August 16, 2011

Gold ETF - Gaining Exposure to Gold Prices

Gaining exposure to the Gold Market without having to actually pay the price per troy ounce, which was $1,740 last time I checked, has never been easier. The answer is through purchases of Investment securities known as Commodity ETFs or Exchange Traded Funds. Some of these ETFs sell shares which can be bought and sold on a stock Exchange, such as the NYSE Arca, and derive their value from Gold owned by the issuer. The beauty of these investments is that they can range in price from one tenth the price of gold, to one one hundredth the price of gold. In other words, if Gold is trading at $1,740 per troy ounce, there is a Gold ETF that trades at $174.00 per share and another ETF that is $17.40 per share. To see which ETFs these are, and view live updating charts of the four different Gold backed ETFs I follow, visit my Gold ETF to learn more.

There is one Gold ETF in particular on the page that I linked to above, that rather than tracking the price of Gold, it tracks the Market Vectors Gold Miners Index. This is a Stock Index comprised of 30 mining companies. When Gold mining companies appear to be generally rising, These share may be a suitable option for investors who want to profit from the rise, since the ETF is designed to track the performance and replicate the direction of that particular Index, this is another way to gain exposure to the Gold Market for investors not willing to purchase gold at its current market prices. There is also an ETF which I cover that is designed to double the returns and backed by Gold. For example, If the price of Gold goes up by 10 percent, the investment returns of these shares will be about 20 percent. While there is a risk in larger losses, it comes with the incentive of the potential for larger gains! These type of securities are known as Leveraged ETFs and provide a larger risk/reward investment return. In other words, make sure you are as right as possible on the future direction of Gold prices, be clear on the risks, and this investment could pay off a magnified return as a result.

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