Gold has consistently been the preferred choice for those investing in precious metals. However, if purchasing physical gold doesn't interest you, there’s an alternative, gold Exchange-Traded Funds (ETFs). These provide a more convenient and efficient way to invest. To ensure you make the right investment decision based on your goals, it's essential to identify the top-performing gold ETFs.
This guide will outline some of the best options for investing in gold ETFs. We’ll consider performance, expenses, liquidity, and overall benefits when making our recommendations.
5 Best Gold ETFs
- SPDR Gold Shares (GLD) – Best Gold ETF Overall
- iShares Gold Trust (IAU) – Gold ETF With the Lowest Fees
- abrdn Physical Precious Metals Basket Shares ETF (SGOL) – Best for Diversified Precious Metals
- GraniteShares Gold Trust (BAR) – Best for Low-Cost Gold Investment
- VanEck Gold Miners ETF (GDX) – Best for Gold Mining Stocks
SPDR Gold Shares (GLD)
iShares Gold Trust (IAU)
abrdn Physical Precious Metals Basket Shares ETF (SGOL)
GraniteShares Gold Trust (BAR)
VanEck Gold Miners ETF (GDX)
SPDR Gold Shares (GLD) – Best Gold ETF Overall
SPDR Gold Shares (GLD) has been the go-to gold ETF option since 2004, boasting an impressive track record. Not only is it the largest gold ETF with over $55 billion in assets under management, but its substantial size and market presence also offer investors stability and reliability.
GLD focuses on investing in physical gold bullion while also holding cash reserves. This strategic approach ensures that investors have direct exposure to the actual asset, aligning the fund's performance closely with the price movements of gold itself. GLD provides ample liquidity for investors, with an average daily trading volume of 5.77 million shares.
- The largest gold Exchange-Traded Fund (ETF) available in the market
- Exceptionally liquid
- Relatively elevated expense ratio
- Lack of dividend disbursements
iShares Gold Trust (IAU) – Gold ETF With the Lowest Fees
iShares Gold Trust (IAU) is a highly esteemed Exchange-Traded Fund that exposes investors to the value of gold. With an impressive $30 billion in assets under management, it’s a substantial player within the domain of gold ETFs. IAU is listed on the NYSE Arca, providing investors with convenient access.
One notable benefit of IAU is its lower expense ratio compared to other gold ETFs such as SPDR Gold Shares. This makes it a more financially efficient choice for those seeking to benchmark the price of gold. Due to its size and liquidity, investors can easily buy and sell shares with an average daily trading volume of 4.9 million.
- Relatively modest expense ratio
- Exceptional liquidity
- Has remained within a specific range since 2020
- Lacks dividend disbursements
abrdn Physical Precious Metals Basket Shares ETF (SGOL) – Best for Diversified Precious Metals
The abrdn Physical Gold Shares ETF, or SGOL, is an appealing choice for investors searching for a cost-effective gold ETF stock. With a relatively low expense ratio of 0.17%, this fund offers great value to its investors by keeping fees at a minimum.
SGOL primarily holds gold bullion bars, which are securely stored in vaults situated in Zurich and London. While it may not have the largest amount of assets under management compared to other gold ETFs on the market, it still boasts an impressive $3 billion. SGOL maintains decent liquidity with an average daily trading volume of 2.14 million traded shares.
- Offers an online inventory of its held gold bars
- Relatively modest expense ratio
- Has maintained a consistent trading range since 2020
- Doesn’t distribute dividends
GraniteShares Gold Trust (BAR) – Best for Low-Cost Gold Investment
GraniteShares Gold Trust (BAR) is a gold ETF stock that focuses solely on holding physical gold in its vaults located in London. It provides a cost-effective option with its low expense ratio of 0.17% per share price, making it stand out among other gold-leveraged ETFs.
BAR can be easily traded through a brokerage account or on the NYSE Arca exchange. Compared to other gold ETFs mentioned in this guide, BAR has lower liquidity and an average daily trading volume of around 617,000 shares. The fund prioritizes transparency by disclosing the specific gold bars it holds daily, and knowing that physical assets back their investment gives investors peace of mind.
