ETFs: Worth their Weight in Gold?

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by Rick Pendergraft (04/4/2008)

Everyone’s heard about oil going over $100 a barrel recently. Getting less publicity is the dramatic bull market in precious metals. Year to date, gold is up almost 17 percent and silver is up almost 37 percent.
Too late to catch the upswing in prices? Not necessarily. Global demand for precious metals will likely keep rising as the exploding middle class in Asia gets a taste for the finer things in life. So, yes, prices have moved up considerably over the last few months. But there is no reason to believe this is a bubble that could burst anytime soon.
You can get involved in this market by investing in ETFs (Exchange Traded Funds) that focus on precious metals. Choose from broad-coverage ETFs, such as the Powershares CD Precious Metals Fund (DBP), to more narrowly focused ETFs, like the iShares Silver Trust (SLV). You can even invest in silver and gold mining companies with the Market Vectors Gold Miners (GDX) fund. Purchasing shares in ETFs is as simple as buying shares of a stock. The benefit is you get the diversity of a mutual fund.
Commodities should always be a part of diversifying your portfolio, and it’s easy to add them with ETFs. Take advantage of the precious metals bull market and pick up a few. Don’t get spooked by any short-term price drops. We are in the midst of this long-term bull market, so consider them to be longer-term investments. A moderate pullback in prices may just make it cheaper for you to buy in.
[Ed. Note: Rick Pendergraft is a professional trader and market analyst. In Rick’s new investment service, he reveals how you can make hundreds - even thousands - of dollars just by playing a simple game of “guess the pattern.” Learn more here.]