As fear of a fragile economic recovery and the possibility of a double dip recession take front row, the appeal for gold and its exchange traded funds (ETFs) remains shinny.
Recently, ETF Securities USA LLC (ETFS) announced a record day’s trading volume in ETFS Physical Swiss Gold Shares (SGOL) of 1.74m shares or approx $208m in dollar value traded 1.74m shares represents the largest one day volume since SGOL’s inception on September 9th, 2009. Additionally, SGOL’s assets under management exceeded $695M as of August 13th, 2010.
The objective of the ETFS Gold Trust’s (SGOL) shares is to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Trust is open ended and is designed for investors who want a cost-effective and convenient way to invest in gold as well as diversify their precious metal holdings. SGOL has an expense ratio of 0.39% per annum.
ETFS Gold Trust (SGOL) is backed by allocated gold bullion and stored in secure vaults in Switzerland by the Custodian, JPMorgan Chase Bank (JPM), one of the world’s leading Custodians for precious metals. The Shares represent an interest in physical gold owned by the Trust. The physical gold of the Trust is subject to minimal counterparty or credit risks, which contrasts with other offerings that achieve bullion exposure through the use of derivatives.
Some other ways to play gold include:
- SPDR Gold Shares (GLD), which is the most heavily traded gold ETF
- iShares COMEX Gold Trust (IAU), which is backed by physical gold
- PowerShares DB Gold Fund (DGL), which utilizes futures contracts to gain exposure to gold
- Market Vectors Gold Miners ETF (GDX), which is an equity play on gold and holds large-cap stocks which are primarily involved in mining of gold, silver and other precious metals
- Market Vectors Junior Gold Miners ETF (GDXJ), which focuses on small and mid-cap companies which are primarily involved in mining of gold and silver.
Disclsoure: Long DGL