Gold ETFs have long been an attractive investment tool, enabling investors to diversify their portfolios and protect against inflation. Some invest in physical bullion while others hold shares of mining companies that specialize in producing gold.
To help you choose the most appropriate gold ETF for your investment strategy, we’ve ranked them on several investment-related metrics.
1. SPDR Gold Shares (GLD)
SPDR Gold Shares (GLD) is one of the world’s largest physically-backed gold exchange-traded funds (ETF). Each share in GLD represents an ownership interest in physical gold bullion; as a result, its price closely tracks that of physical gold prices.
Investors have sought exposure to gold for millennia as an insurance policy against currency crises and political unrest, and in more modern times as part of portfolio diversification and as an insurance against inflation.
Before investing in gold, investors should carefully assess its risks before adding it to non-tax-advantaged accounts like 401(k) and IRA plans. One major risk for GLD shares may be taxed as collectibles rather than ordinary income, potentially significantly decreasing returns and return.
2. VanEck Vectors Gold Miners ETF (GDX)
VanEck Vectors Gold Miners ETF (GDX) is one of the most sought-after gold ETFs on the market, tracking an index composed of global gold mining firms. The fund boasts deep primary, secondary, and derivative markets for trading purposes.
This ETF tracks a market-cap weighted index of gold mining companies and is rebalanced quarterly to maintain stability for investors who fear inflation or an imminent financial crisis.
However, this investment should only be undertaken as a speculative venture and isn’t suitable for everyone. Performance of the GDX ETF has been highly volatile; therefore it should only be undertaken by long-term thinkers comfortable with risk. Furthermore, unlike GLD and QAU which invest directly in physical gold bullion bars or coins; instead GDX invests directly in shares of gold mining companies instead.
3. iShares Gold Miners ETF (IAU)
The iShares Gold Miners ETF provides exposure to both physical gold and public companies involved in gold mining, each with different risks that should be evaluated carefully by investors. Furthermore, investors should keep an eye on expense ratios as these funds may eat into after-tax returns and shorten returns over time.
Establish your financial goals and locate investments best suited to helping you meet them. Diversification is key when building an investment portfolio and adding safe haven assets such as gold may prove beneficial in certain market situations.
4. Market Vectors Gold Miners ETF (GDXL)
Market Vectors Gold Miners ETF (GDXL) provides one of the easiest and most effective ways to gain exposure to gold mining companies. This ETF seeks to replicate the price and performance of the NYSE Arca Gold Miners Index while investing in global materials stocks of all capital sizes that are weighted based on market cap.
GDX tends to perform well during times of financial uncertainty and inflation, when investors seek safety in hard assets like gold. Furthermore, falling interest rates cause confidence to diminish among yield-generating investments as people turn away from riskier options in favor of gold for safety.
This exchange-traded fund (ETF), or more accurately “exchange-traded fund”, trades on the ASX just like stocks or indices. Being such a volatile financial asset makes GDX ideal for CFD trading as profits can be generated from price movements.
5. Market Vectors Gold Miners ETF (GDX)
This ETF gives investors direct exposure to gold mining companies by tracking the performance and price fluctuations of the NYSE Arca Gold Miners Index – which is market capitalization weighted so larger firms have greater representation within it.
Gold has long been considered an effective hedge against inflation and volatility, offering diversification benefits and protecting the portfolio against fluctuations.
These gold ETFs may be among the top choices available today; however, investing in commodities should only ever be treated as short-term strategies and should never be treated as an investment strategy. We strongly suggest reading our Investing Guide before making any definitive decisions.