Commodity ETFs, just like other ETFs, are traded daily on an exchange in the same way as stocks and bonds. In the United States, the trading in some commodity ETFs (and by extension some gold ETFs) are sometimes subject to oversight by the Commodity Futures Trading Commission (CFTC).  This is seen to be a positive developed for the consumer particularly with the recent scandals that have plagued Wall Street.

What Are Gold Exchanged Traded Funds?

Some gold ETFs in the USA, however, are not subject to oversight by the Commodity Futures Trading Commission nor by the Securities and Exchange Commission (SEC). For example, the largest-by-volume gold ETF available in the United States (SPDR Gold Shares/Trust) is not subject to CFTC oversight because it is not a commodity pool (mutual fund). It not even subject to SEC regulation because it is (also) not an “investment company” as defined by the Investment Company Act of 1940.

A retail investor needs to look closely into the prospectuses of gold ETFs before making the decision to participate in their trades. Each gold ETF has a distinct set of risks and tax requirements that are generally transferred to or shouldered exclusively by the retail investor. In the U.S., gold ETF transactions are considered as commodity transactions and are accordingly charged with a 28% capital-gains tax.

Advantages And Disadvantages

Although holding gold ETFs is generally less expensive (and can have greater short-term profitability) than owning large quantities of physical gold, they inherently carry more risks than physical gold investments. Also, the amount of physical gold in each gold ETF share gradually diminishes over time throughout the lifetime of the fund.

The best gold ETFs, from a quality-based perspective, would be those that allow redemption of shares in actual  physical gold (in addition to cash) without prohibitive redemption fees. Precious Metals Bullion Trust is a good example of this kind of “safer” actual-physical-gold-based ETF investment.

Most Well Know And Respected Gold Etfs

Based on the amount of reported gold holdings or assets, the top-five most popular gold ETFs in the USA include SPDR Gold Trust, iShares COMEX Gold Trust, ETFS Gold Trust, DB Gold Double Long ETN, and PowerShares DB Gold Fund.

SPDR Gold Trust is sponsored by a wholly-owned subsidiary of the World Gold Council (a Swiss-registered non-profit entity) and the shares are marketed/issued by State Street Global Markets, LLC. It is an index-type ETF that was intended to follow the spot price of gold bullion. This ETF has an expense ratio of 0.40%. The current price per share is $153.56. It’s latest market capitalization figure is US$64.93 billion, with the shares held by investors numbering to about 422,000,000.

iShares COMEX Gold Trust is marketed/issued by iShares . It is also an index-type ETF that was designed to follow the spot price of gold bullion. This ETF has an expense ratio of 0.25%, and a current price per share of $15.41. This fund has a market capitalization of US$9.52 billion and  shares outstanding of 594,450,000.

ETFS Physical Swiss Gold Trust is issued by ETF Securities, and is also an index-type ETF designed to follow the spot price of gold bullion. This ETF has an expense ratio of 0.39%, and a current price per share of $156.50. DB Gold Double Long ETN is issued by Invesco and is designed to track a combination of gold futures contracts and 3-month US Treasury Bills. It has an expense ratio of 0.75%, and a current price per share of $47.50. PowerShares DB Gold Fund is also issued by Invesco. This fund has an expense ratio of 0.50%.  It is based on an index of gold futures contracts. The latest available share price was $54.67.

The Best Etfs

A more complete gold ETFs list can be found on various websites on the web. Online gold ETF lists categorize ETFs by type, country, holdings volume, expenses, return rates, and so on.

A list of the top 15 ETFs from according to etfdb.com (an online etf database) is reproduced below for your reference:

1. SPDR – Gold Trust (GLD)
2. iShares – COMEX Gold Trust (IAU)
3. ETFS – Physical Swiss Gold Trust (SGOL)
4. DB – Gold Double Long ETN (DGP)
5. PowerShares – DB Gold Fund (DGL)
6. ProShares – Ultra Gold (UGL)
7. ProShares – UltraShort Gold (GLL)
8. DB – Gold Double Short ETN (DZZ)
9. ETFS – Physical Asian Gold Shares (AGOL)
10. DB – Gold Short ETN (DGZ)
11. Velocity-Shares 3x Long Gold ETN linked to the S&P GSCI Gold Index ER (UGLD)
12. RBS – Gold Trendpilot ETN (TBAR)
13. Factor – Shares 2X (FSG)
14. UBS E-TRACS CMCI Gold Total Return ETN (UBG)
15. Velocity-Shares 3x Inverse Gold ETN linked to S&P GSCI Gold Index Excess Return (DGLD)

Of course etfs are not the only way you can get into the gold market, have a look at our post on other ways to invest in gold here.  You may choose one, two or several types of gold investment vehicles to diverse your portfolio.

