For the current GLD ETF price, view this chart.
If you’re thinking that buying into the precious metals stock market can get you closer to a quick buck, think again. Right now, the fear-ridden, equity selling market may tell you to do just that, but investing in gold and other precious metals markets is more than just a band-aid on your portfolio.
Several gold ETFs have made their way to public listings in stock exchanges around the world, the leading ETF being SPDR GLD, and one of the most expensive too ($125.13, as of July 18, 2014), as compared to its contemporaries ranging from $6- $84. GLD ETF has made its way to the top since its original listing in 2004, being the largest fund to be physically backed by gold holdings. This is an example of a trust with a physically backed gold exchange, and not mining funds which have different movements altogether.
The advantages of investing in gold ETFs are its high accessibility, liquidity, cost-effectiveness, and transparency. This is because GLD stocks are readily available in the NYSE for example, where there is continuous exchange in the market. However, understanding the nature of gold and gold ETFs before investing is tantamount to watching video tapes of the opponent, knowing its strengths and weaknesses and playing to win.
Many people may wonder if buying into gold ETFs will simply mean being able to redeem physical gold bars. SPDR GLD, for example, has gold bullion holdings which are in the form of London Gold Delivery Bars, held by HSBC Bank USA, in its London vault. Unfortunately, it is not simply accessible to the public who have bought regular shares, except for authorized participants holding more than 100,000 shares of GLD stock.
With that being said, your money is closer to buying physical gold than if you were to invest in the VGPMX (Vanguard Precious Metals & Mining Fund), but you do have even better options available especially if you are working towards adding precious metals to your investment portfolio for the long-run.
If you prefer to be able to access your physical assets, you may want to buy gold or silver directly. However, one of the most popular options nowadays is to invest in it for retirement using the leverage of a self-directed IRA. With a gold or silver retirement plan of this type, you enjoy tax-free contributions (as with any other IRS-approved IRA) and minimize risk since gold and silver have always had a long-term positive growth trend. Click here for an overview of a self-directed IRA process and benefits vs drawbacks.
However, when one recognizes the charm of investing in gold, there are still a few calculations to make. Here are two important key points you should consider if you’re planning to invest in the gold market.
The first important key point is to get it within the right timeframe. If you are in your late 40s or younger, you have the luxury of time to build your wealth including your retirement. It would be safe to say that investing about 1-2% in GLD in a low risk portfolio would be beneficial. Currently, GLD price is relatively low, and has the potential to grow within the next 5 to 10 years. Since its initial listing in 2004, GLD stock quote has risen to more than 200%. Its highest was at more than 280%.
The second important key point is to invest in gold ETFs when you have an opportunity to diversify. Some investors may find that real estate is not for them because it requires real commitment, time and attention, just like it was a business. If that is the case, gold ETFs may be for you. Looking to store that extra money that you wouldn’t otherwise spend for more than three years? This completes the formula. When you have the right amount and time for your money to grow, coupled with the growth rate gold ETFs offer, you know that part of your money is protected in the long run.