Another factor likely to provide strong support to gold prices is the expected increase in demand derived from a growing middle class in developing nations. In general, as middle classes grow and incomes rise, these consumers demand and spend more on the finer things in life, like jewelry. With middle classes in nations like China, India and Brazil growing at an exponential rate, the demand for gold used in jewelry in these nations is likely to spike.
Lastly, as the economy in the U.S. rebounds, inflation will likely be inevitable, further bolstering gold's appeal.
Three ETFs that will likely reap the benefits of an appreciation in gold prices include:
The SPDR Gold Trust (GLD), which actually holds physical gold bullion and closed at $111.37 on Friday.The Market Vectors Gold Miners ETF (GDX), which holds various companies that generate revenue through gold mining, exploration and other gold related services, like Barrick Gold (ABX), and Goldcorp (GG). GDX closed at $49.84 on Friday. The PowerShares DB Gold (DGL), which tracks gold futures contracts and close at $40.74 on Friday. Whenin vesting in these equities, it is important to consider factors that could potentially hinder the price of gold, like an earlier than expected tightening of U.S. monetary policy by the Fed. A good to way to protect against these factors as well as the inherent risks involved with investing in equities is through the use and implementation of an exit strategy, which triggers price points at which an upward trend in gold could potentially be coming to an end.
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