The Glitter of Precious-Metals ETFs - Kiplinger.com

By Laura Cohn, Associate Editor, Kiplinger's Personal Finance


Published February 4, 2010

In this article Ms. Cohn identifies five exchange-traded funds that give investors a stake in gold, silver, platinum and palladium. Unfortunately she leaves out my favorite, SIVR, an ETF that tracks the spot price of silver. When silver went below $16.00 and ounce I started buying shares in SIVR, paying as low as 15.35/share. You can buy it through your online broker just like stocks, I paid $4.50 per trade, no other fees. I prefer to hold physical silver which I also bought today, but the ETF shares I bought with OPM (other people’s money). Yes, I bought on margin. I believe this is a temporary dip and when the price increases I will sell. I never hold paper silver very long, and frankly I have never had to. Anyway this is not my article so read on.

"For decades, gold bugs have argued the bullish case for their favorite metal. In recent years, they’ve actually been right. The price of gold has climbed steadily for the past nine years, from $277 an ounce in 2001 to a record high (not adjusted for inflation) of $1,213 in December 2009 as investors piled into the yellow metal because of its reputation as a safe haven and as a hedge against a falling dollar. Gold closed at $1,115 on February 2.

The rising price and the rise of exchange-traded funds have attracted investors in droves. Thanks to ETFs, investors can buy gold without having to open their own Fort Knox. Last year, investors around the world bought 51.2 million ounces of gold, and 35% of that amount came through ETFs. In the case of silver, the figure is even more astounding. Investors snatched up 172 million ounces of silver last year, and 87% of it was via ETFs. Silver closed February 2 at $17 an ounce, well below the record of $50, set in 1980, but far above the $5 level of recent years.

The best way to get a piece silver, buy the iShares Silver Trust (SLV), which charges 0.50% per year. Both GLD and SLV provide a stake in the metals, which are housed in vaults located in London. That way you don’t need to buy bars and worry about where to store them safely."
To read the entire article go here.