Ultimate Guide to Gold ETFs and ETNs

Although it lagged the broader market rally over the past three months, gold proved its worth during the deflationary selloff last fall. The yellow metal has underperformed during periods of economic stability, such as 1980-2000, but it has shown itself to be a good asset to hold during periods of extreme inflation or deflation.

Recently, gold has started to outperform once again. Be it fears of inflation or the depreciating dollar, investors have turned to the "barbarous relic" for protection. During the month of May, SPDR Gold Shares(GLD Quote) returned 10%. That compares to a 5% return for the S&P 500. Meanwhile, shares of gold mining companies have been strong for three months, benefiting from the stock market rally as well as stable gold prices. The Market Vectors Gold Miners exchange-traded fund (GDX Quote), which tracks these shares, increased 32% over the past three months, vs. a 25% gain in the S&P 500.

Because of gold's recent strong performance and its use as a safe haven at times of crisis, it's important for investors to understand the many options out there for investing and speculating in this precious metal. That's why we're providing you with this introduction to the types of investment vehicles, as well as their tax implications and risks.

Physical Gold ETFs

These funds hold physical gold in storage. They are taxed as collectibles, with a 28% long-term capital gains rate. ...