A traditional investors’ adage states that the values of gold and the United States dollar are inversely proportional.
When one rises, the other falls.
That can be a bummer, especially when a portfolio is dollar-based. New investors in particular can be forced to make that choice when they’re still in the stages of building their wealth and don’t need the hassle and/or exposure of added factors to mitigate the diversion.
That’s when miscalculations can be devastating:
If so, and you’ve done the 80/20 thing to scale up your business, odds are you could well be thinking about gold, wondering how to best add it to a budding portfolio, and keep your risk against the dollar’s fortunes to a manageable level.
A new option has entered the market that may help.
Better yet, it utilizes a market instrument that many small investors choose to nurture their wealth.
It’s called the Exchange Traded Fund, or ETF:
It’s no surprise that ETFs featuring gold have been an attraction since those instruments were created:
SPDR — pronounced spider — is the world’s largest family of ETFs. The acronym shortens its official name, which is Standard & Poor’s Depository Receipts, which is about as vanilla an organization as it gets. Their ETFs are traded in the USA, Europe, and Asia, being managed by State Street Global Advisors (SSGA).
Last month, SSGA announced a new ETF:
Its innovation is the gold shares are hedged in a long position against the shorts of a currency basket that does not include the dollar. All are stable:
- The British pound sterling;
- The Canadian dollar;
- The euro;
- The Japanese yen;
- The Swedish crown; and
- The Swiss franc.
Please keep in mind that investments are the results of personal circumstances and decisions, and each individual has to measure the risk involved.
But those are decisions you control, which is a feature of the Dot Com lifestyle.
In the meantime, continue to expand your financial resources and know that these hedged gold ETFs are yet another tool available for consideration in your investment strategy.