Is now the time to invest in gold?
Investors are flocking to gold as the continuing global economic turmoil is causing investors to plough their money into gold exchange traded products (ETPs).
Investments into ETF Securities' physical gold ETPs have smashed through the $1 billion (£642 million) mark already this year. It says a total of $1.2 billion has been invested, largely by European investors.
There has been increased demand for gold this year and in June alone, gold ETPs attracted $2.2 billion in new assets, according to BlackRock's quarterly ETP report.
What is an ETP?
An ETP is an investment that tracks a commodity or index, so a gold ETP tracks the price of gold, but is traded in the same way as a share.
They are a nice way to invest in gold as they allow you to benefi t from rises in the gold price without owning physical gold, which would mean having to pay additional storage fees or, if you keep it at home, additional insurance costs.
It also allows you to trade quicker than if you were trying to buy and sell physical gold.
Should I invest?
"Gold is used as a safe haven for investors, and when equity markets fall gold prices rise," says Adrian Lowcock, senior investment adviser at Bestinvest. So if you are looking to diversify your portfolio beyond traditional investments gold can be a good choice.
The ETF Securities Gold £ ETF gained 3% in value over the past year, although it has shed 7% over the past six months. The annual management fee is 0.39%.
An Exchange traded fund is a security that tracks an index or commodity but is traded in the same way as a share on an exchange. ETFs allow investors the convenience of purchasing a broad basket of securities in a single transaction, essentially offering the convenience of a stock with the diversification offered by a pooled fund, such as a unit trust. Investors buying an ETF are basically investing in the performance of an underlying bundle of securities, usually those representing a particular index or sector. They have no front or back-end fees but, because they trade as shares, each ETF purchase will be charged a brokerage commission.