Gold ETF Investing
The latest buzz for those investing in gold are exchange traded funds (ETF) based on gold. These are a relatively new phenomenon to the markets and are becoming wildly popular. Most investors understand the solidity and stability of precious metals investing and in today’s market, it’s hard to find another commodity (or stock, for that matter) that gives as steady a return against inflation.
Gold ETF investing can be done through several types of gold commodities on the market. Gold futures, actual gold (in certificates), or even physical gold can all be included in a gold ETF. Usually these funds focus on one type or another, but some dabble in two or all three of them.
Some interesting mixes in this gold ETF investing include some gold ETF offerings that mix the above types, such as the Sprott Physical Gold Trust. This offering issues gold as certificates (at 1/100th ounce per). Anyone with at least 4,000 certs (or 400 troy ounces) can redeem those for a London Good Delivery Bar (a 400oz gold bar). The certificates are removed from the fund and the physical gold is delivered. This call option often drives the price of each share upwards, beyond gold’s spot price. This can be good or bad, depending on your perspective. If you plan to take physical delivery of the gold, you will pay a premium and would probably be better off just purchasing gold itself without going through a gold ETF. If your purpose is speculative investing, however, funds like this have the ability to be real money makers.
Other offerings on the market offer futures as part of a gold ETF. This type of gold ETF investing is more speculative than others and requires a real keen eye on current markets (in futures) and their trends. While investing in gold futures is trending upwards on the whole, individual mines and consortiums may not be doing well or may be stretched to the limit with their futures already – which dogs their price.
Overall, the world of gold ETF investing has definitely gotten interesting and there are few investments that are as exciting when investing in gold today.
Tags: gold etf, gold ETF investing, investing in gold
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