Tips for Investing in Gold ETF

by ETF Base on March 21, 2016

Commodity ETFs, particularly gold ETFs, have allowed people to invest in a physical entity that they would rather not own. Investing in the precious metal can be quite difficult if you lack the resources for storage, transportation, or security. Gold ETFs are insurance against such concerns.

These ETFs are also currently increasing in popularity. 2016 has seen a surge in investors and nations choosing to buy gold. This is because the precious metal has often been a commodity that people turn to in times of economic downturn. The weakened state of the 2016 economy has caused many people to place their investments with the yellow metal. People are also choosing gold as a hedge against inflation that may affect a variety of currencies, particularly the U.S. dollar. A steady decline in the price of oil has also jumpstarted people investing in gold ETFs. The two gold ETFs that should be of interest in 2016 are:

iShares Gold Trust ETF

The iShares Gold Trust ETF (IAU) is a good choice for the average investor who does not wish to purchase a large volume of the precious metal. Its advantage lies in its considerable net assets of 5.54 billion U.S dollars. It is also an extremely efficiently run ETF. This has made it dependable in the commodity ETF circles. As it is not one of the largest ETFs however, IAU still manages to provide its investors with competitive rates. It charges investors 25 basis, which is around 15 basis points cheaper than larger ETFs.

IAU uses a handle of 1/100th of an ounce of gold. The ETF follows the spot price of gold by buying gold bars across the globe. These bars are then placed in vaults in the countries that they were purchased in. IAU is currently performing quite well. The demand for gold has been so high that new shares of IAU were briefly withheld for the month of March.

DB Gold Double Short ETN

The DB Gold Double Short (DZZ) is considered more of an exchange traded note than an ETF. It has, however, been performing extremely well in the past. It currently holds net assets of 62.43 million U.S dollars and has a year to date performance of 15.21 per cent. Its issuer is Deutsche Bank.

DZZ is not for investors who are planning a long term investment. It is because of this that the annual performance is not an effective gage of the day-to-day performances of the commodity of the ETN. Any risk of DZZ is offset by its issuer, Deutsche Bank. The standing and excellence of the bank reduces the jeopardy that may be faced by the ETN.

ETFs are undoubtedly the best way to invest in gold. It removes much of the hassle that otherwise shrouds this stable investment. The global market, as a whole, is increasing its ventures in gold. It seems to be as good a time as any to similarly, back the precious metal. The current situation of the economy requires investors to finance an endeavor that is a little more consistent.



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