Friday, January 20, 2012
A "Golden" Opportunity?
Lately we have been hearing a lot about investing in gold. It is ironic that when gold is at an all time high, people recommend investing. It seems like when it is low, that is the time to invest. Most experts recommend having just a small percentage of the portfolio in gold. Those who do not want to invest in physical gold can buy stock in gold mining companies. The price of gold is currently $1656 per ounce. Over the past 30 days the gold price has risen 2.28%. Over the past year the rise has been 20.75%. But, the serious gain would have come from investing 5 years ago. The gain from 2007 to 2012 has been an amazing 162.25%! The price of gold often goes the inverse direction of the Dow Jones Industrial Average since when the Dow is down, people are searching for an alternative investment. I found an exchange traded fund (ETF) that invests in the inverse of gold. When gold goes down, this investment will go up. It is symbol DZZ, Deutsche Bank AG DB Gold Double. It is currently at $4.78, with a 52 week range between $3.83 and $9.26. This fund has net assets of $107 million. It was founded in February of 2008. It's 3 year total return has been -39.73%, but when gold drops (and it will eventually), it will have a better performance. I looked at the performance of other ETFs, not necessarily those tied in to the price of gold. ETF symbol LBND has been a top performer, earning 117% over the last year. That ETF trades leveraged debt. The investment seeks to replicate, net of expenses, three times (300%) the performance of the DB Long U.S. Treasury Bond Futures index. The index measures the performance of a long investment in the CBOT Ultra T-Bond futures.
*Some information from finance.yahoo.com and http://www.goldprice.org/spot-gold.html