“Risk comes from not knowing what you’re doing.” – Warren Buffet, Chief investor.
Gold ETFs are intermediates between physical gold and the paper market. They don’t have the great advantages of stocks, and neither have their tremendous disadvantages. In the stock market, they behave as the commodity. While in the commodity market, they behave like stocks, and traded like stocks. Gold ETFs are the best hybrid between both.
With the news spreading of gold ETF outflowing cash from the market, SPDR Gold Trust recorded lowest prices of the year. These year-low prices open new opportunities for fresh capital to enter the market.
The price of gold ETFs are heavily affected by gold prices. They are designed to track the price of gold. Their aim is to grant easier accessibility to the commodity. It is the perfect investment for those who are interested in cash, not the physical gold. In other words, it is the answer for those who interested in converting their liquid money into gold and taking back as cash with no interest in the physical gold.
If you are a new investor interested in entering the stock market and needs some hedging, rather than entering the commodity market directly, buy gold ETF now. It is the same gold, a long term hedging asset. And with the recent gap between the supply and demand on physical gold, an opportunity awaits, especially with the recent slump in gold price.
The first step is to study this market. Then decide whether to go and hedge your earnings with gold ETFs, or to think for an alternative hedge asset. The way I see it, it’s the best possible asset in the market for now.
Ask yourself, do you actually want to own gold? or share it? If it the latter, go for gold ETFs. Remember to look for ETFs backed with physical gold.