Precious Metals: An Introductory Tutorial to Gold & Silver ETFs

An Introductory Tutorial to Gold & Silver ETFs

If you’ve found this article then you’re heard about gold and silver ETFs. What is an ETF, and how can you make money through buying and selling these investments? This brief guide will answer those questions.

What is an ETF, and why are they so popular?

The abbreviation “ETF” stands for “exchange-traded fund.” An ETF is a stock-like investment. Instead of representing ownership of a traditional company, however, a share of an ETF represents ownership of a company whose only job is to store gold and/or silver. Specific amounts vary according to the ETF, but in general one share of an ETF is supposed to represent 1/10 of an ounce of gold. ETFs are popular right now because they allow investors who are already comfortable investing in stocks to diversify their portfolios without having to think about physically storing precious metals.

How do you buy and sell ETFs?

You can buy and sell shares of ETFs in exactly the same manner as you would buy or sell blue chip stocks. You can venture into the stock world on your own, you can use a traditional broker, or you can use one of the many online stock trading platforms. Transactions are instant and legally-binding, just as they are with any other kind of stock.

What are the risks involved with an ETF investment?

As is the case with any stock investment, there is a chance that the company’s leadership could act inappropriately or otherwise not in the best interests of shareholders. One of the biggest risks that ETF investors face is the dilemma over a lack of regulated audits. Most ETFs are heavily and regularly audited to make sure that every ounce of metal the company claims to own is accounted for. There is, however, always a slight chance that oversight could cause an ETF’s price to fall due to discovered irregularities in the gold stored by the ETF. Additionally, even if all the gold or silver is accounted for there is a risk that the gold or silver ETF in question could lose value due to declining precious metal prices.  


You should now have a fairly strong understanding of how gold and silver ETF markets work. These investments are slightly more complicated than we can explain in this brief tutorial, but you can take what you’ve learned from this article and apply it to further study of gold and silver ETFs.

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