Posted in Finance, Accounting and Economics Terms, Total Reads: 429
Definition: Double Gold ETF
An ETF (exchange traded fund) refers to a security that tracks an index like sensex, goods or a commodity like gold. Because it trades like a stock it gives the flexibility of selling short, buying on margin and other features which has made them very popular. It also gives the advantage of having diversification of an index fund in the portfolio.
A simple gold ETF refers to the security which moves according to the price movements of Gold. The main advantage is that one can invest in gold without investing in actual physical gold and investors can invest as little as one unit. The investors can buy or sell rapidly in the secondary market just like a stock and make profits.
The difference between a simple gold ETF and a double gold ETF is as follows: A double gold ETF also has gold price as the underlying. The difference is mainly in that in double gold the value of security is twice the value of actual commodity gold. Double Gold ETF can be risky as in case of downward price movements the losses can be huge and hence are preferred only by risk seeking investors. The risk involved is huge but the returns can be enormous in scenarios of upward movement in underlying gold prices.