Keep an Eye on the Precious Metals

They don’t call them “precious” for nothing. While the stock markets have been having convulsions over the credit crisis, gold has been meandering between $650 and $700. It sold off last week as the stock market did- but it wasn’t a huge sell-off.

Gold and silver will provide safety for many investors in the coming months. Mark O’Byrne, Director of Silver & Gold Investments said in an article on CBSMarketwatch:

“During the Wall Street crashes of 1929 and 1987, gold also fell in price during the actual days of the stock crashes but sold off by less than stocks and very soon recouped the initial losses and then surpassed its recent highs.”

If the dollar continues to sell-off, you will see a flight to the safety of gold.

Silver has also been hovering close to the $13 level for quite some time.

How do you invest in these sectors? There are gold and silver ETFs where you can own the commodity directly- the Gold ETF (GLD) and the Silver ETF (SLV). Or you can buy the gold miner index ETF ticker GDX. Some of the natural resource mutual funds or metal mutual funds have seen great returns in recent years. They likely own a combination of gold and silver companies.

The gold mutual funds aren’t doing all that great so far this year. For instance, the Tocqueville Gold Fund (TGLDX) is up less than 1% for the year.

But watch for gold and silver investment to pick up in the future. In times of market volatility and inflation, investors will be flocking to the certainty that is the yellow metal.