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Finra: Gold ETFs Safer Than Stocks

The U.S. Financial Industry Regulatory Authority has warned investors against gold stocks, suggesting that investments in gold ETFs or mutual funds instead could help spread the risk.

The U.S. Financial Industry Regulatory Authority (Finra) has warned investors against gold stocks, suggesting that investments in gold ETFs or mutual funds instead could help spread the risk, Financial Times reports. ETFs backed by physical gold are not similar to making a direct investment in gold, the regulator said.

There have been concerns about some gold ETFs’ exposure to unsecured credit risk. The shares of SPDR Gold Trust which has shot up recently, for instance, are held in an allocated account, but only till such time as baskets are created or redeemed. This means the gold is channeled through the trust’s unallocated account.

Click here for the story from Financial Times.

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