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How To Invest In Gold ETFs

By Edited Nov 13, 2013 0 0

How To Invest In Gold ETFs

How to invest in gold etfs

If you're reading this article, chances are you're aware of the power of precious metals in society today. With our economic future in constant question, people are searching for a way to protect themselves against financial ruin, and gold, silver and platinum are three common routes to do this. My father calls this sort of mentality 'disaster insurance' Learning how to invest in gold ETFs is an important way to protect yourself, because gold ETF funds are a fantastic thing to get involved in!

This article is designed to answer the question 'what is gold ETF?' and many other queries about this mysterious topic. It's also designed to give you a bit of insight and confidence in gold ETF funds, and hopefully get you started on the right path to financial success by introducing this topic!

Let's get started!

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What Is Gold ETF?

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Before learning how to invest in gold ETFs, it's important to figure out exactly what gold ETF funds are! An ETF is an abbreviation for exchange traded funds. Exchange traded products are popular offerings these days. An exchange traded product is a financial security, which derives its price from the derivative product it represents. 

A gold ETF fund is traded on a daily basis, much like on the stock exchange. The price fluctuates, but it holds more or less a proportional value to the commodity it's linked to. The owners or creators of the ETF (usually) hold physical assets that more or less represent the value of that commodity. The owner of a gold ETF fund, for example, would hold assets in actual gold, that more or less represent the total combined value of the ETF fund holders.

The owners of ETFs hold an undivided interest in the assets held by the owners, and they are free to trade their funds on a daily basis, much like stocks. The value of these gold ETF funds will fluctuate throughout the day, depending on the moods of the buying public, but overall the value is more or less pinned to the overall price of the commodity or asset in question.

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How To Invest In Gold ETFs: What's The Big Deal?

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You may ask yourself why people would be wanting to invest in gold ETF funds, instead of just going with gold itself? There are a lot of different reasons for this, but I'll list a few. 

First, with a gold ETF fund, you are accessing gold at a much more reasonable price point. To get into a gold ETF is much easier than buying an ounce of gold itself. Consider that an ounce of gold costs upwards of $1600 these days, and shows no sign of slowing down or losing value. That's a difficult thing to buy into!

Secondly, buying straight gold is difficult, not necessarily economical, and presents security risks. You usually have to purchase gold through a broker; this costs you extra money, and it takes time to get your hands on your purchase. And once you do hold the gold, you have a major security risk. You had better have a vault, because gold is very valuable! 

Gold ETF funds

are easily tradable on a daily basis, and are often used as a small part of a larger portfolio, for overall stability. You do have to pay a small commission, somewhere along the lines of 0.4%, but the gradual gains of gold ETF funds will likely supercede this small loss.
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How To Invest In Gold ETFs

Investment in gold and silver is probably a good idea. I have several friends who have made a lot of money off of investments in precious metals, including gold ETF funds. Silver ETFs do exist also, but they are a bit more volatile and are considered a more dangerous investment. 

I hope you now better understand what a gold ETF is, and how to invest in one. Do your research, because not all gold ETF funds are made equal: some will charge higher commissions than others. You should definitely look into this before buying into it! 

Good Luck!



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