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Launched on April 2007, ETFS Physical Gold (PHAU) is a fund that can be traded on any major stock exchange, just like regular securities. What makes this fund different from securities is the fact that it is designed to track the price of physical gold in the market.
The physical gold bought by the PHAU fund is held by the custodian bank, HSBC Bank USA NA. This gold is traded by the fund according to rules for Good Delivery laid out by the London Bullion Market Association (LBMA).
Trading In the ETFS Physical Gold (PHAU) Fund
The ETFS Physical Gold fund offers investors an easy and cost-effective way to invest in the precious yellow metal market. They no longer need to buy physical gold to profit from the increasing demand for the metal. All they need to do to gain an entry into the market is to buy a minimum of one security, which is a secured, zero-coupon note issued without a date, of PHAU.
The value of a PHAU fund is equivalent to the spot price of gold minus the management fees.
Just like other exchange traded funds, PHAU securities can be sold through brokerage accounts at any point to capitalize on an increase in gold prices. PHAU ETFs are, however, only traded across the five major stock exchanges — the LSE, Xetra, NYSE-Euronext, Borsa Italiana and Tokyo Stock Exchange.
ETFS Physical Gold Fund Features
Key features of PHAU are:
It tracks the price of gold instead of a range of equities.
The fund is backed by physical, allocated gold.
With clear pricing, the performance of the fund can be tracked easily.
These securities can be traded in the major currencies, such as the British Pound (GBP), US dollar (USD), euro and yen.
The securities are tradable at the five major stock exchanges across the world.
Benefits of Investing In PHAU
Some of the benefits of investing in PHAU are:
It can be held in ordinary brokerage accounts.
Investing enables diversification of one’s portfolio
You can short sell the PHAU securities, as well as buy on margins.
The low cost of investment in the PHAU and the speed of trading make this a good option for almost any type investor.
Risks of Investing in PHAU ETF
Risks associated with investments in PHAU are:
The price of PHAU securities will fall or rise with gold prices, as a result of which an investor may not receive the invested amount.
The securities are priced in US dollars, euros or the GBP. Thus, the investment made in currencies other than these might be affected by unfavourable exchange rate movements.
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