Riding the boom on gold bullion exchange-traded funds,
If approved, the New York firm's Van Eck Associates' Market Vectors Trust would follow the two-year-old
The fund comes on the heels of the $660 million
The Amex index includes companies that focus on gold and silver and have a daily volume over 50,000 shares for at least six months and market capitalizations greater than $100 million.
The Van Eck ETF will have a total expense ratio of 0.55%
Investors who choose to bet on the companies, rather than the bullion, may face more volatility, but also better tax treatment.
Because precious metals are classified by the
"Mining equities leverage the gains or losses in metals themselves," said Brien Lundin, editor of Gold Newsletter. "On the way up, this can be a wonderful thing. On the way down, it can become quite a painful thing," Lundin said.
Although there are funds that invest in mining companies, the Van Eck ETF would present stiff competition, with a lower price and better trading flexibility, according to Steve Jon Kaplan, editor of
Mining companies are also susceptible to rising costs such as labor, fuel and insurance, whereas gold is a pure asset, free of credit risks, or new share issuances, said Jon Nadler, an analyst with bullion dealer
Nadler, skeptical that the Van Eck ETF can pan investment gold, suggested other products may better play off of the recent gold rush.
"If one wishes to purely speculate," he said, "could entertain ETF or options on gold, perhaps a smattering of mining shares, but that's about it."
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.