Gold Exchange Traded Funds

Gold is a popular commodity for investors. If you want to invest in gold and retain flexibility that you may not have otherwise, consider gold exchange traded funds. An ETF seeks to match or replicate the performance of the market, therefore a gold ETF is based on the price of gold. ETFs let you buy stocks that are based on a market’s value that does not sell its own stocks or bonds, gold being a prime example. You get the benefits of both a commodity and a stock in one.

It is important for investors to understand what they are getting when they buy gold exchange traded funds. At no time do you own any actual gold. What you do own are stock and/or bond shares of a specific fund created to replicate the performance of the gold markets using securities and futures backed by this precious metal. An ETF of this type is not a mining company, trading company or gold note. You are simply benefiting from particular movements of the gold market without actually owning any of this commodity. If it sounds complicated, that is because for the average individual investor, it is.

The first course of action should be to locate a broker whose specialty is ETFs dealing with gold, silver and other precious metals. This is because they have influences all their own, they are hard commodities mined from the earth and very different from other commodities mostly because of demand. When it comes to fuel and food, demand is based on supply and need. However gold, silver and other metals do not work this way. There is not a continously rising demand for gold. This is why any investment professional you choose should specialize preferably in gold exchange traded funds.

Even if you use the services of a professional broker it helps to understand the basics of both ETFs and gold as a commodity. ETFs feature shares from numerous companies, with the number of companies represented being as few 10 to numbering in the thousands. The companies are connected in some way, in this case the common thread is gold. If you find you like investing in ETFs of this nature, you might want to branch out into others like oil ETFs or technology ETFs. One of the most trendy types of exchange traded funds right now are water ETFs.

Even with the wide variety of exchange traded funds out there, gold remains alluring for many reasons. You might decide to invest in gold exchange traded funds as well as actual gold commodities, for which you should use the services of a CTA or commodities trading advisor. This type of professional understands how to profit from futures contracts which relate to speculation of a commodity’s value at a specific point in the future. There are also stocks available from companies in the gold mining and trading business you may want to investigate if you are interested in different types of gold-based investments.

Comments are closed.