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Guide to Precious Metals: Gold

NEW YORK ( TheStreet) -- With the introduction of exchange traded funds, investors have been given the opportunity to play not only stocks and bonds, but also precious metals. As the number of retail investors boasting gold, silver and other shiny metals within their portfolios has blossomed, this slice of the market has evolved into a whole new asset class.

Many investors are familiar with veteran metals funds such as SPDR Gold Shares (GLD) and iShares Silver Trust (SLV). However, over the years ETF providers have introduced new products which provide investors access to not only gold and silver, but also platinum and palladium. ETFs and ETNs today can expose investors to the physical commodity, futures contracts and individual gold miners. Additionally, as the ETF industry has expanded, investors have been given the opportunity to take leveraged bets on the performance of popular precious metals.

Over the next two days I will examine the various precious metal exchange traded products and compare their relative strengths.


Physically-Backed. Today, ETF investors can choose among three funds to play physical gold. The iShares COMEX Gold Trust (IAU); GLD and ETFS Physical Swiss Gold Shares (SGOL) all seek to meet the same goal: track the price of gold bullion. However, beyond this strategy, there are a number of important differences between the three options to consider.

Launched at the end of 2004, GLD holds the title of being first mover in the physically backed gold ETF arena. IAU, the second fund to make an appearance was launched slightly over two months later. Together, these two funds dominated the niche until the close of 2009, when SGOL was launched.

With over 16 million shares changing hands each day, GLD is the most liquid of the three options and is therefore best suited for active traders. With all three handily surpassing 100,000 shares traded per day, buy and hold investors would do well holding any of the three.

SGOL, launched by ETF Securities, has attempted to draw in bargain-hunting investors by differentiating itself. The fund cut its expense ratio by a single basis point, charging investors 0.39% rather than the typical 0.40%. Also, to address investors' concerns about storage, SGOL keeps its gold in Switzerland. These differences have helped SGOL amass a respectable $400 million in assets.

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SGOL $117.88 1.76%
GLD $115.60 1.71%
DGP $24.03 3.53%
DZZ $7.08 -3.60%
DGL $39.71 1.70%


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