- Relatively affordable per-share price and expense ratio
- Clear visibility into the gold bars held by the trust
- Relatively reduced liquidity
- Absence of dividend disbursements
VanEck Gold Miners ETF (GDX) – Best for Gold Mining Stocks
VanEck Gold Miners ETF (GDX) allows investors to invest in the gold mining sector. This ETF takes a comprehensive approach by including almost 50 major mining companies, which consist of the two largest players in the industry: Newmont Corp. (NEM) and Barrick Gold Corp. (GOLD). By investing in GDX, investors can gain exposure to a well-diversified portfolio of stocks from gold mining companies.
Investing in GDX allows individuals to benefit from the positive performance of the gold mining industry. Several factors, such as production levels, operational efficiency, and exploration outcomes, can influence the success of these companies.
This ETF isn’t solely affected by changes in the price of gold but also by market pressures. GDX is highly liquid, with an average daily trading volume of 16.94 million shares. It's worth noting that this particular ETF is unique amongst others mentioned because it offers dividends to its investors.
- Enhances diversification and risk reduction through broad investment across multiple companies
- Provides dividends
- Relatively elevated expense ratio
- Vulnerable to fluctuations in the equity market
Best Gold ETFs – Buyer’s Guide
What Are Gold ETFs?
Gold Exchange-Traded Funds (ETFs) offer investors a means to access the benefits of gold without the need for direct acquisition, storage, and resale of the valuable metal. Certain gold ETFs directly mirror the price movements of gold, while others focus on investing in businesses within the gold mining sector.
Similar to other ETFs, these funds are created by purchasing stocks in companies associated with gold or by acquiring and storing physical bullion. Investors can then buy shares in these funds, which fluctuate in value based on changes in the price of gold or the stock value of related companies.
Gold is often seen as a secure investment, gaining value when stock markets decline. In September 2011, after the Great Recession, gold reached its highest price at nearly $1,900 per ounce. Lately, the price of gold has been approaching that historic level once again.
Main Things to Know Before Choosing Gold ETFs
To comprehend gold ETFs thoroughly, it’s imperative to grasp several essential factors. Gold ETF stock presents the opportunity to gain exposure to gold conveniently and flexibly by enabling the purchase and sale of shares on stock exchanges, eliminating the need for physical ownership and associated storage and insurance responsibilities.
When selecting a gold ETF stock, consider the expense ratio. This ratio encompasses the annual fees incurred from owning the ETF, covering management, administrative, and marketing expenses. A careful evaluation of the expense ratio can assist in determining if an investment is cost-effective.
Investors should also be mindful of the tax consequences. Selling ETF shares can lead to capital gains or losses, and how they’re taxed depends on factors such as how long they were held and the applicable tax laws.
Awareness of the potential tax impact is essential for making informed decisions and effectively managing one's investment portfolio. If you’re still determining these matters, seeking guidance from a financial advisor may be beneficial.
How to Invest in Gold ETFs?
Here’s how to buy a gold ETF stock:
Step 1: Find a Gold ETF
One way to locate gold ETFs is by searching your broker's website.
Step 2: Analyze the ETF
Two things to check before purchasing shares in a gold ETF
- Five-year performance: Most (though not all) gold ETFs track the spot gold price, meaning their returns should closely mirror gold price fluctuations.
- Expense ratio. This represents the annual fee deducted from your investment in the ETF. On average, gold ETFs have an expense ratio of 0.65%, as reported by ETF.com. Aim for a lower expense ratio.
There are two critical things to remember: The average investor should avoid purchasing leveraged gold ETF stocks. These utilize financial derivatives and borrowed funds to speculate on future price fluctuations. It’s advisable to prevent gold exchange-traded notes. ETNs are debt obligations that don’t possess the actual underlying gold (unlike ETFs) and carry a higher credit default risk.
These investment options are exclusively designed for professionals and unsuitable for a buy-and-hold approach, commonly favored by many investors who save for retirement.
