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Gold ETF Investing


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It was back in 2004 when the exchange-traded fund or ETF was first launched. Its use of course is to track the value of gold on the U.S. markets. Versus buying real gold or even gold certificates, the ETF was considered to be a very inexpensive option for anyone who is just starting out with investments. They have since become a widely accepted alternative to the traditional certificates that were once offered in the past as well as used in place of buying and selling gold in its physical form.

There are many different ETFs that you can choose from today. One of the most popular is that of the SPDR Gold Trust which currently holds more then 659 tons of gold in its reserves. In purchasing the ETF, what you are in fact doing is purchasing a tradable share of stock that is very liquid. Each one of these shares represents only a tenth of an ounce which makes it fairly affordable too, even without the benefits of a cash advance.

The biggest downfall for the small time investor though is the fact that there are a number of things that can change the profit potential of trading in ETFs. The first of these are the fees associated with each trade. There are also the tax liabilities and the various futures that the ETF may also invest in. The later of these drawbacks stem from the fact that an ETF does not have to be based 100% on actual reserves, but can also make use of futures and other forms of investments which may increase the risk associated with their investment.

Because of the fact that one does not actually own any of the gold, they cannot claim the tax advantage as a collectible when filing for their income taxes. This means that you will have to pay more in taxes then if you made the choice to invest in real gold or gold certificates.

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