These ETFs make it easy to own gold and platinum.
The bull market for stocks is more than eight years old. And while many folks are thrilled to see the Standard & Poor’s 500 index up about 14 percent so far in 2017, some investors are starting to get a worried that stocks are overvalued based on historical norms. There are also concerns that big campaign promises from Congress and the White House may not result in actual action to help the economy. Investments in precious metals can be an important way to diversify your portfolio, and to provide a hedge against possible correction in stocks. Here are seven precious metal plays for investors to consider.
ETFS Physical Platinum Shares (ticker: PPLT)
When most investors think of precious metal investing, they think of gold and silver. However, one of the most valuable precious metals out there is platinum, and the PPLT should be on your radar as a result. This ETF invests in physical platinum and nothing else, giving you as pure a play as you can on the metal. Platinum is a “noble metal,” meaning it is one of the least reactive metals on the planet and is highly resistant to corrosion. Because it’s shiny and durable it’s a mainstay of jewelry, and will not fade like white gold. But since platinum is so stable, it also has industrial uses.
ETFS Physical Palladium Shares (PALL)
Another precious metal you may want to consider is palladium. Its stable chemical properties make it desirable for industrial uses in addition to being minted in coins and precious metals for investors. The PALL ETF allows you to invest directly in physical platinum without worrying about taking delivery of the metal. And while you may have some luck taking gold or silver coins to a local pawn shop to redeem for cash, chances are if you bought physical palladium coins you may have a much harder time getting a trustworthy and knowledgeable merchant to redeem them for cash.
VanEck Vectors Gold Miners ETF (GLD)
One of the most popular ETFs for precious metals investors, the GLD ETF follows the largest gold companies on the planet, including Newmont Mining Corp. (NEM), Goldcorp (GG) and Barrick Gold Corp. (ABX). The fund is structured to put more of its assets toward the larger miners, too, meaning you are sure to have most of your money in established names across the industry; right now, 60 percent of the fund’s assets are in its top 10 holdings and all of which are companies valued at $5 billion and higher.
VanEck Vectors Junior Gold Miners ETF (GDXJ)
A twist on the previous fund is the GDXJ, which chases smaller gold miners and purposefully excludes the big ones. The firm’s mandate is to only hold stocks less than $5 billion in market value, but right now it’s hard to find a single gold miner in its portfolio that is even north of $3 billion. When you chase smaller gold miners, there is of course much higher risk involved. These companies simply don’t have deep enough pockets or large enough reserves in the ground to weather a sustained downturn in gold prices like their bigger peers. Expect more volatility here in GDXJ, but if the cards fall right you can also expect better performance.
iShares Gold Trust (IAU)
If you’re looking to play precious metals, one of the first ETFs to consider is the IAU. The fund is solely invested in gold bullion, and very closely mirrors physical gold prices as a result. Before the advent of ETFs, most investors looking to buy gold had to take delivery of physical coins that were difficult to store securely and were difficult to sell. After all, while many see gold as a store of value it’s not like you can go down to the local gas station and pay in bullion. Thankfully, IAU takes all the complication out of the equation. This fund provides a liquid investment that is easy to trade. And best of all it requires no safety deposit boxes or home security system to protect your investment.
iShares Silver Trust (SLV)
For investors looking to diversify beyond simply gold and gold stocks, the SLV is a good alternative. Structured the same way as its sister iShares fund for gold, this ETF provides direct exposure to physical silver prices by holding bullion and nothing else in its portfolio. Silver is more affordable than gold, trading for less than $20 an ounce currently versus roughly $1,300 an ounce for gold. But that creates an even bigger logistical challenge if you plan to invest a sizeable amount of money in silver. Where the heck would you store 50 or 100 pounds of silver bars and coins where they will be safe? The SLV is a better choice.
iShares MSCI Global Silver Miners ETF (SLVP)
If you prefer to play the miners that extract the precious metal, the SLVP is a good choice. The challenge here, however, is that many corporations that mine silver don’t do so exclusively. They often frequently also mine gold or even base metals that include copper and zinc. After all, if you have the equipment and the access, why not extract as much as you can? Changes in the underlying dynamics of mining stocks or fluctuations in other metal prices matter to SLVP. And as a result, the silver miners ETF does not faithfully track silver prices. However, it’s a nice way to get some exposure to silver in a diversified way.
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7 Ways to Buy Precious Metals With ETFs originally appeared on usnews.com
