After five years in the doldrums, gold is suddenly hot again.
The precious metal is up nearly 30% this year alone. Reasons for the rally include some value buying, weakness in the U.S. Dollar earlier in the year, and, most recently, nervous investors flocking to safety in light of the Brexit.
Gold stocks have done even better, with many doubling or even tripling off recent lows. This is because gold miners have something called operating leverage on their side. If costs to mine stay the same and the price of gold shoots up $200 per ounce, all that increase ends up flowing straight to the bottom line.
There are a number of ways investors can play gold using ETFs.
The easiest one is to simply buy the SPDR Gold Trust (NYSE:GLD), an ETF that tracks the price of gold bullion itself. GLD currently trades above $130 per share, its highest level since early 2014.
Canadian investors can also buy gold bullion priced in Canadian Dollars through the iShares Gold Bullion ETF (TSX:CGL.C). This allows Canadian investors a pure play on gold without also indirectly betting on the U.S. Dollar at the same time.
Another strategy would be to buy a diversified ETF of gold producers. Many of the world’s top gold producers trade in Canada, making the iShares S&P TSX Global Gold Index Fund (TSX:XGD) a logical choice. It holds 41 different gold companies weighted by total market cap and it even pays a small dividend.
