Gold ETF

New Shares ETFs and Global Cosmopolitanism

Carl Delfeld gives independent ETF advice for the serious global Investor

Gold ETFs constitute a simple and cost-effective means of making an investment similar to an investment in gold.

This alternative allows a level of participation in the gold market through the securities market. Because the expenses involved in an investment in physical gold are dispersed among all holders of the ETF, such an investment may represent a cost-efficient substitute to investments in gold for investors not otherwise in a position to participate directly in the physical gold market.

Gold Trust ETF

Traders who want to invest in gold via an Exchange Traded Fund may look to streetTRACKS Gold Trust (Symbol: GLD) as a simple, easy way to obtain exposure to the gold market. GLD, which trades an average of 5 million shares per day, provides the investor with a direct and liquid opportunity to participate in the movement of spot gold. The product can be traded in any equity account, including an IRA. Each share of GLD is equal to 1/10th of the price of an ounce of gold and is highly correlated with underlying movements in spot. In short, GLD provides an inexpensive and simple way for retail traders to access the gold market.

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Gold Funds Compare to other methods of gold investing

may be able to purchase. Furthermore, the ETF only trades during US market hours, leaving traders vulnerable to large gap openings, in contrast to the electronic platforms of currency exchanges which provide traders with ample liquidity 24 hours per day.

Additionally, unlike the currency markets where traders may be able to collect daily interest on their balances, ETF investors are subject to interest rate charges on their margin accounts, which at current rates amount to a cost of 9% per annum.

 Gold Mining ETF

An alternative way to capture a share of the gold market is through purchasing a basket of gold mining companies. GDX seeks to replicate the

performance of the AMEX Gold Miners index, GDM. Each stock is held in approximately the same proportion as its weighting in the Index. The fund provides broad exposure to the gold-mining industry and trades with the same ease and liquidity of a common stock.

Though this exposes the investor to less volatility than investing in ETFs that purchase physical gold, there are still risks associated with investing in gold-mining stocks, including sudden and unpredictable drops in value. Investment in the fund is also subject to market fluctuations, economic and political developments, changes in interest rates and perceived trends in stock prices. Finally the ETF is not immune to exceptionally volatile market conditions which will cause trading on AMEX to be halted.

However, in order to establish a position in the GLD ETF, an investor is required to put up at least 50% of capital, limiting the number of shares a retail trader