When you are looking into dipping your hand into the skill of buying and selling on Wall Street, it is vital that you understand what you are doing is a skill, and a matter of luck in its own sense. But many don’t want to trust their hard earned money, and retirement funds to chance, and luck when trying to buy gold ETFs.
At this day in age, luck doenst seem to visit too many homes, or families. With the current economic standing gold seems to be one consistent ROCK that seems to hold value, and the faith of many stock traders. So when you decide to spend your money, look at what gold prices may have on your time.
Keep reading to learn about the gold ETF:
What are gold exchange traded funds?
Gold ETF’s or also known as commodity exchange traded funds are a considered the simpler of the options when wanting to invest in gold—and its high-performing effects on the market—the main difference is you do not own any; you only own a percentage of what the stock represents.
There are several different types of stocks, and bonds; a few different ones consist of futures and derivative contracts monitor and watch the price of the gold and other gold-related items, while others consist of gold assets, which can be found in a trust. Unique ones were created as gold ETFs that were made to monitor companies that are in the gold industry.
While gold seems to keep on climbing, keeping the interest of millions, investors are fighting to get to ETFs like Market Vectors Gold Miners(GDX Quote) and SPDR Gold Shares(GLD Quote). Investors have been known to add gold ETF funds to different portfolios to add diversity, and from pure paranoia due to either inflammation or the exact opposite. Before you jump into investing in Gold ETF it would be wise to talk to an investment broker, test the waters and have a good idea of an investment time frame.
Here we have taken a few simple steps, broken them down into four groups that we feel are the most important when it comes to investing in gold commodity exchange traded funds. All the technical steps mixed with some good ole common sense. We hope that these steps help answer your questions.
Step 1. Know. Understanding what it is you are putting your money towards is the first and foremost important thing that needs to be done before you invest. You have to understand you do not own the bar, you own the asset that represents the bar of gold.
Step 2. GLD. The most common gold ETF is GLD. People use these to wad off the risk when it comes to their portfolio. If you talk to an investment broker they would agree that this is a safe bet for your portfolio if you are new this, and aren’t real confident with your market knowledge.
Step 3. Diversify. Buy into more than one ETF — this will help alleviate any extra risk that may be lurking around. When you do this, you are sreading your money out and not ‘betting’ on one business.
Step 4. Action. Now that you are educated in understanding what a gold ETF is, how it functions, and what the risks are, as well as the advantages its time to take action. If you have an investment broker you can call them, and they can make the investment for you, or you can pick up the phone, purchase your gold ETF on the phone, or log in and do the same over the internet.
What are Some Strategies for Trading Gold ETFs?
Basically, as implemented above, gold is a safe bet. It will be a good thing to start off with to help build up your trading portfolio. As am added advantage of using gold ETFs as a potential hedge to downside risk for both foreign or industry investments.
If you get into a bind and see that you own too many gold ETF’s sell a few. Downsize your hedge. Do you have foreign investments in a country that names gold as its major source of income? This would be another opportunity to sell a gold ETF, in order to protect your downside.
Means are also available to preserve and protect your gold ETF investments. If you don’t want to close your ETF positions, but want some short-term protection in today’s volatile market, trading ETF options may be the ideal way to go.
A few other things that you can do, if you are not ready to jump in watch the market, write down what you want to do, and keep track of that accordingly, see what happens, than when your comfortable with the stability of gold, and a commodity exchange traded fund, than you know its time to take that leap into the world of trading when you buy and sell gold.
Here are a few more tips of the trade:
- Learn the terminology, and what you cna do with your gold stocks once you have bought them. Know what a limit order is, or OCO- one cancels other (order) these are important terms that are used in the trading industry.
- Understand your order is not done until you have confirmed it with your broker.
- Stay mentally grounded, do not get emotionally involved. You will get in over your head.
- Re-evaluate your financial situation often
- Demand that your representative be your guide, continuous and your disciplinarian, let them know UPFRONt what your expectations are, and what your LIMIT is, and be sure they are honest, trustworthy and ‘man’ enough to tell you ” no” when that time comes.
- Keep good records, print everything weekly, or monthly and ABSOLUTELY every December
Last Thoughts on Gold ETFs
In short, gold ETFs are worth their weight in gold. And can be a great way to start dipping into the stock market without losing your head. Gold is on the rise everyday. It is important to weigh all of your options, and take grandma’s advice, don’t put all of your eggs in one basket, if you have enough to invest that you can invest in more than gold ETF. Check out gold exchange traded funds today.