Do You Buy In To The Precious Metals Rally?

Even before the announcement of QE3, precious metals had been holding their own in 2012. But ever since Bernanke initiated what some have called a“kamikaze” monetary policy, these coveted assets have enjoyed stellar performances. For the month of September, gold and silver jumped a healthy 4.7% and 8.7% respectively. With both of these assets on a nice tear in the past few weeks, some are calling for a correction, while others feel that there is no turning back for these two commodity juggernauts [for more precious metals news and analysis subscribe to ourfree newsletter].

SPDR Gold Trust (ETF) (NYSEARCA:GLD)

Potentially, both camps could be in the right in this situation. After such a massive run-up this summer, it would not be surprising to see some investors take profits in the short term, putting the metals in a slump. Afterwards, however, the global easing programs around the world and insatiable demand for these safe haven assets lays a pretty nice path for the two metals, leaving them plenty of room to run. The only question you have to ask yourself is which umbrella you fall under and what you plan to do about it.

You will always have analysts calling for $5,000 goldand $100 silver but the short term is nearly impossible to predict. To better assess the situation, there are a couple of factors that investors should take into consideration. Silver is a much more volatile metal than gold, so when things are good they’re great, but when things go bad, it can get ugly. Silver, however, is much further off of its historical highs than gold is, suggesting it may be undervalued. Another factor to keep in mind is when Bernanke plans to end QE3. Though this is very unlikely to end anytime soon, the expiration of that program will no doubt have some negative ramifications for these two assets [see alsoThree Reasons Why Gold Is Overvalued].

Below, we outline two ETFs to keep a close eye on as the precious metals rally continues to play out.

SPDR Gold Trust (NYSEARCA:GLD): The most popular commodity ETF out there, GLD has more than $75 million in assets as it tracks physical gold. GLD has rapidly become the standard for gold investing, as it trades more than 12 million times each day. Note that the fund is physically-backed and will therefore be taxed as a collectible, meaning you pay 28% on both short and long term capital gains.

iShares Silver Trust (NYSEARCA:SLV): The physically-backed silver fund is the front-runner for securitiestracking the white metal. SLV has just under $11 billion in assets and has been trading roughly 16.7 million times per day for the past month.

This article was originally written by Jared Cummans, and posted on CommodityHQ.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!