For investors who want to add gold to their portfolios, exchange-traded funds offer an easy way to do it.
Just be sure to keep your expectations in check and know what it can mean for your tax situation, experts say. Depending on how the ETF is structured, any gains may be taxed at a different — and sometimes higher — rate than you expected. And while gold can offer a store of value during turbulent market times, the price tends to be volatile.
“It’s going to bounce up and down, and it’s not always going to work in your favor,” said Dan Sotiroff, senior analyst at Morningstar.
The value of one troy ounce (32.1 grams) of gold has skyrocketed over the last year, jumping nearly 60% to $4,204 at Tuesday’s market close from $2,638 a year ago. In comparison, the Standard & Poor’s 500 index
has climbed about 12.9% in that time, closing Tuesday at 6829.37. The surge in price has been attributed to a variety of factors, including increasing demand from both central banks and individual investors — for the latter, that has included investing through ETFs.
