ETF means exchange-traded fund, this is nothing but an investment fund which could be traded on stock exchange which is similar to stocks. ETF has the feature of being able to sell or buy of a trading day at its net asset value. People have to understand that ETFs can be handled by only authorized people, which would be big companies as the transactions involve huge amounts and huge lots. In this mode, there would not be any physical gold possession as profit instead money is involved. In general, by opting ETFs people are able to invest their money on the growth of an entire industry rather than a single product.
People who are interested in making money based on the growth of gold price try to buy gold biscuits or coins or various other forms. This puts them at greater risk in terms of security and safety. We all know the economic crisis faced now which has created a lot of havoc in terms of security. All we get to see is burglaries, thefts, murders, etc., for possession of valuables or cash. By investing in gold ETFs, people can be free of these kinds of risks which can engulf their lives.
The investment made in gold ETFs will be given as shares which enables people to do their trading in stock exchange and sell when they feel like. When there is growth in gold price, value of gold ETFs rises whereas when there is fall in gold price, value of gold ETFs soars. Even while investing in gold ETFs, people can invest in various times to even out their overall cost and finally make good benefit of it. These investments can be made and traded on the Internet which eases the task for busy people.
Gold ETFs can be bought by anyone even without huge amounts of investments. There is a transparency of pricing unlike the variations when purchased in jewelry stores. Depending on various markets, many jewelers have varied prices of gold coins. When gold coins are purchased from one jeweler and sold to another jeweler, they again reduce some amount as the store is not the same. These kinds of problems will not be there with gold ETFs.
Gold ETFs may not be useful for people interested in taking physical gold as here the transaction would be money. Before investing in gold ETFs, people have to find out all the costs involved in these transactions and ensure that there is no hidden cost involved which can cause trouble at a later stage. Having good knowledge is very important rather than investing impulsively.
There are other funds which do gold transactions other than ETFs but ETFs are of low cost than the other funds. They are helpful for tax efficiency. There is an option of short term gold ETFs which enables customers to make some profit in a short period. Sometimes, there might be a situation where there would be a correction of price within a short span of time, in that case people can use that short span to make some profit. To be able to do this, investors should have a keen-eye on the market.