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The Times - October 13, 2007
ETF SECURITIES PHYSICAL GOLD SHARES
What is it? An exchange-traded commodity (ETC) share that tracks the price of gold bullion.
How does it work? The price of the ETC is linked to the spot price of gold and an equivalent amount of the precious metal is held in secure vaults.
Investors can buy ETC shares just like any other shares and have to pay dealing commission in the normal way. One ETC physical gold share currently costs about $73.50 (£36.75). The annual charge is 0.39 per cent.
What are the plus points? Dennis Hall, of Yellowtail Financial Planning, says: “Exchange-traded funds are a cheap way of gaining exposure to shares or commodities and are easy to buy and sell. This particular share is also eligible to be included in an individual savings account (Isa) or personal equity plan (Pep).”
Right now gold is proving popular as a safe haven in the wake of the recent turbulence in financial markets.
What is the downside? Mr Hall says that most investors are not especially familiar with commodities so they may be buying a product that they do not fully understand. Because gold is priced in dollars, sterling investors can suffer currency losses on their holdings.
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Sophie Stewart - London
