 billion a day.  GLD is designed to reflect the performance of the price of gold bullion, less the Trust’s expenses.

Manufacturing indices in both China and the U.S. saw consecutive months of gains in April and May and are partially responsible for the prices for oil, copper and other commodities to be on the upswing.

At the same time, the U.S. dollar has suffered over the past 3 weeks as investors begin to seek out riskier investments.  In addition, U.S. fiscal and monetary policies that some investors characterize as “out of control” threaten the longer term value of the dollar.

The Wall Street Journal reports that option traders are building bullish positions in GLD as well as in gold miners.  An ETF that offers exposure to gold miners is the Market Vectors Gold Miners ETF (GDX) which holds a diversified group of companies involved primarily in the mining of gold.  A broader goup of mining companies can be found in the SPDR S&P Metals and Mining ETF (XME) which tracks the metals and mining sub-industry portion of the S&P Total Market Index.

For more, see the ETF Directory for a complete listing of Commodity ETFs.