Coin Number 1: 1849 One Dollar US Gold Coin

Your Current Price: As mentioned in the appraisal below this coin has a hole in it and was likely worn on a chain.  Considering this fact it is it value is based on it’s gold content.  An 1849 One Dollar US gold is made up of 90% actual gold content, it weighs 1.68 grams, with the current spot price of $1,643.00 USD we would pay $79.80 CAD for your coin.

Original Appraisal From 1970: U.S. Gold Dollar, 1849. Fineness 900/1000.? diameter. 25.8 grains. Reeded edge. Open wreath type — 688,567 minted. No mint mark. Designed by James B. Longacre who emplyeed the services of his daughter Sarah to model for the coin. Authorized by Act of March 3, 1849. Obverse female head wearing coronet the word ‘Liberty’ written above the forehead.

Thirteen six-pointed stars equally spaced around the head, no other design on the obverse field. Reverse 2, 1/2 wreaths of laurel crossed and bound by a single row of ribbon. Large numeral “1” between wreath ends. The date and the world ‘Dollar’ in two lines. UNITED STATES OF AMERICA in area around wreath.

Trend values Coin World July 1.1970- Fine $35.00, Very Fine $40.00. Because the coin is holed and might be worth $5-$10 as a “filler” to a collector, while seeking an acceptable specimen. This is known as a Type 1 gold dollar.

Coin Number 2: 1856 US $1.00 Gold Coin

Your Current Price: This coin is also known as the Liberty One Dollar Gold coin, it is comprised of .900 or 90% gold content. It also weighs in at 1.68 grams.  Considering the condition of the coin we would pay $132.75 for your coin if indeed it proves to be in the condition stated in the old appraisal and comes with current appraisal papers.

Pricing Details From 1970: U.S. Gold Dollar, 1856. (Indian Head/Female) Fineness 900/1000. 9/16? diameter. Reeded edge. 25.8 grains. Reeded edge. 1,762,936 minted. No mint mark. Designed by James Longacre. Known as a Type 111 gold dollar, it has a redesigned headdress as compared with the Type 11 (1854–1856), the feathers are closer together but slightly extended with a single row of beads above the headband inscribed LIBERTY.

UNITED STATES OF AMERICA encircles the device. The female head is on the Obverse. The Reverse shows a large numeral “1” and DOLLAR over the date enclosed in an agricultural wreath of corn, cotton, wheat, and tobacco, bound by a ribbon with two bows. Trend values Coin World July 1, 1970 — Very Fine $47.50, Extra Fine $52.50. I would grade the coin as Very Fine — plus or Almost Extra Fine and value at about $50.00.

Coin Number 3: 1908 US Quarter Eagle Also Known As The Indian Head Quarter Eagle

Your Current Price: This coin also contains 90% or .900 gold content, it weighs 4.17 grams. We would pay $185.00 for this coin if it turns out to be the condition listed in your appraisal and comes with appraisal papers confirming the condition of the coin.

Pricing Details From 1970:  U.S. Quarter Eagle (42.50), 1908, gold. Fineness  900/1000. 11/16” diameter. 64.5 grains. Reeded edge. 565, 057 minted. No mint mark. Designed by Bela Lyons Pratt.  This was the first intaglio impression produced in the U.S.A for general circulation by the mint. The design is in relief but below the surface so that the highest point in the relief is level with the plane of the coin, there is no border pattern. Obverse the male Indian Head is wearing the most realistic of headdresses as compared to other Indian Head designs on U.S. coins.

