Gold: Time to Dump or Time to Buy?

On the ETN side, Deutsche Bank has structured two gold products for the more aggressive trader or investor.  The DB Double Gold Long (NYSE:DGP) and DB Double Gold Short (NYSE:DZZ) give one the opportunity to double his or her view of the gold markets on a per share basis.  These are known as leveraged ETNs.  The power of these products come from the fact that, for a smaller amount of capital, one can possibly achieve a higher absolute return given a move in Deutsche Bank’s gold benchmark, which is based on the gold futures contract.  These carry heavier risks but can help an informed market participant take a long or short bias with an added kick.  (Check out DGP’s performance in 2012 here.)

A fourth way to get involved with gold comes in the form of closed-end funds, or CEFs.  These have a similar make-up to mutual funds but with a limited number of available shares; fortunately they are traded on global stock exchanges as well.  The Central Gold Trust (NYSE:GTU) of Canada gets its value from actual tons of gold held in the Canadian Imperial Bank of Commerce.  GTU stands as a secure and low-cost alternative (especially in regards to expense fees), and one can rest easy knowing that the shares are based on actual precious metals held in safe-keeping.

With so many options to invest in gold, those fearing inflation or further potential drops in the stock market have a few alternatives (see which firms are expecting a rise for gold in 2013).  Having the availability to trade these from a retail account and to trade in either direction are added bonuses, and they can offer a level of protection and sophistication that a jewelry box tucked in a dresser drawer can not.  While gold is still close to all-time highs, further uncertainty in worldwide economies could see it pushed higher.

Disclosure: I do not own shares of any products mentioned in this article.