Why I invest in a gold ETF
Many investors have a disdain for investing in a gold ETF. Not me. I regard investing in a gold ETF as a very solid investment. You want proof of this solidity? Wherein do all central bankers invest? ……..Gold of course.
Gold as basic material for industrial uses
Gold is a precious metal with some very distinct traits. For instance it is ideally suited to make high-grade circuit switches in electronics. There are more industrial applications but to be honest, the demand from industry is not that large compared to other markets.
Using gold in jewelry
Lots of jewelry use gold in their creations. The demand form this sector is substantial, not only in the western world. India and China are major markets for gold jewelry. Of course market conditions are important for this jewelry business. A bad economy may cause people to sell their jewelry which may push prices down a bit.
A gold ETF as insurance against bad times
The fear (just or unjust) of collapsing financial markets, hyperinflation, systemic crashes or war may be a major reason for investors to seek the security of gold. Really big disasters are not necessary but every time fear comes creeping in the price of a gold ETF goes up.
Once every few years speculators make their mark through gold investments. For years gold may sail smooth waters keeping the price in narrow boundaries or making the price go down and then all of a sudden the gold price makes an outbreak and prices skyrocket.
Then a fly-wheel effect is created when more and more investors turn to gold as a sound investment. History tells us that such periods may last for a couple of years and the price of gold may double or quadruple during these times.
ETFS Physical Gold ETF
With this ETF Securities gold ETF you can invest in physical gold. So this gold ETF is not tracking the price of gold through swaps but it invests your invested money directly in pure physical gold. The gold from this gold ETF will be held in a vault, so it is a very tangible ETF.
In my opinion it is a big advantage that this gold ETF is holding the physical gold especially as gold is often used as a hedge against the functioning of the financial system. Investing in gold has some different angles which may have a very positive impact in times.
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ETFS Physical Gold ETF info:
ETF provider: ETF Securities
Exchange: Euronext Amsterdam
This ETFS Physical Gold ETF has quotations on different exchanges and is known under several ticker symbols. As long as the ISIN number is identical you are dealing with the same ETF.