Gold Exchange-Traded Funds (ETFs) are an emerging trend among investors to learn about the fluctuation of the price of gold without possessing the physical metal. These ETFs follow the price of gold and may be traded as any other ETF.
Explore the best Gold ETFs
What are gold ETFs?
Gold ETFs comprise investment funds, which use gold as the underlying asset. They enable traders to sell or buy gold as a stock while still enjoying the fluctuations of the gold prices. Some of the best gold etf to invest in include:
- Physical gold backed ETFs: Physical gold is contained in these ETFs.
- Gold futures-based ETFs: The ETFs are investments in gold futures contracts.
- Gold mining ETFs: These ETFs are involved in companies that handle the mining of gold.
The ETFs specializing in gold provide an easier method of investing in gold without having to purchase, store, and insure real gold.
How gold ETFs work
Gold ETFs operate through the collection of funds of the investors and engaging in the purchase of gold or gold related assets. Gold investors purchase the shares of the ETF whereby the shares generally vary in price to the price of gold.
- Shares represent gold ownership: One share is equivalent to a size of gold.
- Liquidity: The ETF of gold may be bought and sold in the stock market.
- Tracking gold price: ETFs are utilized to monitor the price of gold or a gold index.
The cost of a gold ETF increases and decreases according to the cost of gold, where the investor can obtain exposure to the changes in the cost of gold.
Factors to consider when choosing a gold ETF
When selecting an applicable gold ETF, one has a number of variables to put into consideration. The following are the most crucial ones:
- Expense ratio: Find ETFs which charge low management fees.
- Liquidity: ETFs having high volume of trade are selected to facilitate easy selling and purchasing.
- Gold holdings: Make sure that the ETF has real gold or assets associated with gold.
- Tracking accuracy: The ETF must follow the price of gold very closely.
Key risks associated with gold ETFs
Although gold ETF is potentially a good investment it has its fair share of risks that an investor must take into consideration.
- Market volatility: The price of gold is volatile.
- Counterparty risk: With ETFs having gold futures, there is the risk of the institutions supporting such contracts.
- Management fees: The fees may be low, but accumulate excessively in the long term and consume profits.
- Liquidity risk: In a situation where the ETF is not actively-traded, it might become difficult to sell the shares at a fast rate.
The knowledge of these risks will allow the investors to better decide before investing in gold ETFs.
How to buy gold CFD on ETFs with vantage
It is simple to buy Gold CFDs (Contracts that Differentiate) on ETFs using Vantage. Follow these simple steps:
- Open a Vantage account: Open an account with Vantage.
- Deposit funds: Fund up your account with various types of payment.
- Choose the gold ETF: Select a gold ETF you wish to trade in the Vantage platform.
- Set your position: Buy (long position) or sell (short position) after an analysis of the market.
- Monitor and manage: Keep a check of the price changes of your gold ETF CDFs and modify your position when necessary.
Trade in gold CFDs with confidence through Vantage with highly advanced features to facilitate making the easier decision.
Summarizing
Gold ETFs offer a great opportunity to invest in gold without any complications of purchasing physical gold. Investors have the ability to make better investment decisions by knowing how the ETFs of gold work, the major issues to consider when selecting one, and the associated risks of the process. Vantage connects you with the flexibility and convenience that allows you to trade either physically gold backed ETFs or CFDs, and either way.
