{"id":6698,"date":"2023-01-03T05:00:23","date_gmt":"2023-01-03T05:00:23","guid":{"rendered":"https:\/\/ethis.co\/blog\/?p=6698"},"modified":"2023-01-03T05:01:47","modified_gmt":"2023-01-03T05:01:47","slug":"gold-etfs-and-are-they-a-good-investment","status":"publish","type":"post","link":"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/","title":{"rendered":"What are Gold ETFs and are they a good investment?"},"content":{"rendered":"\n<p><em><strong>It seems the new vogue in gold investments are Gold ETFs, but what are they exactly and is it a good idea to begin exploring such an option?<\/strong><\/em><\/p>\n\n\n\n<p>The investment game comes in many forms. It can be small unexpected moneymakers, like Pokemon cards, sneakers and Funko Pops, to the traditional forms of investments like real-estate.\u00a0<\/p>\n\n\n\n<p>However, there\u2019s been one investment throughout recorded history that exists until today: Gold. It has been shown throughout history to counter the effects of inflation and recession, with many gold owners being saved by the gold they invest before hard times hit.<\/p>\n\n\n\n<p>Both developing and agrarian economies have used gold as a kind of money. In fact, the gold standard has long been a sustaining currency throughout history, with the application of gold being prominent in the time of great Muslim empires. In modern settings, Islamic Finance has seen further development in countries like Malaysia with the launch of a Shariah-compliant <a href=\"https:\/\/www.thebalancemoney.com\/gold-etf-what-you-need-to-know-1214748\">Gold Exchange traded Fund (ETF)<\/a>.<\/p>\n\n\n\n<p><strong>Related:<\/strong> <a href=\"https:\/\/ethis.co\/blog\/halal-stocks-vs-halal-mutual-funds\/\">Halal Stocks vs Halal Mutual Funds<\/a><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_51_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-69e16a4e6bdce\" ><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input aria-label=\"Toggle\" aria-label=\"item-69e16a4e6bdce\"  type=\"checkbox\" id=\"item-69e16a4e6bdce\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#What_are_Gold_ETFs\" title=\"What are Gold ETFs?\">What are Gold ETFs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#How_does_Gold_ETFs_work\" title=\"How does Gold ETFs work?\">How does Gold ETFs work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Benefits_of_investing_in_Gold_ETFs\" title=\"Benefits of investing in Gold ETFs\">Benefits of investing in Gold ETFs<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Practical_Trading\" title=\"Practical Trading\">Practical Trading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Liquidity\" title=\"Liquidity\">Liquidity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Cost-effective\" title=\"Cost-effective\">Cost-effective<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Instantaneous_Trading\" title=\"Instantaneous Trading\">Instantaneous Trading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Well-diversified\" title=\"Well-diversified\">Well-diversified<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#A_sound_investment\" title=\"A sound investment\">A sound investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Low_risk\" title=\"Low risk\">Low risk<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Challenges_of_investing_in_Gold_ETFs\" title=\"Challenges of investing in Gold ETFs\">Challenges of investing in Gold ETFs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/#Are_Gold_ETFs_a_good_investment\" title=\"Are Gold ETFs a good investment?\">Are Gold ETFs a good investment?<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_are_Gold_ETFs\"><\/span><strong>What are Gold ETFs?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/4-1024x536.png\" alt=\"Gold ETFs\" class=\"wp-image-6703\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/4-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/4-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/4-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/4.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>An ETF is an exchange traded fund which are similar to, and traded on exchange similar to, individual stocks. A Gold ETF has only one principal asset: Gold. Technically, they are funds that hold gold derivative contracts that are backed by gold. You may own a gold ETF, but it does not mean you hold any physical gold.<\/p>\n\n\n\n<p>Gold ETFs are a form of information. Owning gold ETFs enables the owner to track, understand and predict the movement and prices of gold.<\/p>\n\n\n\n<p>Buying gold jewellery is termed as a form of investment because the<a href=\"https:\/\/www.imoney.my\/articles\/gold-price-malaysia\"> price of gold<\/a> is known to appreciate over time. Gold can be sold at a higher price once it has reached a high market price. However, buying gold also comes with additional charges, as the buyer has to pay for the making charges as well.