Investors Continue To Buy Gold With Ease, Thanks To ETFs

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October 9, 2009 1:10pm ETF BASIC NEWS NYSE:GLD

thank-you“This week gold prices broke out to new all-time highs above $1,000 and ounce.  Short-term momentum is picking up for all kinds of gold-related assets

as well. Is the trend sustainable?  Yes, at least for now.  Given the economic situation, more and more investors appear to be deciding to allocate a portfolio slice to precious metals.  The gold market is actually small relative to most financial asset classes.  It doesn’t take much activity to create a lot of movement,” Patrick Watson Writes From Invest With An Edge.

“Another factor is that investors can now buy gold much more conveniently than in the past, thanks to ETFs like SPDR Gold Trust (GLD), iShares COMEX Gold Trust (IAU), and ETFS Physical Swiss Gold Shares (SGOL).  A decade ago you would need to have a futures trading account to do this (unless you wanted to take possession of physical gold), and online trading was still a novelty.  Now all it takes is a few mouse clicks,”  Watson Writes.

“Unlike most commodities, gold is also a monetary asset.  Its movement is closely tied to opinions about the value of paper currencies.  The gold rally comes at the same time as U.S. dollar weakness.  Some would argue that gold is simply the other side of a dollar trade.  If one expects inflation and dollar depreciation, gold is a good place to hide. The risk of gold is that the same factors that allow it to move up so quickly mean it can move down just as fast.  The area around $1,000 acted as resistance for a long time.  Having been surpassed, this price zone should now serve as support.  If gold drops back below $1,000, much more downside is probably ahead.   If you’re on-board with gold, enjoy the ride – and keep your seat belt fastened,” Watson Writes.

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We have listed the profiles of some of the Gold ETF’s below:

The objective (IAU) of the trust is for the value of its shares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust’s expenses and liabilities. The trust is not actively managed. It receives gold deposited with it in exchange for the creation of baskets of iShares, sells gold as necessary to cover the trust’s liabilities, and delivers gold in exchange for baskets of iShares surrendered to it for redemption. The trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act.

The investment (GLD) seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.

ETFS Physical Swiss Gold Shares (SGOL) is designed to offer investors a simple, cost-efficient and secure way to access the precious metals market. SGOL is intended to provide investors with a return equivalent to movements in the gold spot price less fees.






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