Gold ETF

Are you a gold bug? If not then this is the best time to become one. You see, the price of gold is hovering around $1,000 per ounce after breaching the historic barrier of $ 1,200 per ounce a few months back. But soon it may break barriers such as $2,000 per ounce or $3,000 per ounce. Yes, it’s true, many experts expect this to happen in the coming months and years of this decade.

This long-term trend in the gold market is being fueled by geopolitical uncertainty, weakness in the U.S. dollar, supply constraints, increasing demand for gold by investors and hedgers, and a host of other factors! What this means is that the gold market is in a long-term bull market because of several factors.

Generally, in times of political and financial uncertainty, investors tend to seek refuge in safe haven assets like gold. Throughout human history, gold is considered the ultimate investment. Even today, in modern times when we deal with paper currencies, gold is the ultimate currency. It is something that is still considered the ultimate store of wealth. The last bull market in gold had been going on for ten years. It began in 1970 and finished in 1980. This is the best time to invest in gold as a long term investor.

But how to invest in gold? About five to ten years ago, it was difficult to invest directly in gold. Either you had to buy gold bullion or gold futures trading. But this changed completely with the introduction of exchange traded funds (ETFs).

Now a Gold ETF is one of the easiest ways to invest in gold. These ETFs trade like a stock. You can go long or short as you want. These may be traded on all major exchanges in the world like New York, London, Frankfurt, Tokyo, Hong Kong, Sydney, Dubai and others.

There is a subtle difference in the various gold ETFs that you should know. Some invest directly in gold bullion and physically possess this precious metal. These ETFs tend to follow the spot price of gold with great accuracy.

On the other hand, some gold ETFs trade in gold futures. Futures prices follow the spot price of the product that they build on, but sometimes they depart because of backwardation and Contango in the futures market. Too technical? Do not worry! I only meant to point out that when you invest in these vehicles, do your research and figure out what ETF best suits your investment needs!

When you invest in these ETFs, you will be charged a small commission fee, and a small annual fee. These fees are not much compared to investing in mutual funds – another way to invest in these products.