Investing in Gold on NYSE

Invest in gold on the NYSE with an ETF.

Investors have several ways to invest in the value of gold through securities traded on the NYSE. Exchange-traded funds that mirror the price of gold have become some of the most popular investments on the exchange. Investing in gold can be a profitable inflation hedge in an investor's portfolio.

Instructions

1. Establish an account with a discount stockbroker if you do not already have one. Smart Money magazine provides an annual ranking of online discount stockbrokers (see Resources section).

2. Review the current share prices and market returns of exchange-traded funds--ETFs--that focus on gold. The funds either hold gold bullion directly, with their share prices tracking the price of spot gold; or they own shares of gold mining companies. Here are the major gold ETFs:

   SPDR Gold Trust, stock symbol GLD.

   iShares COMEX Spot Gold Trust, symbol IAU.

   Market Vectors Gold Miners, symbol GDX.

   Market Vectors Junior Gold Miners, stock symbol GDXJ.

3. Determine which fund or funds you want to buy, and how many shares of each. GLD and IAU are bullion funds that directly track the price of gold. Gold mining ETFs invest in the larger gold mining companies or smaller, exploration-focused miners.

4. Buy your selected ETF shares using the stock order screen of your online brokerage account. To buy shares of an ETF you must enter the stock symbol and number of shares. A market buy order will be filled within seconds at the current price. A limit order can be used to buy shares when they reach a certain price. When your order is filled, the shares will show on your brokerage account summary screen.

Tips & Warnings

• Always look at the price chart of the ETF shares before investing. If the share price is in a downtrend, wait for the price to bottom and turn upward before investing.

• The bullion ETFs, GLD and IAU, are backed by physical gold. These funds will not pay any dividends, and gains and losses will be based on the price changes of spot gold.

• The gold mining ETFs own the stocks of companies that can increase their profits if gold goes up, and still make profits if gold stays level or even declines. The gold mining ETFs might pay dividends.

• It is possible to lose a significant portion of your investment if you buy gold ETF shares. Do your own research and understand the risks before making any stock market investment.

References

• Seeking Alpha: A Guide to Commodity ETFs and ETNs

Resources

• Smart Money: 2010 Broker Survey