Introduction

Gold exchange traded funds (ETFs) are securities designed accurately to track the gold price. Gold ETFs provided investors to participate in the gold bullion market without the necessity of taking physical delivery of gold. Other than that, there also provide to buy and sell that participation through the trading of a security on stock exchange. There are including in Mumbai, London, Paris, New York and Zurich. Usually, each unit is approximately equal to the price of one gram of Gold. But, there are also provide a unit which is approximately equal to the price of half gram of Gold. When Gold ETF prices move up, the ETF increase and when gold prices move down, the ETF decrease the value. So, it would be a positive relationship investment.

Background

In May 2002, the idea of a gold ETF was officially conceptualized by Benchmark Asset Management Company Private Ltd in India when they filed a proposal with the SEBI. However, the idea did not receive regulatory approval. It was launched later in March 2007. In March 2003, the first gold exchange-traded fund was launch on the Australian Stock Exchange under Gold Bullion Security (ticker symbol GOLD). They targeted originally at investment institutions.

During 20 years in the gold price from 1980 ($850 an ounce) to 2001 ($260 an ounce), the gold bullion market became very hard to reach private investors. The investment market in gold bullion dried up. So, the professional spot bullion market shrank in on itself and becoming a closed shop for gold dealers and traders. Most of the marketplace’s final customers were gold jewellery manufacturers. New gold bullion investment buyers were keeping out because of a fundamental constraint. This was the form of the professionally traded commodity: the gold bullion Good Delivery Bar.

Advantages of Gold Exchange Traded Funds

When the dollar is weak, the gold trends will rise. So, if your investment portfolio has risk to the dollar’s bottom, the purchasing a gold exchange traded fund will help you block that exposure. Therefore, sold a gold exchange traded fund can help if your exposure is the top.

A gold exchange traded fund that can be use to block gold commodity risk or get exposure to gold itself. If an investor has risk due to the gold price rises, owning a gold exchange traded fund can help to reduce risk on that position. On the other hand, if an investor decides to short gold after research, trading an inverse gold exchange traded fund may be a faster way to put on that position.

While gold is a commodity exchange traded fund, it can represent as an industry exchange traded fund.

Gold exchange traded funds can also be act as a block for regional risk or get foreign exposure.

No safekeeping and security issue for investors.

Gold exchange traded fund give more tax planning area than mutual funds because fund unit can be change into underlying shares or stocks.

Commissions of gold exchange traded funds are charge much lower when compared with mutual funds.

Disadvantages of Gold Exchange Traded Funds

Exchange traded fund prices are subject to supply and demand in stock market. So, the wider range of fluctuations than investments in mutual funds.

The exchange traded fund management cost will be a burden when counting profit.

The steps to invest in Gold Exchange Traded Funds

You should know what a gold exchange traded fund is. A gold exchange traded fund is the only commodity traded. After you buy a gold exchange traded fund, you don’t actually own a gold bar but you own an asset.

GLD is the most common gold in exchange traded fund and it is a spider exchange traded fund. Sometime, people use Gold exchange traded fund to reduce risk in their portfolio. Many analysts and financial advisors suggest that Gold is necessity in an individual’s portfolio.

Most of the people prefer to buy gold exchange traded fund to spread the risk. While gold prices skyrocket, you don’t have to worry about a gold company doing bad and losing money. Through a gold exchange traded fund, you only will track the price of gold.

To purchase a gold exchange traded fund, you need to log into your online brokerage account. Next, place the same way that you would a stock. Then, enter the ticker symbol of the gold exchange traded fund that you like and place order. Beside, you can do this with a phone in your hand. Just call your broker and give him the symbol of the ticket, price, and amount of shares you want to buy.

Gold Certificate

Introduction

A certificate showed ownership of gold investor hold of storing the actual gold bullion. These are the easy way for modern investors to invest in gold. Because they don’t need taking physical delivery of the gold. Banks and financial institutions are issued the gold certificates for those investors are holds the physical gold. Therefore, these gold certificates were used the actual currency, redeemable for goods and services. Other than that, the advantages for investor no need to worry about storing or insuring the gold. Another advantage for gold certificates are very liquid and offer diversify one’s assets with gold.

History

From 17th century, Goldsmiths were issued gold certificates in London and Amsterdam to customers depositing gold bullion into their safe-keeping. These gold certificates represent as prove of the gold ownership. During that time, the certificate ware passed from one investor to another like cash payments without transfer the gold bullion.

In the middle of 19 century, gold certificates was began issue by the US Treasury that could exchanged for gold bullion from its storage. The US government banned issuing gold certificates in 1933 when it went off the gold standard and holding gold certificates was illegal until 1964. Franklin D. Roosevelt ordered US citizens to turn in their gold (coins, bullion or certificates) to the Federal Reserve Bank. Other than that, for those who did not agree will be imprison and fine.

Nowadays, several German, Swiss banks, Australia, and US continue issued gold certificates.

Size of Gold Certificate

Two sizes of gold certificates was produce along with US currency – a larger size from 1865 to 1928 and a smaller size from 1928 to 1934. The backs of all larger-sized notes of series 1928 were green; the smaller sized notes of series 1934 were orange.

Large size gold certificates included of 9 issues and it were give certified and authorized by the Currency Act of March 3, 1863. Different issues have different function and usefulness. First, second, third and sixth issues were used mainly between banks and clearinghouses and it were not used for general circulation.

The function of the first and second issues was used to certify the amounts of dollars that have been deposited with the Assistant Treasurer of the United States in New York payable in gold.

The third issue contained of series 1875 and the obligation of it is to countersign and dated by hand.

The fourth issue is to read the certificates that have been deposited in the Treasury of the United States of America Dollars in gold coin repayable to the holder on demand.

Fifth issue consisted of series 1888. The sixth issue consisted of series 1900 and used mainly between banks and clearinghouses. Seven issues consisted of series 1905, 1906 and 1907.

The eighth issues consisted of series 1907. The ninth issues’ series and denominations were series 1913 and 1922.

Small size gold certificates had three series. It included the seals and serial numbers continued to be printed in gold ink, however, the backside lost the typical gold color and used the green rear drawing of the other small size notes. This certificate is a legal fond in the amount and thereof in payment of all debts and dues to public and private.

The steps to invest in Gold Certificates

You can track the gold price daily. So, you can get an idea to trade the metal in the market. Track the price of gold through the consulting online investment sites like Yahoo.

Finance and Money.CNN.com. Other than that, you also can get the previous day’s closing price of gold in the Wall Street Journal and other financial publications.

You need to open an account at an online brokerage firm or mutual fund company. Therefore, you can buy gold certificates by purchasing the exchange traded fund that trades under the ticker symbol GLD. The value of the fund is positive relationship with the price of gold. When gold prices increase the value of the fund rises. When gold prices are on the decrease the price of this fund will drop.

When you are ready to buy then contact your online brokerage firm or mutual fund company. You may invest all of your funds at once if you make sure that the price of gold has nowhere to go but up. On the other hand, you can spread your purchases out by investing a little bit each month over a period of a year or two if you want to spread the risk and avoid the danger of purchasing at the top of the market.

Using a spreadsheet program like Microsoft Excel to track how much you invest in gold. It is important. Because this will let you see how much you are doing and it will make it easier to calculate the tax of your gold investment.

Gold Savings Account

Introduction

Today, financial market offer gold saving account to give more convenience gold products available in the market. You can record all the transaction into saving passbook account. Normally, gold saving account are involved higher charges than physical gold.

Malaysia’s bank that provide gold saving account such as:

1. Public bank – Gold Investment Account (GIA)