Tuesday, June 7, 2011

Types of Gold ETFs in US

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In US, there are different types of Gold ETFs available for trading:

Gold ETFs investing in physical Gold: They are the ones which we have in most countries. As mentioned earlier, they are backed by physical Gold. Some of the Gold ETFs in this category: SPDR Gold Trust (GLD), iShares COMEX Gold Trust (IAU) etc.

Gold ETFs investing in Gold futures: They are the ones which invest in Gold bullion futures rather than directly investing in physical gold. Investors interested in high leverage trade in such ETFs as the leveraged Gold ETFs allow traders to gain multiples of their investment through leverage. As an example, if they invest $1000 and when the gold prices increase by 5% their returns may be multiple of 5%, lets assume 10% in this example, so $100. However, the losses will also be multipled by the same factor. So, usually high risk investors trade in these kinds of ETFs. One of the Gold ETF in this category: PowerShares DB Gold (DGL)

Short Gold ETFs: These ETFs are inverse in nature i.e. when gold prices move northwards, the price of gold ETF comes down. One of the Gold ETF in this category: Ultra Short Gold ProShares (GLL)

Gold Miner ETFs: These ETFs invest in the shares of gold mining companies. Since the profits of gold mining companies are related to price of gold they mostly track the performance of physical gold. But they may not reflect physical gold prices. Some of the Gold ETFs in this category: Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), PowerShares Global Gold & Prec Metals (PSAU) etc.

For more details refer to http://www.theinvestmentworld.com/
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