Gold is one of the most popular commodities traded on the forex market. There are many investors who are interested in placing their money into this commodity. Many of these investors do not know how to pick the individual gold investments that they want. As a result of this, the investors seek something known as a gold ETF.
The ETF is an exchange traded fund that is similar to a mutual fund. It spreads your money around the gold market for you. A triple leveraged gold ETF fund is one that moves approximately three times as much to the upside or downside as the gold commodity itself.
What does all of this mean?
If an individual is invested in a triple leverage, then they are making a very bullish bet on gold. They are saying with their money that they believe that gold is going to increase in value so much that they are willing to triple down on that bet. If they are correct, they stand to make about triple as much as they would if they had just invested in gold itself.
However, if their assumption is incorrect, then they will see their money disappear about three times as fast as well. This reality drives many people away from this kind of fund. However, the day trader may find this kind of investment to be pretty effective for their needs.
What advantages are there to this kind of investment?
There are a few advantages to investing in an ETF rather than a mutual fund. The primary advantage is the fact that investors are going to be able to trade in and out of the fund during regular trading hours.
A mutual fund does not allow for trading like a regular stock. It only spits out quotes at the end of each day once the totals have been added up. The ETF reacts differently in that it has real time quotes just like a regular stock.
Why a gold fund?
A gold fund is just one option in the ETF market. A triple leveraged one is just one sub category within the fund as well. Investors should carefully select which investments might be right for them. No one investment is right for everyone.
Many find a gold fund to be a great way for them to diversify the holdings that they already have. Holding some commodities in an investment portfolio can be a great hedge against just having stock market holdings.