The operation principle of gold ETF is: large gold producers entrust physical gold to fund companies, and then fund companies publicly issue fund shares on exchanges based on this physical gold and sell them to various investors. Commercial banks act as fund custodians and physical custodians respectively, and investors can freely redeem the funds during their existence.

Gold ETF is listed on the stock exchange, and investors can trade gold ETF as easily as buying and selling stocks. Low transaction cost is a major advantage of gold ETF. Investors don't need to pay gold custody fees, custody fees, insurance fees and other fees when buying gold ETFs, but only need to pay the usual management fee of about 0.3%-0.4%, which is very prominent compared with the average handling fee of 2%-3% in other gold investment channels. In addition, gold ETF also has the advantages of safe storage and strong liquidity.

Investment advantages of gold ETF

1. Convenient transaction

Gold ETF funds are listed on stock exchanges, such as StreettTracks Gold Trust (GLD) listed on the New York Stock Exchange, GoldBullionSecurities(GBS) listed on the London Stock Exchange and Euronext, and GoldBullionSecurities (Gold) listed on the Australian Stock Exchange. Investors can trade gold ETFs as easily as buying and selling stocks.

Keep safe

Investors buying fund shares is equal to holding gold spot. These gold are usually delivered in the fund custodian's vault based on the deliverable gold bars of the London Gold and Silver Exchange, which is extremely safe.

3. Low transaction cost

Investors can buy gold ETFs, and they don't need to pay for the custody, storage and insurance of gold, but only need to pay a management fee of about 0.40%, which has obvious advantages over other investment methods with a rate of about 2%~3%.

4. Strong liquidity

Gold ETF has primary and secondary markets. At the same time, market agents or market makers are active in market transactions. In addition, the stock of gold ETF is huge, which greatly ensures the liquidity of trading.

5. Transparency of transactions

Global gold trading is a 24-hour continuous trading, and the price is very transparent.

6. The transaction is flexible.

In major gold ETF transactions, market orders, limit orders and stop-loss orders can be set according to needs. In addition, funds such as GLD can also sell short and provide margin trading options, which is very flexible.