In recent years, exchange traded funds tracking precious metals like gold, silver, platinum and palladium has become extremely popular among investors. Actually it was mutually beneficial; the growth of precious metals made ETFs more popular and the popularity of ETFs made precious metals more precious. There are many reasons behind this success.
- Precious metal ETFs provide a great opportunity to individuals who don’t have enough money and desire to buy the physical metal commodity but want to benefit from their price growth.
- There is a growing acceptance of precious metal investments as good hedging tools against inflation, weak dollar and economic recession. The fact that precious metal prices are increasing steadily over the years has enhanced this belief.
- Precious metal ETFs tracking physical commodities, future contracts, metal stocks, and more offer opportunities for all kinds of investors.
- Moreover, some investors find themselves much more comfortable investing in these ETFs rather than investing in stocks, bonds, and currencies, which can be a little more complex and time consuming.
Although considered good hedging instruments, investing in precious gold ETFs can be risky. The fact that most precious metals have grown exponentially to a possible market correction and higher tax treatment can make them less favorable to investors.
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