iShares Gold Trust ETF
Today we’ll take a look at the last fund selection in my series of updates for the blog’s mutual funds and ETF’s, specifically the BlackRock sponsored iShares Gold Trust (NYSE: IAU – $12.50). This exchange traded fund is quite simple: They own physical gold with each share worth about a hundredth of an ounce of gold. Gold prices are sinking today, a surprise to many traders as a number of negative fundamentals for the precious metal seem to outweigh the price boost investors expected from a government shutdown. Gold for December delivery at the NYMEX was tumbling $41 to $1,286 an ounce. The shares of the ETF are down 25% over the past twelve months, but off “only” 5.6% since the fund entered the portfolio in November of 2010. Over the intermediate term, the rise if gold prices appears to be over. Value Line is predicting that bullion prices will average around $1,400 for the remainder of the year, but only $1,300 for 2014. Hence IAU will trade somewhere between $13.00 and $14.00 over the next 18 months or so, if they are correct. While I don’t recommend more than an 8% allocation of these shares in a conservative portfolio, the case for such a holding rests on its ability to insure against currency depreciation, worldwide economic turmoil and general political unrest.