Gold-backed Exchange Traded Funds (ETFs) have grown strongly in scale and popularity over the last decade and their combined gold holdings now surpass all but the largest central bank gold reserve holdings. However, its important to understand the mechanics of these gold-backed ETF investment vehicles and to appreciate what they can and can't provide to gold investors.
This infographic takes you on a tour of gold-backed ETFs and illustrates insights into how these products really work, including the following:
- The contemporary gold holdings of the world's largest gold-backed ETF platforms
- Why holders of gold ETFs are holders of units / shares, not gold holders
- The characteristics and common objectives of gold-backed ETFs
- How the world's largest gold ETFs support and perpetuate the opaque practices of the London Gold Market
- The secretive vault network within which many large gold-backed ETFs allocate and store their gold in
- How the amount of gold represented by an ETF unit erodes over time
- The summary mechanics and infrastructure of many of these gold ETF vehicles
For more information about the mechanics of gold-backed ETFs, please also see BullionStar Gold University article Gold ETF Mechanics.