So gold and other commodities are all the rage right now. Jim Rogers says gold is going to $2000, others say it’ll hit $3000, others still say it is over priced.

Who are you to believe?

Well you don’t have to believe us, but when we started this blog gold was below $900. That’s right, well below $900. Now it’s over $1000 and continues to climb. The dollar is weak, which has historically meant gold is a good buy along with other precious metals like silver and platinum. The stock market however, has pushed upwards for the past 2 months amid the weakening dollar, increase in precious metals and uncertainty in the economic outlook of the world.

So where do you invest.

Well, if you’re look at gold, you may want to look into the ETF GLD. GLD is an ETF that is freely traded as a stock and holds all the same value as owning a tenth of an ounce of gold. That’s cause it’s backed by the value of gold. If the fund needs more shares to trade, it buys more gold. The price of the fund tracks the price of gold by a tenth, pretty consistently.

By putting your money into this fund you don’t have to buy gold bullion directly and find a place to store these. If you have to pay to store it, and pay a premium to buy it, it doesn’t make sense to buy it that way. Buy the fund if you need to. Or buy shares in a company that mines or processes gold. But thats a whole nother story.

That’s right, we’re late on the reporting but gold is over $1000 US dollars for an ounce. Yikes.  Is it too much?  No one really knows, but all those skeptics that spoke out as it traveled down below $900 after coming near these recent highs a while back are eating their words….

Or are they?

The Washington Post has a great article on why some investors are fearing the sudden rise in gold, and also why some investors think $1000 is just the beginning. Inflation on the rise, the dollar weakening and a market that isn’t quite sure why it’s almost back at a DOW of 10,000. That’s what has investors scratching their heads and disagreeing.

One things for certain, gold and ETFs like GLD could still be good buys if we continue to see the fed printing money, and worldwide banks scooping up gold as a hedge to the weakening dollar.

Recently we discussed the iShares ETF IAU which is a gold trust ETF like the silver trust ETF SLV. Now here’s another one that, if you’re into ETFs, you may be interested in. It’s called streetTRACKS Gold Trust (GLD).

Like IAU and SLV, GLD buys and stores gold and allows investors to buy a share of the gold it owns. The price basically tracks the price of gold per ounce at about 1/10th the value of an ounce of gold. Fees are taken off for running the fund, which is the reason for not tracking the price exactly.

Currently, the precious metals market has been taking off as investors try and find a safer place to put their money than the stock market. If you want to buy gold, rather than buy gold bullion, you can purchase gold through the ETF and take advantage of long term capital gains tax benefits. If you buy gold bars or coins you’ll need to pay full capital gains taxes.

These are just some of the advantages that buying gold through ETFs such as IAU and GLD can offer.

If you want to get into gold and you don’t want have gold bullion collecting dust in the corner of your safe deposit box, then an iShares electronically traded fund might be the way to go for you. With iShares IAU ETF you can own a fractional ownership of gold held by the iShares Gold Trust.

Rather than own large sums of gold you own roughly 1/10th an ounce of gold per share you own in the iShares trust. And the best part is, you can trade these easily from your regular stock trading account. This means if you buy and hold you can take advantage of long term capital gains rules rather than taking the sale of a gold bar as a fully taxed gain, as you would do if you owned gold bars.

Some people say they want to be able to hold the gold, but those same people don’t realize that when they buy stock in a company they have nothing to hold, so why not do the same with buying gold. The ETF IAU will allow you to own a piece of a precious metal that has historically held it’s value. And with the spread of wealth around the world increasing, demand for gold can only go up (or so we think).

Buying gold now during this volatile time period may be risky, but if you hold long enough, we imagine that owning an ETF like IAU will prove to be very valuable, and easy to trade.