World Gold Council: ETF Gold Holdings at Highest Level Since 2013Adam Gardiner
Serious gold investors know that investing in gold through a gold IRA is far superior to investing in gold through an exchange-traded fund (ETF). But despite the many drawbacks of gold ETFs, following their actions and performance can be a good way to identify trends in gold markets.
Gold ETFs have become a popular investment method for people who want to be able to invest in gold as a financial asset and benefit from its price gains without actually owning gold. Gold ETFs purchase gold and then sell shares in their fund to investors. The more shares purchased, the more gold ETFs have to buy. And recently ETFs have been buying.
Overall gold holdings by gold ETFs are at the highest they’ve been since 2013, increasing over 6% in just the past two months. That’s an indicator that many investors are worried about the direction of the world economy and want to try to diversify their portfolios by investing in gold. And the more gold ETFs buy, the higher the price will get as that rising demand meets a stagnant supply.
It’s worth mentioning the drawbacks of ETFs, first and foremost being that purchasing ETF shares doesn’t actually make you an owner of gold, just of shares. That’s why gold ETFs are often described as “paper gold” to distinguish them from actual gold ownership.
Then there’s no way of knowing just how much gold the ETF holds, how many shares correlate to each ounce of gold, etc. It’s like fractional reserve banking, just with gold. Contrast that to a gold IRA, in which investors actually own the gold they’re investing in and can take physical possession of that gold at any time (subject to IRS regulations and any applicable taxes.)
With a gold IRA you know exactly how much gold you own and you know at any time just how much your holdings are worth. You benefit from gold ownership while still enjoying the tax advantages of a traditional IRA account. And you have peace of mind, knowing that your gold is stored safely and is protecting your assets.