A Golden Investment Guide: Newgold Etf Nigeria

Gold is a popular investment option in Nigeria, especially in times of economic uncertainty. Gold is a hedge asset, protecting finances from risks such as hyperinflation. In Nigeria, which is currently facing high inflation and currency devaluation, gold is seen as a way to preserve wealth. One way to invest in gold in Nigeria is through the NEWGOLD Exchange Traded Fund (ETF), which is traded on the Nigerian Stock Exchange. NEWGOLD is a gold-backed ETF, meaning it invests in physical gold, and its value is tied to the price of gold bullion. This ETF provides a more accessible way to invest in gold compared to buying physical gold, which can be risky due to the presence of fake dealers and the need for secure storage. By investing in NEWGOLD, Nigerians can gain exposure to gold and potentially hedge against the country's economic challenges.

What is the NewGold ETF?

The NewGold Exchange-Traded Fund (ETF) is a gold-backed fund that allows investors to invest in gold without having to deal with the physical asset. It is traded on several stock exchanges, including the Nigerian Stock Exchange (NGX), the Johannesburg Stock Exchange (JSE), and the Botswana Stock Exchange (BSE).

NewGold ETF is an alternative way to gain exposure to the gold market and is often used as a hedge against inflation and economic uncertainty. The fund tracks the price of gold bullion, and for every unit created, it buys 1/110th of a fine troy ounce of gold. The physical gold is stored by NewGold, and investors pay an annual fee of 0.3% for this service.

One of the benefits of investing in NewGold ETF is that it is traded on the stock exchange like a share, making it easy to buy and sell. It is also regulated and professionally managed, reducing the risk for investors. The value of the fund is influenced by the price of gold and the exchange rate between the South African Rand (in which the fund is priced) and other currencies, such as the US Dollar.

NewGold ETF has attracted investors looking to diversify their portfolios and protect their capital in times of economic uncertainty in Nigeria. It has seen significant trading activity, particularly from foreign investors looking to convert their Naira assets into Dollars due to the country's forex liquidity issues.

How does the NewGold ETF work?

The NewGold Exchange-Traded Fund (ETF) allows investors to invest in a debt instrument, the value of which tracks the price of gold bullion. For every unit created, the fund buys 1/110th of a fine troy ounce of gold and stores the physical gold for an annual fee of 0.3%.

NewGold ETF is listed on the Johannesburg Stock Exchange (JSE) under the short code GLD and is priced in South African Rand (ZAR). It is also traded on the Nigerian and Botswana Stock Exchanges.

As an ETF, NewGold is traded like shares on a stock exchange. It is a pooled investment fund that is professionally managed and regulated by the exchange where it is traded. This means that there are many risk management techniques in place, so investors don't have to worry about counterparty or market risk as much as they would if they were managing their own investments.

ETFs can be bought and sold at any time on a stock exchange, providing instant liquidity. They are denominated in small values, like the price of a share, and can be bought from a brokerage authorized by the exchange, such as NGX, for a small brokerage fee.

NewGold ETF is a good option for those who want their investments to match the price of gold.

Why invest in the NewGold ETF?

The NewGold ETF is an Exchange-Traded Fund (ETF) that enables investors to invest in gold without the difficulties of buying, storing, and selling physical gold. ETFs are traded on the stock exchange like shares, making them easy to buy and sell.

Gold is a hedge asset, which means it protects your finances in risky situations such as hyperinflation. As the value of the Naira decreases due to inflation, gold tends to rise in local currency terms. Thus, gold is seen as a better store of value than local currency.

Gold has been a way to preserve and pass on wealth for generations. It holds value over time and is still in high demand globally, with central banks and financial organizations storing large amounts.

The NewGold ETF is an ideal investment strategy to diversify your portfolio and gain exposure to the gold industry and other sectors like gold mining, manufacturing, and transport. Gold ETFs are also used as hedge protection against a fluctuating market, making them an alternative to insurance in your investment portfolio.

Gold ETFs are easier to trade and more liquid than physical gold. They can be bought and sold during working hours, and gold prices are publicly available, making the process transparent. There are no entry or exit loads, and they attract less tax than physical gold.

Gold prices also do not fluctuate substantially, so you can prevent major losses even when returns on equities decrease significantly. Gold ETFs are available in variable denominations, making them ideal for all types of investors, as you can invest with as little as one unit, which represents one gram of gold.

Additionally, the NewGold ETF is priced in South African Rand (ZAR), so it offers exposure to currency fluctuations against the US Dollar. When the Rand weakens against the Dollar, NewGold outperforms spot gold, and when the Rand strengthens, it underperforms spot gold.