The word LIBERTY appears above the head and the date below. There are six five-pointed stars in the field left of the head and seven in the right. The designer’s initials BLP appear over the date. Reverse a stately eagle, perched on a bundle of arrows over which appears a scrolled olive branch, on the left the words E / PLURIBUS / UNUM on the right IN / GOD / WE / TRUST. Over the Eagle are the words UNITED STATES OF AMERICA, below 2 DOLLARS. Trends values Coin World July 1, 1970 Very Fine $29.00, Extra Fine $32.00, Uncirculated $37.50. I would grade the coin as Extra Fine.

If you are interested in learning more about gold coins check out our post on some of the best gold coins to buy.  As you can see as time carries on and the price of gold continues to increase so do the value of gold coins in any condition.

There are a few different ways you can invest in gold, the answer to questions such as ‘should I invest in gold?’ or ‘why invest in gold?’ depend mostly on your familiarity with the pros and cons of the different choices of gold investments.  If you are tired of the same old results from under performing investments or are just looking for a safer way to retain your wealth it will be worth your time learning about some different ways to invest in gold.

We will look at purchasing physical gold both bars and coins, using a pool account to buy gold, buying gold etfs, as well as an overview of investing in gold stocks, futures and gold OTC’s.

Investing In Physical Gold

You can purchase gold bars and coins relatively easily.  Gold bars come in a variety of sizes, from 1 gram all the way up to 400 ounces.  Finding a a reputable dealer is the key, when you purchase bars you will be charged the days spot price plus the dealers premium or bar charge, this charge represents the dealers profit. Click here more detailed information on gold bar prices.

Gold bars or biscuits from recognized refineries such as Johnson Matthey, Englehart, Canadian Mint, Perth Mint to name 4, there are 130 accredited gold refiners throughout the world.  Investment grade gold bars and biscuits are at least .999 fine or 999/1000 parts actual gold content which is the same as 24 karat gold.  You can also purchase bars .9999 and recently the Royal Canadian mint brought out a .99999 fine gold bar, the .9999 and .99999 offer a heavier price tag one which I personally do not think is worth the extra money but to each their own.

You can also invest in gold coins in two different ways, you can purchase gold bullion coins.  Gold bullion coins again are at least .999 fine, you can also find some gold Maples that are .9999 fine for an extra premium.  The other type of gold coin are numismatic or collectible gold coins, these are not necessarily .999 fine gold and are often less such as .900 or .916. There is much to learn about buying the right kinds of numismatic gold coins, click here for more information on the best gold coins to buy.

Storing Your Gold

Another consideration you will have if you chose to purchase physical gold is storing it, if you are only going to have 1 or 2 ounces you may be comfortable keeping it at home but the once you start getting a little more you would best off keeping it in a safety deposit box.  As the economy worsens, more and more people talk about the gold confiscation act reoccurring but to my opinion this would quite unlikely.

Gold Pool Accounts

A gold pool account is when you purchase gold through a company but you do not have ownership to a specific bar or coin, you own part of the pool.  I liken it to you owning a piece of the pie, with most pool accounts you can choose to take ownership of your metal and have it delivered to you at a later date if you wish, they will charge your for delivery.  Pool accounts are an good way to invest in gold without having to have it in your physical possession.

You will pay a spread when purchasing gold in a pool account, for example the spot price of gold today is $1,645.00, to purchase 1 ounce of gold in Kitco’s gold pool account you would pay $1,677.00 per ounce, this is a good rate and less than you would pay as a bar charge.

You can also purchase allocated bars which means you have ownership of a specific bar, this would be recorded and registered by a serial number on the bar, the fees are slightly higher for this service and in my opinion unnecessary unless you are a stickler for detail and are sure you want to take physical ownership of the bar in the future.

Gold Etfs

Gold Etfs or exchange traded funds are certificates of ownership of gold that are backed by physical gold bullion.  These certificates are traded much the same as regular stocks and bonds.  The most well known gold etf in the US is SPDR Gold Shares, known just as well by it’s ticker symbol ‘GLD’. GLD is backed by physical bullion but it’s investors are not permitted to take possession of the bullion.

The price of GLD mimics the spot price of gold in pluses and minuses.  For a more detailed explanation on etfs visit our post on the best gold etfs for novice investors.

