You can learn a lot about an investor from whether they invest in gold, and how they do it.
As people pile into gold exchange-traded funds at the fastest rate in more than a year, it’s clear that the precious metal’s appeal as the ultimate safe haven now extends well beyond the universe of dollar-doubters and doomsayers otherwise known as “gold bugs.”
Gold is up almost 6 percent this year, compared with a 6 percent loss for the S&P 500-stock index. This is a major turnaround from the past two years, when gold ETFs were down 34 percent, and $33 billion flowed out of those funds.
Given gold’s performance, it’s not a huge surprise that gold ETFs took in $1.8 billion over what has been a volatile start for markets in 2016. What’s intriguing is how gold ETFs aimed at very different investors have shared in those inflows.
Gold ETFs for the merely fearful
When scared investors look for safety, many scoop up shares of the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). GLD is the ETF favored by liquidity-loving institutions because it trades more than 500 million shares a day. IAU is used more by advisers and buy-and-hold retail investors since it charges 0.25 percent in annual fees, compared with 0.40 percent for GLD.
Gold ETFs for the truly paranoid