How to Invest In Gold Without Actually Buying Gold

Gold ETFs allow individuals to invest in gold without owning physical gold.

Many people think that the only way to invest in gold is to buy physical gold in the form of gold bars, gold coins or gold jewelry. Today, there is another way to take advantage of the price movement of gold: gold ETFs, or exchange traded funds. Gold ETFs invest in either gold bullion or gold futures. The prices of the ETFs move up and down with the price of gold. The ETFs trade on the major world exchanges, such as the New York Stock Exchange. Gold ETFs are a great way to participate in the price movements of gold without buying the physical gold commodity.

Things You'll Need

• Computer
• Internet connection
• Brokerage account

Instructions

1. Prepare a list of gold ETFs to research. A few of the more popular gold ETFs are the Spiders Gold Trust (ticker symbol: GLD), the iShares COMEX Gold Trust (ticker symbol: IAU) and the Powershares DB Gold Fund (ticker symbol: DGL).

2. Go to Yahoo! Finance, Google Finance or your brokerage's website to research the gold ETFs. Enter the ticker symbol in the stock quote field. Read the profile and description of the ETF. On Yahoo! Finance the profile can be found by clicking on "Profile" on the quote screen. On Google Finance the profile is near the end of the page on the quote screen. Take into account the expenses associated with buying and selling the ETF.

3. Read the ETF prospectus when you find a gold ETF that interests you. The prospectus can be found on the website of the ETF sponsor and gives detailed information on expenses, investment methodology, risks and the correlation between the price of gold and the performance of the ETF.

4. Decide if investing in gold through an ETF is right for your financial circumstances. In the current economic environment the price of gold is very volatile and gold is not an appropriate investment for everyone. If you are unsure whether a gold ETF will make a good addition to your investment portfolio talk about it with your stock broker or financial advisor.

5. Buy the gold ETF that you decide is correct for your portfolio and current financial situation. Place the order with your brokerage house like you would a stock.

Tips & Warnings

• If you believe that the price of gold will fall, you can sell a gold ETF short to profit from the price decline.

• The price of gold can be very volatile. If you buy a gold ETF be sure to keep an eye on it like you would any other investment, such as a stock or bond.

References

• ETFdb: The Definitive Gold ETF Guide: Gold Bullion ETFs 101

Resources

• Yahoo! Finance
• Google Finance
• Powershares: DB Gold Fund
• iShares: Gold COMEX Trust
• Spiders: Gold Trust