August 24, 2011

Investing in Precious Metal ETFs

Precious Metal ETFs (Exchange Traded Funds) allow investors to gain exposure to the various Precious Metals on the Market. The most popular are Gold ETFs which investors use to profit from either a rise or decline in Gold Prices. The reason I mention that it is possible to profit from a falling Gold Price, is because there is a Gold ETF which is known as an "inverse" ETF. What this basically means is that the Shares of this security - which trades on the New York Stock Exchange - is specifically designed to rise in value when The Gold Spot Price is falling. There is a similar product for Silver that allows investors to profit from a decline in Silver Prices. Of course there are also Silver ETFs which Rise in Value as Silver Prices Rise. Both the Precious Metals, have ETFs associated with them that are considered "Ultra."

This is a reference to basically mean that the stated objective of these particular ETFs is to double the daily return of the metal being tracked. In other words, for the Gold Ultra ETF, when Gold prices rise 3 percent in a single day, the ETF shares will rise by about 6 percent - these type of ETFs are known as Leveraged ETFs. If Gold Prices fall however, the decline in the Value of the Ultra Shares, could fall, but by twice the percentage amount. Because of this, Investing in these Shares can be quite profitable, but come with the added risk of potentially larger losses.

Platinum and Palladium ETFs

The other two popular Precious Metals with ETFs designed to track their price and performance, are Platinum and Palladium. Both of these metals can seem expensive to the average investor if purchasing them on the Open Spot Market. The Platinum ETF however, tracks the Platinum Market Price and trades at about one tenth of the price. For example, if Platinum is trading on the Spot Market at $1,800 per troy ounce, than the ETF that tracks it, will be trading at about $180 per share. This makes it convenient and affordable for investors wanting to gain exposure to the Platinum market, without actually having to buy any of the metal itself! There is also an ETF for Palladium.

This ETF also tracks Palladium Prices but costs about one tenth the price of Palladium being sold on the open market. Today, the Price of Palladium is at $741 per troy ounce, and the ETF shares that track it, are trading at $74.25. To learn more about the ETFs mentioned above including viewing live charts for each one, follow any of the links above. To learn more about Precious Metal ETFs in General, visit the Website which covers Exchange Traded Funds in more detail. Discover the other Market Segments beyond just Precious Metals that ETFs have been created to track. From Market sectors, ETFs for Oil, to the various industry groups, the creation of ETFs now provide investors an opportunity to gain exposure to the different segments of the World Economy.

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