Given the ongoing war scenario in Ukraine, the COVID19- Omicron Variant resurgence, and inflation seemingly going rampant, a Gold ETF might be an elegant solution going forward.
In fact, as the Russia-Ukraine conflict continues, the race to bearer assets seems to be lit
Many traders out there understand what a bearer asset is. For the ones who don’t, a bearer asset, to put it in simple terms, is something which when you hold in your hand or are in possession of, there is no counterparty risk to it, meaning that unlike your bank account, no one can freeze it or turn it off.
Currently Gold was thought to be the go-to, top-of-mind bearer asset, but one can make the case that Bitcoin quickly gained ground and is likely to have also achieved that status.
So, how can one get in on the action?
The thing is, physical gold is a bearer asset only if you are storing yourself and storing gold, especially if you own a lot of it, can be difficult and risky, or somewhat expensive if you require a custodian and insurance.
Sending it somewhere or moving it around is even harder sometimes given how bulky it is.
Verifying it is also another big hurdle to overcome. Accordingly, when you combine all these factors you realize this makes it nigh impossible to send a vast amount of gold to another person or institution
Moreover, there is added premium one must pay when buying physical gold bars, for example, which can be around %10 in some cases, meaning that you have to pay in excess of whatever the market value is at the time.
For those who are skeptical of crypto, those who don't have a vault in which to store gold, or those who don’t have the access to a custodian, a Gold ETF might just be the way.
A gold exchange traded fund operates much a like a stock, which means you can trade it as much as you wish in your .
It works basically like a gold IOU given that what you are purchasing is not the actual gold, rather ownership interest in a trust that does own gold and keeps it with a custodian.
But convenience comes at cost
Gold ETFs allow you to get in on the action, however, they are not what many people think they are.
There are a lot of things “in the way” of the gold you purchase through ETFs when compared with actual physical ownership.
Open an account with FxGrow today and begin your trading journey.
Those things add convenience to the process, but they also seem to add risk because in the case of an act of God, a terrorist attack (much like it happened with the gold kept on the World Trade Center, but was later recovered), force majeure, or if the gold is lost or destroyed, then you might find yourself in an awkward position.
Gold ETFs offer the convenience of trading gold but at a cost. That cost is usually out of everyone’s radar and has rarely been a major issue which leads investors to believe that the pros seem to vastly outweigh the cons.