Exchange traded funds (ETFs)
Using securities to buy gold
In recent years new products have entered the gold investment markets. An example is exchange-traded funds, or ETFs, that are meant to track the price of gold. However there are some limitations of using ETFs to invest in gold. You suffer from:
- Owning a share of a debt instrument or security
- Exposure to multiple financial institutions
- Costly management fees
- More limited security and control
ETFs now exist for many investments and asset classes, but as precious metal investors learn more about their limitations they tend to favour more tangible alternatives. Ultimately their complex financial nature, and vulnerability to counterparties, has reduced the appeal of gold ETFs. This trend has increased as investors are now able to buy gold online at the live gold price, more securely and efficiently using other products.