Gold ETF Funds

The Gold ETF fund will purchase a large amount of gold, maintaining the physical metal in storage. They will then issue shares in baskets ETFs use derivative contracts to track the price of gold. There is an annual administration fee of 0.5% per annum. Thus every year the amount of gold backing an ETF share shrinks by that amount. This makes them unattractive as a medium or long term way to invest in gold. Investors do not own or have title to the underlying bullion asset.

Some of the more popular include the SPDR Gold Trust (GLD), Market Vectors Gold Miners ETF (GDX), and ProShares Ultra Gold (UGL).

SPDR Gold Trust (GLD) tracks the gold price index. They issue the shares at one tenth of the price of an ounce of gold.

ProShares Ultra Gold (UGL) is for the risk-oriented investor, designed to double the investment return, if the price of gold increases, and vice versa.

Market Vectors Gold Miners fund (GDX) attempts to mirror the NYSE Arca Gold Miners Index as closely as possible. This type of Gold ETF is made of up gold company stocks, thus it tracks the gold stock index, not the gold price index.

Investing in an ETF, you own units, fractions of bullion bars, not distinctly allocated product In the case of gold, physical delivery is limited exclusively to the format of 12.5 kilo at a charge (up to 5%).

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