Wednesday , 6 December 2023

Protect Yourself From Inflation With Gold & Other Precious Metals Funds (+2K Views)

Investing in some form of precious metals is the preferable way to protect oneself from risingprecious-metals inflation/decrease in the value of the U.S. dollar and, to that end, below are 10 ETFs and ETNs and 5 mutual funds to do just that. Words: 879

The comments above & below are edited ([ ]) and abridged (…) excerpts from an article by P.Radomski (

One’s portfolio should have at least one asset that will retain value should the U.S. dollar’s value drop significantly. Such categories to consider are the emerging markets, precious metals and TIPS.

– make sense only if you believe that the inflation numbers are correctly representing the situation in the economy. Since I have a hard time believing this (as the way the inflation is measured has been changing and is currently – politely speaking –suspicious) I can’t recommend purchasing TIPS.

Emerging Markets
– provide an interesting way to diversify one’s stock holdings, but given the level of globalization in the financial markets, it is likely that any serious plunge in the US would translate into a similar development on the emerging markets as well.

Precious Metals
– the best way to go. Below are some alternatives to consider:

a) Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs)
– a convenient way to trade any market but, since they add another layer to the risk pyramid because there is one more entity between you and the place where your money, I prefer owning stocks and especially metals, directly. However, since ETFs, ETNs, and precious metals mutual funds might still be preferable way of being in the precious metals market for many investors, I have prepared a list of the most interesting funds that you might be interested in as follows:

DBP – based on UBS Bloomberg CMCI Gold Total Return index. In short, this ETFs performance is a weighted average of gold’s and silver’s gains with the following weights: 80% gold and 20% silver

DBS – based on the Deutsche Bank Liquid Commodity Index – Optimum Yield Silver Excess Return™ – tracks the price of silver

DGL – Deutsche Bank Liquid Commodity Index – Optimum Yield Gold Excess Return™ – tracks the price of gold

DGZ – 100% anti-gold, moves in the opposite direction to gold. Purchase if you want to profit on gold’s decline.

DZZ, GLL – like the above, but these funds involve double leverage. In other words, if gold gains 1%, this fund loses 2%.

GDX – 100% precious metals stocks, based on the GDM Index

GLD, IAU – price of these funds reflects the value of gold owned by each trust

XGD.TO – it replicates, the performance of the S&P®/TSX® Global Gold Index, so it offers considerable exposure to Canadian gold stocks.

b) Mutual Funds:

PMPIX – aims to track the performance of the Dow Jones Precious Metals Index (PM stocks) with a 1.5x leverage factor. It uses at least 80% of its capital to purchase equity securities contained in the index. In other words – it is in a way similar to GDX, but it involves more leverage.

FSAGX – Fidelity Select Gold invests at least 80% in gold and gold securities

USAGX – USAA Precious Metals and Minerals is very similar to the above fund (at least 80% in gold and gold securities). Additionally, the remainder (capital not invested in PMs) may be used to purchase other natural resource stocks

TGLDX – Similar to FSAGX, but with not more than 20% of the fund’s total assets invested directly in bullion / metals themselves. Therefore, this fund is more of a proxy for PM stocks, than FSAGX is.

UNWPX – Again, this fund invests at least 80% in companies principally engaged in the exploration for, or mining and processing of, precious minerals such as gold, silver, platinum group, palladium and diamonds. The difference here is that it invests at least 40% of its assets in securities of companies that are economically tied to at least three countries other than the U.S. Therefore, it offers a considerable geographical diversification.

In Summary
One of the best ways to protect yourself from rising inflation and a decrease in the value of the U.S. dollar is putting at least a part of your assets into precious metals…

[While] there is nothing like holding the [actual] metal in your physical possession, if the choice is between owning them through a fund or not owning them at all, I would certainly go with the former option.

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