Investing in an Exchange Traded Fund (ETF) has become one of the best ways to cash in on the increasing value of gold bullion. A gold ETF is an investment that rises and fall with the gold price.The price of gold continues to leap ahead while the stockmarket remains unstable and many company shares are dropping in value. Gold cannot be devalued by government quantitative easing, and gold can still be used to buy goods if a national currency goes into freefall. This makes gold unique as a solid form of investment.
A gold ETF can be a based around owning actual physical gold or can track the price of gold bullion as a commodity. Not all ETFs are the same so they respond differently due to how they are structured. It is best to invest in an EFT that holds physical gold allocated in your name. Your gold will be safely stored in bank vaults, usually in London, New York or Zurich. A fund manager buys the gold on your behalf, and your gold is insured during the time it is stored. Your gold can be sold on the open market, just as it is bought on the open market. If the price of gold is very strong when you buy it may well drop back slightly in the short term, but the long term outlook can only be good.
A gold ETF that is backed by physical gold held vaults will be audited twice a year, sometimes this is done at random, so that serial numbers are checked and the correct purity of gold is ensured. Your gold is ringed-fenced so even if the fund management company which issued your gold investment certificate were to go bankrupt, gold remains the property of individual ETF holders and ownership cannot be challenged. Your assets are monitored by an independent manager.
Gold ETFs are simple to trade, they are very flexible and you can acquire more gold during the dips in the price of gold to accumulate more. While a gold ETF invests your money in physical gold, shares in these funds can be bought and sold just like any other form of share dealing, and you can ask any stockbroker to purchase or sell these on your behalf. The shares you buy will track the value of gold while your gold is being safely held in a bank vault.
Exchange Traded Funds provide investors with easy access to the gold market. An EFT has a big advantage over other types of fund by being traded in the same way that you would buy and sell stocks. The amount of expense involved in this form of investment is generally lower than it would cost you to pay for management of a mutual fund. When you buy and sell shares in an ETF you simply pay the same rate of commission to your broker that you would pay for for stockmarket trades.
ETFs have grown rapidly in recent years and gold has become a very liquid market. In September 2010 the price of gold reached a new high, so now is a good time to cash in on the gold rush with an EFT.