&nbsp;<\/p>\n\n\n\n<p>Additionally, once a customer purchases gold jewellery, the responsibility for keeping it safe and secure falls solely on the buyer, and there is a great risk involved with storing a sizable sum of money. Hence, most of the problems of keeping physical gold have been solved after introducing gold ETFs.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How_does_Gold_ETFs_work\"><\/span><strong>How does Gold ETFs work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/5-1024x536.png\" alt=\"Gold ETFs\" class=\"wp-image-6704\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/5-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/5-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/5-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/5.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Gold ETFs follow the index price of the metal. Due to the fact that real gold underpins the Gold ETF, each unit is exceedingly pure and equal to one gramme of gold. Gold exchange-traded funds (ETFs) invest in and monitor domestic gold prices.<\/p>\n\n\n\n<p>While the cost of gold jewellery varies by nation, you can typically trade gold ETFs at the same cost. When buying or selling gold, there is a brokerage charge as well as minimal fund management fees.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Benefits_of_investing_in_Gold_ETFs\"><\/span><strong>Benefits<\/strong> of investing in Gold ETFs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Due to their ease of trading and lack of necessity for storage owing to theft, gold ETFs are growing in popularity. Benefits include:<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Practical_Trading\"><\/span>Practical Trading<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The easiest way to trade in gold ETFs is through your broker on the stock exchange, just as you would do with stocks. The minimum purchase amount for a gold ETF is just one unit, which is equal to one gramme of gold.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Liquidity\"><\/span>Liquidity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Exchange-traded funds for gold are traded on stock exchanges and are very liquid since you can convert them to cash whenever you like. You can sell them as soon as you buy them because there is no lock-in time for them.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Cost-effective\"><\/span>Cost-effective<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There is no load for purchasing or disposing of units in gold ETFs listed on the stock exchange because there is no entry or exit system. The brokerage fee can be 0.5% or less, and the expense ratio for gold can be 1% or less.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/1-1024x536.png\" alt=\"Gold ETFs\" class=\"wp-image-6700\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/1-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/1-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/1-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/1.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Instantaneous_Trading\"><\/span>Instantaneous Trading<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>On the stock exchange, gold rates are available to the public for access. What\u2019s more, anyone can rapidly examine the gold prices for the day or a certain hour before trading in Gold ETFs.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Well-diversified\"><\/span>Well-diversified<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Your gold ETFs may be a great addition to your portfolio of investments. A change in portfolio offers you a far larger return during uncertain market situations by reducing market risks.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"A_sound_investment\"><\/span>A sound investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Because they are often regulated and actual gold of similar value backs each unit, gold ETFs are secure investments. Additionally, gold funds keep their real gold in the care of the gold custodian.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Low_risk\"><\/span>Low risk<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For investors who want to enter the gold market with low investment risks, the gold ETF is one of the most practical, simple, and adaptable forms of investment because gold prices don&#8217;t exhibit as much market flexibility as stock prices do.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Challenges_of_investing_in_Gold_ETFs\"><\/span><strong>Challenges<\/strong> of investing in Gold ETFs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/2-1024x536.png\" alt=\"Gold ETFs\" class=\"wp-image-6701\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/2-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/2-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/2-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/2.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Gold ETFs can be quite pricey.