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Question

What are Gold ETFs?

December 01, 2011


One Answer

  1. Trustable Gold Posted 

    Gold ETFs (gold exchange-traded funds) are investment funds that are traded on stock exchanges and invest in gold.

    Only some gold ETFs are fully invested in physical gold. Other ETFs invest not only in physical gold but also in gold related instruments, which may lead to quite different results from owning the commodity directly.

    Investors in gold ETFs own an interest in the pool of assets held by the fund. Thus, investors in gold ETFs do not own the physical gold which is held and owned by the fund.

    Gold ETF’s should be distinguished from Gold ETCs (exchange-traded commodities). ETCs are investment vehicles that track the performance of an underlying commodity index based on a single commodity. Gold ETCs are asset backed bonds, some of which are collateralised by physical gold. Investors in gold ETCs are exposed to a counterparty risk.


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