Invest in Precious Metals with a Gold ETFA gold ETF or exchange traded fund could be your ticket to getting into gold. Over the past couple of years, the price of gold has sky-rocketed. But while you might want to get in on this, you may not want to fill a safe with gold coins or lug around a bunch of gold bars. Or the fact that gold was over a thousand dollars for a single ounce may have kept you from getting into gold in 2009. It turns out there's an easy way to get into the gold market with exchange traded funds. So instead of having to actually physically own gold, you can invest in it by trading stocks. There are a few gold ETF options available, and the best feature is they are relatively inexpensive-usually priced at about 1/10th the cost for an ounce of gold. That means small investors can start getting into gold without having to spend a large amount of money.
iShares COMEX Gold TrustThe first gold ETF we'll look at is the iShares COMEX gold trust, which trades under the ticker IAU. Here's the fund description: The iShares COMEX Gold Trust ("Gold Trust") seeks to correspond generally, to the day-to-day movement of the price of gold bullion. The objective of the Gold Trust is for the value to reflect, at any given time, the price of gold owned by the Gold Trust at that time, less the expenses and liabilities of the Gold Trust. In short, these folks bought a bunch of gold bullion that they keep for you. When you buy a share of this gold ETF, in a sense, you basically take ownership of a small slice of their gold investment. But let's be clear, you don't actually own the gold and can't ask them to send it to you. But you do own stock in the gold and as the price of gold rises or falls, the price of your stock will rise and fall with it. At the time of writing there are 79.30 tonnes of gold in the trust. The price of one share is $107, making this a cheap way to start taking advantage of gold markets. As of January 2010, the fund had a year-to-date return of 23.46%, and since inception in 2005 a 20.53% return.
SPDR Gold shares TrustListed as one of the fastest growing ETFs in the United States since its inception in 2004, the SPDR Goldshares Trust gold ETF is another great option. This trust holds a lot more gold - 1,112 tonnes - or nearly 36 million ounces of gold. The value of the gold in the trust is a staggering $38 billion at the time of writing. It's traded on many stock exchanges including the NYSE, Tokyo, Hong Kong, and Singapore. Like the iShares fund, this gold ETF trades at around 1/10th the price of an ounce of gold, so was also about $107 a share at the time of writing. Since this fund trades in multiple markets, the price can fluctuate "after hours". The ticker for this gold ETF is GLD. In January 2010, the YTD return was 27.12%, a little better than the iShares IAU fund.
Trading SilverBesides gold, you may want to invest in other precious metals using an exchange traded fund. There are other options out there, and investing in silver is just as easy as investing in gold. The iShares Silver trust (SLV) is a silver ETF that trades on the NYSE. The fund description is: The objective of the iShares Silver Trust is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities. The year-to-date return as of January 2010 is a staggering 56.67%, reflecting the rise of precious metals during the financial crisis. There are a mind-boggling 300 million shares of silver held by the trust. The silver ETF trades under the ticker SLV, and is priced at about the price for one ounce of silver, following the London Silver Fix. This fund does not trade after hours.
SummaryA gold ETF offers investors an easy way to get into the gold market. Think of it like a mutual fund. A mutual fund pools money and allows investors to invest in a large number of stocks they otherwise wouldn't be able to on their own. With a gold or silver ETF, you can invest in a trust that holds millions or hundreds of millions of ounces of a precious metal, and you can start investing for a hundred dollars or less. 
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