How to Choose a Gold or Silver ETF
Rising inflation, increasing government debt and uncertainty about stocks, bonds and real estate have driven many investors to consider precious metals. One popular way to invest in gold and silver is through exchange-traded funds (ETFs). This brief guide will show you what you should take into consideration when choosing a gold or silver ETF.
Which metal is right for you?
ETFs exist for gold, silver, and platinum. Determine which metal(s) you want to invest in so you can narrow down your options. Gold ETFs are the most popular, followed by silver and then platinum. Gold is often considered the “safest” of the three metals, while platinum is largely speculative and silver falls somewhere in the middle.
How much can you invest?
Gold ETF shares usually represent either 1/10 or 1/100 of one ounce of physical gold. If you can afford to buy at least 1/10 of an ounce of gold you might be able to save a little money compared to ETF shares that represent 1/100 of an ounce of gold. Shares that equal approximately 1/10 of an ounce of gold include SPDR Gold Trust and ETFS Physical Swiss Gold Shares. Examples of ETFs that issue shares that represent 1/100 of one ounce of gold include iShares Gold Trust and Van Eck Merk Gold Trust. Most silver ETFs are issued in one-ounce increments.
What kind of research is needed?
Find out how long the company has traded publicly, and find out how much gold or silver they claim to have on hand.
Trustworthy ETF companies should be transparent and release their audit results on a regular basis. If possible, find out how much the company spends on employees’ salaries and office space. Reputable ETF companies have extremely low overhead in order to keep the focus on the precious metals.
How to Make the Initial Investment
Buying shares of a gold or silver ETF is as easy as buying any other stock. You can use a broker from a company like Edward Jones, or you can use an online trading platform such as E-Trade. Either way, you will receive confirmation of the transaction and you can then track the fluctuation in value of your ETF shares online or in most newspapers.
Choosing a gold or silver ETF doesn’t have to be a daunting or intimidating task. Stay savvy by doing your homework and taking your time instead of rushing the investment. After all, there is no benefit to making the wrong decision faster. By doing your due diligence and having a clear idea of your own investing needs, goals and desires, you will give yourself a much greater chance of success with precious metal ETF investing.