Gold Stocks

Investing in gold or mining stocks or equities is a standard investment channel that is no different from investing in other publicly traded company. The value of this type of investment can vary widely compared to gold prices. Generally, this type of investment can net positive gains if the price of gold continually increases or remains stable at an elevated price for a relatively long period of time.

Gold stocks are subject to the same uncertainties as other traditional stocks and bonds, uncertainties which arise from variations in factors such as the quality of management, the quality and quantity of the ore (always an unsure estimate), the cost of mining and processing the ore, etc.

Gold Futures And Options

Gold futures and options are very similar to futures and options contracts for commodity-type goods such as base metals, grain, vegetable oil, etc. With a gold futures contract, one party is bound by the contract to either deliver or purchase a certain amount of gold at a certain price at a certain future date. The counter party is then bound to purchase (or deliver) that said amount of gold.

Each contract usually involves gold lots of 100 ounces (per contract). An option on a gold futures contract allows either party to buy (or “call”) or sell (“put”) the specified amount of gold at the specified time and price without being obligated to actually carry out the transaction. As with similar futures and options contracts on commodities, gold futures and options contracts can be traded at established commodities markets or exchanges.

OTC Gold Contracts

Over-the-counter (OTC) gold contracts are custom-made spot or forward contracts that are made between institutional dealers or companies that represent very wealthy individuals and that involve large quantities of gold. These are private contracts whose details are usually not made public, except maybe for majority share holders of public companies and other such people.

These contracts can be drawn up and acted upon all over the world, 24 hours a day, seven days a week. Many OTC spot or forward contracts are similar to futures contracts, but unlike futures contracts, OTC contracts are made between two parties without the purview of an exchange middle party or clearing house. OTC transactions are inherently riskier than futures and options transactions. OTC trading accounts for the majority portion of the world trade in gold.

The Best Ways To Invest In Gold

As you can see there are a variety of ways to invest in the gold. Which is the best way to invest in gold?  That is up to you, it depends on how much knowledge you currently have or how much time you are willing to take to educate yourself.  The easiest way to start investing in gold is by purchasing a small bar or coin, as you gain more confidences you may chose to buy larger amounts.

Pool accounts are another fairly straight forward option to enter the gold market, the main thing you would need to do is find a well known and respected company with a good track record such as Kitco.  Getting started is quite easy but your minimum buy in would be 1 ounce, once your account is set up and funded it is easy to buy and sell.

Etf’s are also in the beginner to mid knowledge range, with etf’s you want to make sure you have the flexibility of buying and selling small amounts the etf, I have heard that some require you to buy and sell in certain amounts.  Stocks, Options and Otc’s are vehicles that will requite quite a bit more knowledge and expertise and you may encounter price manipulations beyond your control.

In the end investing in precious metals is a fun and interesting way keep hold of wealth and prosper, myself, I like to keep it simple and stick to regular old fashioned bars and bullion coins.  The only thing I need to monitor is the price of the metal and find the best premiums I can when buying.  Good luck in your choice!

Current Gold Spot Price

Today’s current spot gold price is the main factor or basis that will determine how much you can sell you bar for or how much an ounce of gold will cost for you to purchase.  The spot price is derived from futures contracts, in North America the spot price is listed in US dollars and fluctuates throughout the day.

This chart lists the current spot price of gold in US dollars, this will serve as the first piece of  information you will need to determine how much you can buy or sell your gold bar for.

Bar Charges And Premiums

If you are buying a one ounce bar you will be charged a ‘premium’ or ‘bar charge’, so let’s say for example the spot price of gold is $1600 you will be charged $1600 plus the premium or bar charge.  Different companies and dealers have different premiums or bar charges.

For a one ounce bar it would be anywhere from $40 to $100 depending on the company or dealer you are doing business with.   The more ounces you buy the lower premium a company should be charging you per ounce.  The premium or bar charge represents their profit on the sale.  It pays to shop around to get the lowest bar charge you can from a reputable dealer.

Price When Selling Your Gold Bar

If you have a gold bar to sell the first thing you should do is look up the current spot price of gold.  Let’s stick with the same example above and say the current gold spot price is $1,600.00 US, you can not expect to get $1,600.00 for your gold bar, you can expect to get anywhere from 92.5 to 98% of spot price.

