Gold ETF – Gold ETF Funds

The invention of the precious metals ETF has allowed more and more retail investors to enter the world of precious metals trading. Over time the growing popularity of precious metals exchange traded funds has created a whole new asset class. Today investors can have holdings, in gold, silver, platinum, and palladium, without the hassles of maintaining their own vault, and even have diversified exposure to gold miners. Let’s take a closer look at some ETFs that might be used to give your portfolio a glittery shine.

Gold ETFs -

Physically Backed by Gold – At the time of this writing there were three ETFs that allow investors to play physical gold. These are SPDR Gold Shares, the ETFS Physical Swiss Gold Shares, and the iShares COMEX Gold Trust.  These gold ETFs work by acquiring physical gold then issuing shares. Their gold is held at custodian banks in various locations.

Uses Futures Contracts – The PowerShares DB Gold Fund ETF is composed of futures contracts on gold and is intended to reflect the performance of gold.

Leveraged Gold ETFs – Two gold ETFs use various financial instruments, like future contracts and options contracts to deliver twice the daily price of gold, the ProShares Ultra Gold ETF, and twice the inverse of the daily price of gold,  the ProShares UltraShort Gold ETF. A word to the wise about these types of levered funds. If used in the way they were intended, as a daily trading vehicle for active traders, or as a VERY short term hold, these funds can be a good financial tool. But they are likely not appropriate for most retail investors. The fees and expenses, or decay you may hear it called, of these ETFs will not allow them to track the price of gold longer term. They aren’t designed to track the gold price longer term. And if you get on the wrong side of the trade with these funds you will lose money twice as fast.

Silver ETFs -

Physically Backed By Silver – The iShares Silver Trust Fund and the ETFS Physical Silver Shares ETF both store their silver in vaults in England and try to match the price of silver.

Uses Future Contracts -The PowerShares DB Silver Fund uses futures contracts to match the performance of silver.

Leveraged Silver ETFs – The ProShares Ultra Silver ETF seeks to correspond to twice the performance of silver on a daily basis. The ProShares UltraShort Silver ETF seeks daily investment results that correspond to twice the inverse of the performance of silver. Both of these funds use financial instruments like futures contracts and option contracts to get their results.

Platinum ETF & Palladium ETF -

Started in 2010 the company ETF Securities offers exposure to platinum and palladium through two ETFS respectively, the ETFS Physical Platinum Shares and the ETFS Physical Palladium Shares. These ETFs aim to match the price movements of the respective metals they are named for. These funds hold physical platinum and palladium metals in ingot form stored in vaults in London and Zurich.

The Gold Miners ETF -

The Market Vectors Gold Miners ETF was created in 2006 as the first United States gold stock ETF and attempts to match the performance of the NYSE Arca Gold Miners Index. The fund is made up of a mix of small, medium, and large gold mining stocks from all over the planet.

We hope you enjoyed this quick introduction to precious metals ETFs and encourage you to explore more of our site.