When making the decision to invest in silver or gold, many people do not have the storage space to house silver or gold coins. A way to invest in gold or silver without actually buying silver or gold is to invest in a precious metals ETF. There are many ETFs to choose from and each has different features.
A precious metals ETF is a fund traded on various stock exchanges. The investor owns a paper certificate, not an actual supply of gold or silver. This method of investing presents some unique benefits, including the fact that many of these funds serve as a hedge against inflation. This is because they are comprised of foreign investments that rise in value when the U.S. dollar declines.
Investing in a precious metals ETF eliminates the need for the investor to worry about the authenticity or storage issues required when owning physical gold or silver, such as gold coins and silver jewelry. The individual invests in either supplies of silver or gold or an assortment of companies that deal in the mining and refinement these precious metals. The fund purchases the actual metal or invests in the relevant mining companies and issues shares of stock whose value grows as the price of the metal increases.
Investments in commodity ETFs more than doubled in the year 2009, due to both the wider availability of these investment vehicles and the excessive media coverage regarding the weakened U.S. dollar. In 2009, the SPDR Gold Trust ETF (GLD) rose by 24 percent. Other precious metals ETFs that have historically done well when the dollar was weak are iShares Silver Trust ETF (SLV), Market Vectors Gold Miners ETF (GDX), and Market Vectors Junior Gold Miners ETF (GDXJ).
Investors should conduct some research into the performance of these, always keeping in mind that past performance is not a guarantee of future success. Those who make the decision to invest in a precious metals ETF should consult with an investment broker in order to get sound financial advice. The decision to invest in gold or silver can be wise even in a poor economy as long as the proper research is done.
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