Investors tend to buy gold as a hedge or safe haven against economic, political or currency risk. For example, recent events that have pushed gold higher include renewed tension in the Middle East and concerns about U.S. government debt.

There are a number of ways for investors to hold gold. For instance, you could buy physical gold, shares of gold mining companies or units of a gold ETF.

A Gold ETF Enjoys Certain Advantages Over Stocks and Bullion

As we point out in our free report, “Top ETFs to Own Now,” holding physical gold comes with additional costs, including for storage and/or insurance, that can seriously erode any gains you make from investing in gold.

And while mining stocks have performed well when gold prices are on the upswing, they’re just as prone to the various costs and risks that other mining companies face, such as cost overruns, political resistance to a project or an acquisition that goes sour. Any of these factors can cause them to plunge, no matter what the gold price is doing.

The drawbacks of holding bullion and buying gold mining stocks have increased the appeal of investing in a gold ETF, particularly the SPDR Gold Trust (NYSE: GLD). The gold ETF was launched in November 2004 with the intention of allowing investors to tap into the gold market without having to take delivery of gold itself, and to let them buy and sell their interest through stock exchanges.

This Gold ETF Is Backed by the Real Thing

Unlike many other gold-focused ETFs, the fund doesn’t use futures or derivatives, nor does it hold shares of gold miners. The gold ETF simply buys gold bullion at spot prices and stashes the metal in underground vaults buried deep below the streets of London. Its sole assets consist of gold bullion and, from time to time, cash.

That lends to a high degree of price stability based on the value of the underlying gold. Unlike many metals ETFs, which frequently trade at large discounts or premiums to net asset value, SPDR Gold Shares rarely trade much higher or lower than one-tenth of an ounce of gold, because there’s never a question of what’s underlying the shares.

No Safe Required

This gold ETF is one of the easiest ways to invest in gold without installing a floor safe. And despite all the convenience the fund offers, it sports a very reasonable expense ratio—just 0.4%. Even if you were to hold physical bullion, it’s unlikely you could do it any more cheaply.