Sunday, December 17

Review of Iau – Ishares Gold Trust Etf

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iShares Gold Trust ETF has grown rapidly since its inception in January of 2005.  It is definitely an investment that should be considered.  Here are some of the facts that you might want to review before buying the ETF:

  • IAU has 4 vaults with well over three million gross ounces in storage.  The vaults are in London, New York and Toronto.  That means that your investment is backed by real gold and you don’t have to worry about hiding your gold yourself.

  • Because IAU actually holds gold in storage, the ETF performs similarly to the price of gold.  If you are bullish on gold, you can buy the ETF and not worry about futures contracts as you would with a gold ETF that is purely a paper ETF, meaning that it holds paper instead of physical gold.

  • IAU actually lists the gold bars that it holds on its website so you can verify that they actually own gold as well as how much the bars weigh.

  • The sponsors fee of IAU is a mere 0.25% which is quite low for an ETF.  That means that you are paying the company less to manage the ETF than you would if they were dealing in paper assets because paper assets require a lot of calculations daily to determine what paper to own.  The sponsors fee is the only recurring expense for the ETF, meaning there won’t be any surprises.

  • The ETF is traded on the New York Stock Exchange, meaning that you can buy and sell shares through any normal stock trading account.

  • The ETF lists three risk factors that are summarized here: The first is if there is a sudden liquidation of gold by a large investor.  The second is significant hedging by gold producers.  The third is an attitudinal shift by investors toward gold, leading to a decline in prices.

  • The amount of gold in the trust will slowly decline due to sponsors fees, so you should expect that such a decline will be factored into the price.

Be sure to visit the iShares Gold Trust ETF website to complete your review of their IAU ETF.  This article is by no means complete and doesn’t claim accuracy.


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