Saturday, December 5, 2009

Investing in gold with ETF.

Recently I posted article about investing in physical gold like buying coins, ingots or bricks. This time I would like to cover the other side of gold investing which is investing without keeping or owing physical gold.

One of the most common investment product that act as alternatives for those who want to invest in gold is ETF, or exchange traded funds (sometimes translated as index shares). It is a form of collective investment funds with low costs, greater flexibility and transparency, and accurate monitoring of the underlying asset (index, commodity, etc.).

ETF gold are due to its properties as an ideal alternative to physical gold. Emerged as a tool for investors who want to own physical gold, but do not have it stored at home and want to have it for cheaper money. Management fee is usually less than half a percent, but to be added charges for trading broker, which may not be the cheapest.

In 2004, the WGC, in cooperation with State Street Global Advisors launched gold ETF on the New York Stock Exchange under the name of streetTRACKS Gold Shares, now called Tracks SPDR Gold (GLD). Today, this product is also traded on stock exchanges in Singapore (GLD 10US $), Tokyo (1326) and Hong Kong (2640). At present it is the most popular investment tool for investing in gold and indirectly holds more than the custody of 1 127 tonnes of gold.

Other well-known ETF are iShares COMEX Gold Trust, which determines the price based on the price of futures contracts on the COMEX commodity exchange. Traded on the New York Stock Exchange (IAU) and the Toronto Stock Exchange (IGT). The Fund currently holds 80.72 tons of gold, but in this case, there are criticisms and doubts about the quantity of gold which backed securities. The Depositary is The Bank of Nova Scotia, Canada.

Among the investors are very popular Canadian ETF Central Fund of Canada (CEF) and Central Gold Trust (GTU) traded on the New York Stock Exchange and the Toronto Stock Exchange. According to some experts are safer investment in gold than GLD. In addition to the long history of funds it is also mainly due to the simplicity and clarity of the investment strategies and fund structures as well as the need to hold all the gold at Depositary without the opportunities to lend it to third parties (at least 85% of funds must be kept in precious metals).
First appointed but also invest in silver. Currently, the ratio of the two metals is 55:42 in favor of gold and the rest is in cash. Central Gold Trust holds 396.8 thousand ounces of gold, which is 97% of its portfolio.

Here is full list of Gold ETFs with their specifications.


1 Response to "Investing in gold with ETF."

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