Overall, the NewGold ETF is a good option for those wanting exposure to gold and its price performance without the hassle and risk of buying physical gold.

How to buy the NewGold ETF

The NewGold Exchange-Traded Fund (ETF) is a gold-backed fund that enables investors to invest in gold without having to deal with the challenges of buying, storing, and selling physical gold. Here's a step-by-step guide on how to buy the NewGold ETF:

Step 1: Understand the NewGold ETF

The NewGold ETF is a pooled fund that invests in gold bullion. It is designed to track the performance of the price of gold. For every unit of the ETF created, the fund purchases 1/110th of a fine troy ounce of gold. The physical gold is stored by NewGold, and investors pay an annual fee of 0.3% for this service. The NewGold ETF is priced in South African Rand (ZAR) and is traded on the Johannesburg Stock Exchange (JSE) with the short code GLD.

Step 2: Decide How Much to Invest

The NewGold ETF is bought and sold on the stock exchange like shares, making it easy to invest in. You can buy as little or as much of the ETF as you want, depending on your investment budget and goals. Keep in mind that investing in gold is generally seen as a long-term investment strategy.

Step 3: Open a Brokerage Account

To purchase the NewGold ETF, you will need to open an account with a brokerage firm authorized to trade on the NGX exchange in Nigeria or the relevant exchange if you are investing from another country. You can compare different brokerage firms to find one that suits your needs in terms of fees, platform usability, and customer service.

Step 4: Place a Buy Order

Once your brokerage account is set up and funded, you can place a buy order for the NewGold ETF. Log in to your brokerage account and enter the ticker symbol for the NewGold ETF, which is "NEWGOLD" on the Nigerian Stock Exchange (NGX) and the Botswana Stock Exchange (BSE). Specify the number of units you want to purchase, and place your buy order.

Step 5: Monitor and Manage Your Investment

After purchasing the NewGold ETF, it's important to monitor the performance of your investment over time. Keep an eye on the price of gold and the overall market conditions, as these will impact the value of your ETF units. You can also consider setting up price alerts to notify you of significant changes in the price, allowing you to make timely investment decisions. Remember that investing in gold, including through ETFs, carries risks, and the value of your investment can go down as well as up.

NewGold ETF vs other investment options

NewGold ETF is a gold exchange-traded fund (ETF) that tracks the performance of gold bullion. ETFs are traded like shares on a stock exchange and are a pooled investment fund. The NewGold ETF is listed on the Johannesburg Stock Exchange (JSE) and is priced in South African Rand (ZAR). For every unit created, the fund buys 1/110th of a fine troy ounce of gold, which is then stored for an annual fee of 0.3%.

Compared to other investment options, NewGold ETF has several advantages and disadvantages.

Advantages

• NewGold ETF is an alternative solution to gaining exposure to gold, especially during times of economic uncertainty. Gold is often seen as a safe-haven investment during periods of instability.
• It is easy to buy and sell NewGold ETF on the stock exchange, making it more liquid than physical gold.
• The ETF is professionally managed and regulated, reducing the risk for investors.
• It is a good option for those who want their investments to match the price of gold.
• NewGold ETF can be used as a hedge against a fluctuating market and as insurance in an investment portfolio.
• It is rated as one of the best defensive assets available, offering protection against economic fluctuations and currency debasement.
• Each unit of the ETF represents 1 gram of 99.5% pure gold, making it an ideal long-term investment.
• Gold ETFs are also suitable for investors who want to track the actual price of gold in real-time without owning the physical commodity.
• They have lower brokerage charges, typically between 0.5% to 1%.
• There are no entry or exit loads, resulting in zero additional charges when buying or selling.
• Gold ETFs offer tax benefits as they do not attract VAT or Securities Transaction Tax.

Disadvantages

• The performance of NewGold ETF is dependent on the price of gold, which can be volatile and subject to market conditions.
• The ETF is priced in South African Rand, so its performance can be impacted by currency fluctuations against the US Dollar.
• There may be better investment options for those seeking higher returns, as gold ETFs offer relatively lower returns compared to riskier assets.
• Gold ETFs may not be suitable for those looking for short-term investments, as physical gold can be more easily liquidated and traded.
• The expense ratio of gold ETFs may be higher than that of other ETFs, making them a more expensive investment option.
• Gold ETFs may not provide the same level of diversification as other investment options, as they are primarily focused on gold-related assets.

In conclusion, NewGold ETF is a good investment option for those seeking exposure to gold and wanting to hedge against economic uncertainty. It offers advantages such as liquidity, professional management, and insurance against market fluctuations. However, it is important to consider the potential disadvantages, such as volatility in gold prices, currency fluctuations, and higher expense ratios.

Frequently asked questions