ETF’s are something that have come to light lately, but not always in a good way. Exchange traded funds are mutual funds that are based off commodities. Every niche of the market has them and they offer a way for the everyday investor to be able to trade something that they may not otherwise be privy to. Because of this, they have gained in popularity.
Some of the reports that have come out about ETF’s have not exactly been flattering. Now this does not mean that they are not some silver ETF’s that are worth looking into, it just means that you have to be careful when trading them. It is very important to track the value of the ETF against the market value of the commodity that it represents.
This concept is a little easier to understand in an example, so here we go. Let’s assume that silver is trading at $100/ounce. A silver ETF may be trading at $35/share and that value should be relative to the value of the silver. If the trading day ends with silver trading at $110/ounce, by all rights, the silver ETF should now be valued at $38.50/share. However, this is rarely the case.
ETF’s are very tricky, there are even times when a commodity goes up, and the ETF that it is supposed to be based on goes down. This is why it is so important to follow ETF’s before you ever invest in them to see which ones are trading true and which ones act more like regular stocks than the commodities that they represent.
ETF’s are generally available within any brokerage house, although this may not always be the case. If you are interested in trading these funds, get online and see what ETF’s are available through your broker and start tracking them. In a few weeks, you should have a general idea how they are performing against real silver and can begin to trade them.
If you’re not interested in investing in a silver ETF, don’t forget about the gold ETF — a great alternative. Or you can buy silver coins, buy gold coins, or look into purchasing gold bars.