WHAT IS A GOLD AND SILVER ETFS?

A case for owning Physical Precious Metals VS Gold and Silver ETF's

What is the Purpose of Gold ETF?


The strategy behind the gold ETF is to track and reflect the price of gold

While the assets in the fund are backed by the commodity, The intent is not for an investor to own gold.
A gold ETF gives an investor to gain exposure to the performance of gold

Gold tends to rise when the dollar is weak, so if your investment portfolio has risk to the dollar’s downside, purchasing a gold ETF may help you hedge that exposure. Selling a gold ETF can help if your exposure is to the upside.

A gold ETF is a commodity exchange traded fund that can be used to hedge gold commodity risk or gain exposure to gold itself. If an investor has risk when the price of gold rises, owning a gold ETF can help reduce risk on that position. Or if after ample research an investor decides to short gold, trading an inverse gold ETF may be a quick way to put on that position.

And while gold is a commodity ETF, it can act as an industry ETF as well.

For example, if an investor wants to gain exposure to the gold mining industry, owning a gold ETF may be an investment strategy that can fit his or her portfolio. While there are individual gold-mining stocks like Barrick Gold (ABX) and precious metals indexes like the XAU, a gold ETF may be a simpler or more diverse way to make an investment in the gold mining industry.

There are a lot of benefits that come with ETFs and therefore sometimes they are a solid tool to have in one’s investment arsenal.

Gold ETFs can also be applied as a hedge for regional risk or to gain foreign exposure. If a certain country is solely dependent on gold as its main source of income, and investor with risk in that country can short a gold ETF as protection. So if gold drops, the short ETF position will help lessen the loss.

What are the Advantages of a Gold ETF?


  • Gold tends to rise when the dollar is weak, so if your investment portfolio has risk to the dollar’s downside, purchasing a gold ETF may help you hedge that exposure. Selling a gold ETF can help if your exposure is to the upside.
  • A gold ETF is a commodity exchange traded fund that can be used to hedge gold commodity risk or gain exposure to gold itself. If an investor has risk when the price of gold rises, owning a gold ETF can help reduce risk on that position. Or if after ample research an investor decides to short gold, trading an inverse gold ETF may be a quick way to put on that position.
  • And while gold is a commodity ETF, it can act as an industry ETF as well.
    For example, if an investor wants to gain exposure to the gold mining industry, owning a gold ETF may be an investment strategy that can fit his or her portfolio. While there are individual gold-mining stocks like Barrick Gold (ABX) and precious metals indexes like the XAU, a gold ETF may be a simpler or more diverse way to make an investment in the
    gold mining industry.
  • There are a lot of benefits that come with ETFs and therefore sometimes they are a solid tool to have in one’s investment arsenal.
  • Gold ETFs can also be applied as a hedge for regional risk or to gain foreign exposure. If a certain country is solely dependent on gold as its main source of income, and investor with risk in that country can short a gold ETF as protection. So if gold drops, the short ETF position will help lessen the loss.

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