Investing in a Gold ETF

Are you looking to take advantage of the high priceto buy a small piece of the action. An exchange
of gold, but you don't want to actually taketraded fund isn't exactly like a mutual fund, but the
possession of gold bullion or coins? If so a gold ETFbenefit to investors is similar, and the costs are
(exchange traded fund) might be what you're lookinglower. One advantage of an ETF over a mutual fund
for. Here's how it works. A trading company sets upis that they are equities, ordinary shares of stock
a trust that buys gold bullion. Then they carve upthat trade on the exchanges. So you can login right
ownership of their stash into small slices that are soldnow and buy shares of your favorite gold ETF if the
as shares of stock on a major exchange like themarkets are open. Or you can unload them just as
NYSE.easily as selling any other share of stock.
When you buy a share, you're buying into ownershipThere are several funds available on the market to
in the trust. Since the ownership of the gold is carvedsuit the preferences of different investors. Here are
up into many small slices, it allows investors to get ina few things to look for when choosing a fund to
on a large chunk of gold for a small amount ofinvest in. First of all, check into how much gold bullion
money.the trust behind the fund owns. Some are much
Think of it like a mutual fund. A mutual fund is a poollarger than others. Next, see how the fund is
of money used to invest in a wide diversity ofindexed. Precious metals trade on many markets, and
stocks. For example, if a mutual fund has the Sdifferent funds may be indexed to different markets.
& P 500 as its benchmark, it will use the pool ofPricing structures may also differ, typically they are
money to buy shares of stock in the S & P 500priced at 1/10th the price for a single ounce of gold,
on behalf of the investors in the fund. This providesbut lower prices are also available. Since different
small investors with an opportunity they would notfunds are structured a little bit differently, returns will
have otherwise. For a few thousand dollars youalso vary, so study the fund performance.
couldn't buy shares in the 500 companies of the SAnother option for getting into precious metals is to
& P 500. But you can get in on a mutual fundinvest in mining companies. There are several ETFs
that does so, and reap the rewards of the S &that track companies that mine gold, silver, and other
P 500.precious metals. The performance of these funds will
A gold ETF is a trust that owns millions of ounces ofdiffer from those funds based on holding the actual
gold. Most of us couldn't own millions of ounces ofbullion.
gold, but with the exchange traded fund, we're able