Comments on: is buying gold ETF shares as safe as buying gold coins?

By: Aron R

Aron R — Fri, 06 Feb 2009 01:40:47 +0000

Gold ETFs basically are a way that you can buy or sell small pieces of huge piles of gold, stored in vaults maintained by a custodian, with the same convenience as buying and selling stocks on an exchange. So far to date, the price of these ETFs, like GLD and IAU, have very closely tracked the spot price of gold.

These are relatively new, and there are still some questions about how they might behave under extreme stress, like Weimar Germany-like hyperinflation, for instance. There are also a few people who, frankly, don’t trust the custodians of the ETFs. They may just be paranoid, but this is noted here for completeness.

Coins in a home safe or in a bank safe deposit box are also subject to loss.

If you are holding physical gold, have enough money to spread your investments around, and might be concerned about any one of them, the general rule is to diversify, with:

- A few coins at home.
- A few coins in a safe deposit box.
- Gold held in ETFs, in the US or overseas.
- Gold held in various custodial accounts (other than ETFs) overseas.

Examples of the latter include the Central Fund of Canada (a closed-end fund that also trades like a stock, although unlike ETFs it may at times sell for a significant discount to or premium over the value of its underlying gold and silver bullion), Perth Mint certificates, and GoldMoney.com.

For more on investing in gold, see:

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(Answer from ‘Aron R’ in ‘Other Answers’)

By: James H

James H — Wed, 04 Feb 2009 11:37:28 +0000

By this time, buying gold shares is the very good time. It`s bounce up to the history highest record. But you must remember one thing, anything that goes up fast might also dramatically falls.
Wish you good luck!

By: thewonderbreadboy

thewonderbreadboy — Mon, 02 Feb 2009 16:11:35 +0000

Either way seems very safe to me. If you’re paranoid then just bring a body guard with you. Or maybe try wearing a fake mustache and some thick glasses to disguise your identity. Or maybe you could just go to a shrink. I’m not sure what that has to do with anything, but I think it would be a good idea nonetheless…

By: Bob Keith

Bob Keith — Fri, 30 Jan 2009 18:26:05 +0000

Exchange Traded Fund (ETF) is an open-ended fund that can be traded like a share on a stock exchange. It is also an index-tracking collective investment fund that aims to track the performance of the underlying index by holding a portfolio of the constituent stocks of that index.

ETFs invest in a portfolio of securities, which may include international shares, fixed income securities, listed property trusts, or a combination of asset classes. Prices therefore are determined by the value of the assets the ETF holds.

As investors move in and out of ETFs, the fund issues new units or cancels them accordingly. This allows them to maintain on-market prices that correlate closely with the value of the underlying portfolio.