Gold investing can be an excellent way to protect against inflation and diversify a portfolio. When choosing an ETF for gold investment, investors should carefully evaluate its expense ratio, historical performance and liquidity before making their selection.
Before investing, it is crucial that you understand both your risk tolerance and investment goals. This will allow you to determine how much volatility you can handle comfortably.
SPDR Gold Shares (GLD)
GLD is one of the oldest and most acclaimed exchange-traded funds (ETFs), tracking gold bullion prices in London as an ETF. GLD provides an effective hedge against inflation while its low costs make it attractive to short-term traders.
This ETF is physically backed by gold bars and coins stored in vaults that are regularly inspected, offering high transparency with online listings of each bar held as collateral. Furthermore, its track record and expenses ratio have proven exceptional.
The best gold ETFs feature low expense ratios, large total assets and adequate liquidity to enable buyers and sellers of shares easily. We also considered fund managers’ track records and financial stability before looking at average bid-ask spread and trading volume figures; both can have an effect on total fund returns.
IAUM Gold ETF (IAU)
iShares’ iAUM ETF provides investors with one of the safest gold ETF options: investing in physical bullion. Investors purchase shares backed by actual bullion bars stored safely with BullionVault vaults; this eliminates futures contracts, lowers storage costs, and forgoes insurance premiums altogether.
This fund boasts a low expense ratio and is tailored to satisfy fee-conscious buy-and-hold retail investors. Furthermore, its daily trading volumes rank among the highest available to traders who desire access to gold prices.
Gold’s high resistance to economic uncertainty and rising interest rates makes it an asset worth adding to your portfolio, provided you have an appetite for risk and return. But be wary of investing in leveraged gold ETFs (which use derivatives to speculate on price movements) or exchange-traded notes – they do not lend themselves well to long-term wealth preservation strategies like buy-and-hold strategies.
iShares Gold Miners ETF (IAU)
If you want to invest in gold without physically owning coins or bars, an ETF account at a discount broker may be the way to go. Some platforms charge no transaction fees while others levy similar costs as stock purchases; you can then purchase ETFs regularly so as to benefit from dollar cost averaging.
Gold may provide investors with an alternative investment vehicle and protection from market volatility, yet investors should carefully assess their risk tolerance and investment goals prior to adding this asset to their portfolio.
SPDR Gold Shares is considered the safest gold ETF available, as it holds physical gold bullion in secure vaults and seeks to reflect daily price movements of this precious metal. Investors should avoid leveraged and inverse gold ETFs which use financial derivatives to bet against gold prices; such investments involve greater operational risk. It’s important that investors understand any tax implications when selling shares – these may vary depending on holding period and tax jurisdiction.
Market Vectors Gold Miners ETF (GDX)
GDX, launched in May 2006 and traded on NYSE Arca exchange, is an ETF designed to track gold miners. Its aim is to replicate, before fees and expenses, price and yield performance of NYSE Arca Gold Miners Index.
Gold mining ETFs provide investors with a way to diversify their portfolios and reduce risks associated with other assets. They’re especially helpful if investors fear inflation or an imminent financial crisis; but be wary as gold mining stocks are highly speculative investments with high levels of risk and volatility.
Gold prices typically surge during times of economic instability and many investors view it as an effective hedge against inflation. Gold also tends to do well when interest rates decline as investors lose trust in other income-generating assets.
Goldcorp (GG), Barrick Gold (GOLD), Newmont Mining (NEM -0.21%), Silver Wheaton (WPM -0.64%) and Franco-Nevada Corp. (FNV -0.24%). Of these six holdings, only Silver Wheaton has seen consistent returns on equity over time.
