See How Gold ETFs allows one to invest without investing in gold

By | October 21, 2019

When the days in stock markets are going bad, investors wish to invest in some really safe options and not in risky investments. Investors wish to invest in low risk but high rated bonds. Another option, when the market is really down is to invest in gold as it is believed to be staple of the economy. However sometimes stocking up gold is also not that great idea. There is another good option which we are going to discuss here.

Gold ETFs

Gold ETFs

Investing in Gold commodity exchange traded funds (ETFs) is simple and easy way to invest in gold without actually owning gold products. There are many types of Gold ETFs that are available in the market. Some of these have future and derivative contracts that keeps track of price of gold and gold related indexes while other types have gold assets that are held in trust. Some other Gold exchange traded funds that are available in the market keeps track of companies in the gold industry.


Let us take for instance the most popular gold ETFs – GLD, the SPDR Gold Shares ETF. In this type of ETFs, one does not actually owns the gold product but the gold s actually held by some trust. The trust offers baskets in exchange for deposits of gold. So here, you actually have exposure to price of gold but do not have gold asset or product piled up with you.

Why should you buy Gold ETF?

Trading in gold ETFs is very simple. Now just think that if you wish to invest in some gold mining sector then you need to make individual purchases of the gold stocks. Then you need to decide the company from which you need to purchase it. Also, in order to target a certain price you need to purchase all the equities in the index basket. Investing goals become hard to achieve as there are many complications and commissions.

On the other hand, when one purchases gold ETFs they make one purchase at one price and save funds on commissions too. As soon as you have one trade in gold ETFs you get instantly exposed to price of gold.

Benefits of Gold ETF

Investing in gold ETFs offers many advantages. Few of them are mentioned below:

  • Purchasing gold ETFs create many advantages for the investors. Gold ETFs have great tax advantage when compared to other investment products like mutual funds.
  • ETFs have simple transactions and have lower fees too.
  • As such there are no limitations with ETFs but if you understand the way ETFs work, investing in them is a real boon.

Some Strategies to remember while trading in Gold ETFs

It is clear that as such gold is safe to invest in. If you wish to invest in something that has low risk and is stable too, then gold ETFs are really good option as the rates of gold tends to increase with drop in dollars. If you have foreign investment in a country and if that country has gold as its major source of income then you could sell gold ETFs to save your downside. You can invest in short term protection by trading in ETF.

How to If you wish to invest in gold ETF, then it is always better to do a thorough research. Keep a track on performance of gold and see how they perform. Once you are sure about a particular ETF you can call a broker and purchase the gold ETFs of your choice.

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