This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Don Dion's Weekly ETF Blog Wrap

Stocks in this article: GLD

NEW YORK ( TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next.

Here are three of his blogs from the past week.

Get Your Hands on Some Gold
Published 6/9/2010 10:07 AM EDT

When it comes to gold ETFs, investors want more than just exposure: They want to be able to hold the physical gold in their hands. Intense demand for the relatively new Sprott Physical Gold Trust ETV (PHYS) has pushed the fund to a more than an 11% premium.

I was skeptical about PHYS when it launched back in February. PHYS seemed at first like a gold fund for the paranoid. Unlike existing physically backed gold funds, like the massive SPDR Gold Shares (GLD), iShares Comex Gold (IAU) and the newer ETFS Swiss Gold (SGOL), investors in PHYS can request actual delivery of gold bullion (in exchange for shares) in an armored truck.

Investors in physically backed gold funds like GLD, IAU and SGOL have exposure to the value of a stockpile of gold held for the trust. The funds' values reflect the value of the physical gold they hold. As all three funds are large and liquid, investors can buy and sell shares at prices that are very close to the funds' underlying value (or NAV).

As PHYS has the option of physical delivery, however, investors seem more than willing to pay a premium to know that they can take delivery of the actual metal. Provided the amount of PHYS you own is enough to cover at least one so-called London Good Delivery Bar, which generally weighs around 400 troy ounces, you can request delivery each month before the 15th. PHYS' premium reached 20% in May as concerns about Europe's currency intensified.

> > Bull or Bear? Vote in Our Poll

It's important for investors to remember that PHYS's closed-end format means that premiums (or discounts) aren't unusual when it comes to pricing. The advantage of funds like GLD, IAU and SGOL is that they closely track their underlying value.

Is the advantage of physical delivery enough to make PHYS worth the premium? For some investors, maybe. The minimum investment -- currently over $1,200 -- you have to make in order to qualify for physical delivery might be pricey for some.

If you want to be able to hold your gold investment in your hands, I'd recommend that you invest in gold bars or coins directly. That way, you don't have to worry about premiums, or hiring a armored truck to deliver your investment from Canada, where the assets are stored at the Royal Canadian Mint. If you just want exposure to the price of physical gold, however, GLD, IAU and SGOL are solid investments.

At the time of publication, Dion Money Management was long IAU.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs