Gold ETF stands for Gold exchange traded fund. An exchange traded fund is a stock that is spread into different stocks. Instead of you having to buy 20 different Gold mining stocks you could just buy 1 Gold ETF stock and be diversified completely into the Gold industry.
Many amateurs say not in invest in Gold ETFs because you will not be holding physical Gold in your hand. What most amateurs dont' realize is that an investment doesn't have to be forever. If you are 20 years old before you start to critically think about investing then you really only have 60 years of investing because at 80 you will be probably retired and be cashing out of the system.
Investing in Gold isn't to make gains Gold is far to slow and clunk for that, Gold is there to diversify your assets. The people who buy physical Gold are thinking about it all wrong. They put 50-70% of their capital into Gold and then they are at the mercy of the markets.
If you are truly balancing out your portfolio then you are buying physical Gold to not sell but to keep in a chest or safe. The use of Gold ETFs can be to hedge your risk of buying physical gold. Let's say you buy Gold at $1,000.00, then what you could do is spend $200.00 on shorting a Gold ETF. If the price of Gold drops then you will not be losing the value of your physical Gold. When the price of Gold has fallen far enough you can then cash out your Gold ETF short and be paid in cash.
Buying just physical Gold has been proven to not be a prudent investment unless you are hedging.
Buy Physical Gold
Short Gold ETF
It is a simple strategy that people dont' seem to understand. Why buy a commodity and not set yourself up for its movement in both directions?
As with all investments, you should either talk to a financial advisor or read some books beyond just articles to round your mind out. Investing successfully is something that Wallstreet is constantly trying to figure out so don't assume that you have. Many articles online are nothing more then hawking investments that they themselves also own. You want to keep clear headed so you don't put your hard earned money into investments that have no backbone.
There has been a large rise in the Conservative United States that has vilified financial banking. Don't fall into any kind of herd when it comes to looking at investments. Warren Buffet didn't make his billions by falling the crowd and neither should you.
I hope that you enjoyed this article and I suggest that you constantly read investment articles so you can collect the view point of many different financial writers.