When exploring the world of gold investment it is important to know about a thing called a Gold ETF, or a gold exchange traded fund. These traded funds are no more than representations of gold, reflecting the current gold price. Much like stocks and bonds, a Gold ETF is an intangible contract of funds that are only the cash equivalent of gold. For many investors this type of gold investing is preferred to selling jewelry.
But investors who are just setting foot into the gold market may wonder whether they can benefit more from exchange traded funds or from actual gold pieces. Are Gold ETFs the way to go, or should investors stick to the real deal?
Physical Gold
On one hand, many gold investors take pleasure in dealing with
physical gold in the form of coins or bullion, as well as selling jewelry to
gold buyers. For them, the more rare and historical the coin, the more eclectic the jewelry, the more interested they are. Besides, selling jewelry online gives investors more control over their investments than simply wiring funds to and from an account. Selling gold coins to pawn brokers and gold buyers also gives tangible confirmation of the sale instead of moving abstract figures.
Advantage: Buying gold helps hedge large wide-scale monetary crises such as fallen stocks. Or, if ever there was a future wide-scale monetary crisis, it’s likely the banks that are controlling the funds could become
bankrupt or insolvent.
Disadvantage: Physically owning gold pieces can be a burden for
investors who are just looking for a way to profit from price variations in the
gold market. Investing in rare coins is a long-term endeavor whereas Gold ETFs
are traded frequently.
On the other hand, each Gold ETF typically represents one-tenth
of an ounce of gold bullion. So if the price of gold goes up 10% the ETF shares
increase at the same proportion. Transversely, if the price of gold goes down
10% so do the ETF shares.
Advantage: A Gold ETF is much like a stock that can be traded on a
major stock exchange, making it easier to buy and sell. The fees are also very
low, which isn’t always the case for physical gold pieces.
Disadvantage: In the event of a banking institution’s bankruptcy
Gold ETFs are likely liquidated, which means that investors are left with no
shares, no physical gold, and little cash for their investment endeavors.
As far as gold investment goes, there are two sides of the
coin. Entrepreneurs and business investors looking to make money off gold
transactions are less likely to see value in owning physical gold pieces. Yet,
there is still a certain amount of allure involved with physical gold in the
form of bullion and coins. In fact, selling jewelry online gives investors the
benefit of owning gold, but still getting the most from their investment
without having to take it to a pawn shop or gold buyer. Another point in favor
or owning gold jewelry is the amount of additional investors attracted to the
craftsmanship of the piece, and not just the gold value.