<\/p>\n\n\n\n<p>While free trades are generally considered common practice in the industry, cost ratios for ETFs are charged as a percentage of your overall investment. You would incur a yearly expense of $25 if you put $10,000 into an ETF with a 0.25% expense ratio. <a href=\"https:\/\/www.fool.com\/investing\/stock-market\/market-sectors\/materials\/gold-stocks\/gold-etfs\/\">Expense ratios<\/a> for gold ETFs are frequently higher than for other well-known index products like the S&amp;P 500.<\/p>\n\n\n\n<p>There is also the risk of potential counterparty. <\/p>\n\n\n\n<p>The danger you take when you rely on someone else to make sure your investment is adequately secured, handled, and insured is another problem with being denied access to actual gold despite your investment. ETFs are also managed by a number of individuals, which only raises the possibility that something will go wrong with your investment.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Are_Gold_ETFs_a_good_investment\"><\/span><strong>Are Gold ETFs a good investment?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/3-1024x536.png\" alt=\"Gold ETFs\" class=\"wp-image-6702\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/3-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/3-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/3-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/3.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Despite having some shortcomings, Gold ETFs can be a great way for investors to accumulate gold over a period of time, as gold can be purchased in small quantities. Due to this, investors can plan out when to buy gold in a way that benefits them in the future. Say an investor&#8217;s children are getting married, ETFs can be a good indicator of when the gold needed for that marriage can be procured.<\/p>\n\n\n\n<p>Again, investors wishing to diversify their portfolios in the gold market might consider gold ETFs. Due to the fact that the invested funds are placed in <a href=\"https:\/\/www.policybazaar.com\/gold-rate\/articles\/why-investing-in-gold-a-good-idea\/\">99.5% pure gold bullion<\/a>, it is a very low-risk investment option. It\u2019s an option for those who wish to invest in gold but do not want to maintain physical gold on hand at added cost.<\/p>\n\n\n\n<p>ETFs, being digital, also have no risk of theft or the added cost of storage. Real gold comes with physical storage cost, while ETFs do not. When the investor does need physical gold, they can just exchange the ETFs in multiples of 1 kilogram units of 0.995 purity.<\/p>\n\n\n\n<p>Gold ETFs can be a relief in terms of tax. No sales tax, VATs or securities transaction tax are applicable on gold ETFs. Also, as they are traded like stocks on the exchange, they\u2019re eligible for <a href=\"https:\/\/cleartax.in\/s\/gold-etfs\">long-term capital gains<\/a> after one year. This is unlike physical gold which is only eligible after three years.<br><br>Finally, unlike real gold coins and bars which jewellers only offer exchanges and not buybacks, gold ETFs are easier to exchange around the world, with their prices being transparent if one wishes to do so.<\/p>\n\n\n\n<p>Ultimately, Gold ETFs can be potential mediums for low risk gains and diversification strategies for investors looking to expand their portfolios. It\u2019s important that we consider the pros and cons of each asset class, doing due diligence before venturing into new opportunities.<\/p>\n<div class=\"rns\" data-title=\"What are Gold ETFs and are they a good investment?\" data-tags=\"Gold,Gold ETF,Gold ETFs,halal investment\" data-categories=\"Halal Investment\" data-comments=\"0\" data-date=\"1672722023000\" data-author=\"Khalid Bin Mohd Fadzillah\" data-single=\"\" data-url=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/\"><\/div> <!-- Check out https:\/\/reactandshare.com -->","protected":false},"excerpt":{"rendered":"<p>It seems the new vogue in gold investments are Gold ETFs, but what are they exactly and is it a good idea to begin exploring &hellip; <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/ethis.co\/blog\/gold-etfs-and-are-they-a-good-investment\/\">Read More &rsaquo;<\/a><\/span><\/p>\n","protected":false},"author":77,"featured_media":6705,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":""},"categories":[1753],"tags":[2112,2111,2110,2086],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2023\/01\/6.png","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbDwgm-1K2","_links":{"self":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/6698"}],"collection":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/users\/77"}],"replies":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/comments?post=6698"}],"version-history":[{"count":2,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/6698\/revisions"}],"predecessor-version":[{"id":6707,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/6698\/revisions\/6707"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media\/6705"}],"wp:attachment":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media?parent=6698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/categories?post=6698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/tags?post=6698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}