Investors in gold and gold exchange-traded funds (ETFs) haven't had much to brag about over the past year or so. As gold prices rise, investors may be interested in gold-traded funds instead of buying ingots themselves. Gold ETFs are exchange-traded funds that expose investors to gold without having to directly buy, store and resell the precious metal. This makes this ETF an ideal option for investors looking for the cheapest way to invest in gold without owning it directly.
This ETF invests directly in gold stored in a London vault and supervised by the ICBC Standard Bank, and its price should follow the spot price of the precious metal relatively closely. The SPDR has long dominated the gold trading market, but the iShares Gold Trust gradually lost the assets of the buying and holding crowd. This list includes the most popular gold ETFs on the market (funds you can usually read about in almost any daily commodity summary), as well as some that don't receive as good coverage in the financial media, but that could be better investments than their high-asset siblings. This fund invests in small-cap foreign mining companies that generate at least half of their revenues from gold and silver.
Some gold ETFs directly track the price of gold, while others invest in companies in the gold mining industry. This iShares gold ETF is not as liquid as the SPDR Gold Shares and its supply and demand differentials are not as tight, making it not ideal for short-term traders. Gold miners can use the cash flow they earn from gold production to expand their production, make dividend payments and buy back shares. The advantage of owning a gold mining company ETF instead of a gold price ETF is that it can generate higher returns.
Some people turn to investing in gold to diversify their portfolios, and aggressive investors may try to profit from short-term swing trading.