So if spot price is $1,600.00 US you can expect to get anywhere from $1,480.00 to $1,568.00 for a one ounce bar of gold.  Of course you want to get as much as you can so it pay to shop around for prices.

Exchange Rates

In North America and throughout much of the world spot prices are often listed in US dollars, if you are not in the US you have to take into account the current exchange rate if you are going to be paid in your own countries currency.

I am in Canada and currently the Canadian dollar is quite strong comparatively speaking, using the example above of a current spot price of $1,600.00 US that converts to $1,570.32 CAD.  So using my Canadian spot gold price of $1,570.32 I could expect to get anywhere from $1,452.25 to $1,538.91 for an ounce of gold.

Current Price Of A Gold Bar

Prices of gold bars vary according to their size, below you find some examples of common gold bar sizes and prices, at the time of this writing the spot price of gold was $1,663.30 US and the prices listed below are all in US dollars:

1 gram gold: $62.55
5 gram gold bar: $274.72
10 gram gold bar: $569.45
1 Ounce gold bar price:  $1,708.80
100 gram gold bar price: $ 5,474.24
5 Ounce gold bar: $8,564.00
10 Ounce gold bar: $17,138.00
1000 gram / 1 Kilo gold bar price (32.15 ounces): $54,135.42
100 Ounce gold bar: $167,730.00
400 Ounce gold bar: $667,720.00

As you can see you can spend a little or a lot when entering the gold market.   The prices listed above are excellent rates and something you should look for if you’re serious about getting into the market.  Don’t let the large bar prices intimidate you, as you can see you start small and work your way up!

By 1500 B.C. gold was accepted as a standard exchange in international trades and gold coins became common place in the Middle East. Over the next few centuries gold sparked such events as the first American Gold Rush in 1803 and the California Gold Rush in 1843.

By 1913 the United States passed the Federal Reserve Act which requires that funds in the United States be backed by at least 40 percent in gold.

In 1934 the United States government stopped production of all gold coins and laid claim to all monetary gold and by 1990 the United States had become the world’s second largest producer of gold.

When people think of gold, dollar signs follow close behind. We all know that Gold has has a high price tag but why is gold valuable? Let’s have a look…

Gold Is Scarcer Than You Think

So, just why is gold so valuable, if you were given the choice between a 5 karat diamond and a ounce piece of pure gold taken straight from the ground which would you say is more rare? If you said the diamond you’d be wrong. One reason that gold is so valuable is because of supply and demand. According to gold.org you are more likely to find a 5 karat diamond than a one ounce pure gold nugget.

Gold’s Many Uses

While about 60 percent of the gold supply is used to make jewelry the rest is used for a variety of different projects including wiring and pieces in electronics. In fact, 12 percent of the gold market is used for technological purposes.

Uses of gold in technology include power wheelchairs, onboard computers in spacecrafts, and transmitters in telephones, in phone jacks, television sets, medical equipment and lasers.

Because gold can be used for so many different things and it is considered a rare mineral which also contributes to it’s value.

Is White Gold As Valuable As Yellow Gold?

In its most natural form gold is yellow. When gold is used to make jewelry it is first made into an alloy by adding other metals such as copper, silver, nickel or palladium.  When white gold is alloyed silver, nickel and palladium are used to achieve the ‘White’ gold.  Because white gold contains the exact same amount of gold as yellow gold they are equally valuable.

Which Is More Valuable Gold Or Platinum?

For a many years, in fact decades platinum held a higher spot price than gold. But in the fall of 2011 the tables turned and gold prices reached an all time high of $1,922 per ounce, while platinum dropped to $1,538 per ounce by the end of the same month. At present gold value has been declining while platinum is rising steadily. As of this writing gold price per ounce sits at $1,641.86 while Platinum sits at $1,563.74 per ounce.  So if you are asking which is more valuable gold or platinum, the answer is today gold has surpassed platinum in value.

I suspect a time will come when Platinum will again surpass Gold in price but it is my belief that the uncertain world economy has lead to many people turning to gold as an investment thus driving it higher in price.   As a matter of fact gold is currently priced higher than Rhodium which I find surprising due to the scarceness of Rhodium comparatively speaking.