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Want exposure to physical gold? Here's why a gold-backed ETF is the best option for you

by , 14 May 2014

If you want to invest in physical gold, you have a couple of different options. You could buy Kruger rands for example. You'd just have to find somewhere safe and secure to keep them. Or you could opt to invest in a gold-backed exchange traded fund (ETF). This has all the advantages of holding gold, but without the hassle. Let's take a closer look…

The importance of physical gold backing

Absa NewGold is a gold-backed ETF, the research team at the Resource and Scarcity Report explain. All the physical gold that backs the ETF is in a vault in London.

It may surprise you, but the real thing doesn’t back some ETFs and ETNs (exchange traded notes). They just have promises attached.

For example, an ETN can have a paper note promising the amount of the asset that it’s attached to. But this means there’s a bit of risk that if the worst should happen, you won’t actually get the asset.

This isn’t the case with Absa NewGold. Even if Absa comes crashing to its knees, your gold is waiting for you.

Three plus points of investing in Absa NewGold

Plus point #1:
You don’t have to worry about safely storing your gold. The gold bullion is stored in a vault in the UK. And to ensure that everything is above board, there are regular inspections and audits.

Plus point #2:
If you hold enough NewGold ETFs and the required permits, you can actually exchange them for physical gold.

"Own this hot commodity share before the end of the month, and hold on for a 108% gain!

It's not the sexiest of all the metals.

It doesn't have gold's "bling"... Or silver's sparkle.

But the point is... It's used to keep the lights on in virtually every country on the planet!

And the company I want to tell you about today is sitting on nearly R200 billion worth of the stuff!"

Plus point #3:
A minimum of 97% of the money invested in NewGold is in gold. The fund manager uses the remaining cash for expenses and any redemptions the ETF may have. The gold is in the form of London Good Delivery bars.

So there you have it, why a gold-backed ETF is the best option for you if you want exposure to physical gold.

Want exposure to physical gold? Here's why a gold-backed ETF is the best option for you
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