Step 3: Buy the Gold ETF
Purchasing ETFs is similar to buying stocks through an online brokerage. A recommended strategy entails regular purchases, allowing for the benefits of dollar-cost averaging.
How Do Gold ETFs Work?
An Exchange-Traded Fund (ETF) is a type of investment security that combines the funds of multiple investors to purchase a diversified portfolio. Unlike investing in individual stocks, ETFs offer lower risk as the investment is spread across various companies within a specific market sector or industry.
Gold ETFs specifically hold physical gold bullion in secure vaults or use financial instruments to track the price of gold. Some gold ETF stocks invest in mining companies and fund gold production activities.
These types of ETFs issue shares that represent a specific amount of gold. As the price of gold fluctuates, the value of these shares changes accordingly. Investors can buy and sell these shares on stock exchanges throughout the trading day, providing liquidity and easy access to exposure to gold investments.
How Should I Invest in Gold?
Investing in gold offers a variety of options, each with its pros and cons. Before deciding on the best approach for you, it's important to consider your investment objectives carefully.
Consider factors such as how long until you retire, your anticipated income requirements (remembering that gold doesn't generate income unless sold), and your overall comfort level with risk. Remember that gold isn’t an ideal short-term investment strategy. It performs better when held as a long-term asset in a portfolio.
- Gold Bullion or Gold Jewelry: Physical gold encompasses a range of assets, from investment-grade gold with a purity of 99.5% (995) in the form of bars, ingots, coins, or rounds to gold jewelry and collectibles. Reputable dealers, custodians, and depositories are to facilitate the purchase of physical gold assets and ensure their secure storage.
- Gold IRAs: Gold IRAs are specialized retirement accounts that permit investors to hold physical gold, as well as other precious metals like silver, platinum, and palladium. As classified by the IRS, these self-directed IRAs enable individuals to include alternative assets such as gold, cryptocurrency, or real estate in their retirement portfolio, options not available with traditional or Roth IRAs. Gold IRAs are managed through gold dealers, custodians, and depositories.
- Gold ETFs and Mutual Funds: For investors who prefer not to select individual stocks, gold-leveraged ETFs and mutual funds offer a diversified approach to investing in gold. They provide exposure to gold through holdings in gold mining companies, firms that finance gold production, and, in some cases, physical gold bullion.
This approach spreads the investment across multiple holdings, reducing risk and offering broader exposure to the gold industry compared to investing in individual gold mining stocks or holding physical metal.
Top 3 Gold Investment Companies
Goldco – Best Gold IRA Company Overall
Goldco , a privately owned company based in California, has established itself as a leader in the precious metals industry with over ten years of experience. Their expertise lies in gold IRAs and asset protection services. They assist clients with starting or transferring their gold IRAs while guiding tax-advantaged retirement plans. It's important to note that Goldco doesn’t charge any fees directly.
There are associated custodian fees, setup and annual maintenance fees, and storage fees ranging from $150 to $200 per year. To open a gold IRA account, customers must make an initial investment of at least $25,000 and go through a representative-assisted account opening process.
Goldco boasts numerous positive customer reviews that reflect high satisfaction levels with their communication skills, efficiency, specialist knowledge, and exceptional customer service. These reviews have earned them an impressive 4.8 out of 5 stars.
The company has taken steps to address complaints related to inflated prices, misleading information, and delayed payouts. Goldco's dedicated customer support team is available Monday through Friday from 7:00 AM to 4:00 PM PST via phone or their website's chatbot feature.
American Hartford Gold - Best Gold IRA Company for Small Investments
American Hartford Gold is committed to assisting individuals and families in investing their money in valuable metals. This encompasses gold, silver, and platinum as bars or coins. We offer the convenience of delivering these precious metals directly to your doorstep or securely storing them within a retirement account such as an IRA, 401K, or TSP.
By incorporating "safe haven" assets into their investment portfolios, clients of American Hartford Gold can enhance their financial security for the future. Our investors can expect to receive top-notch gold and silver coins at competitive prices while enjoying a 100% satisfaction guarantee.
Augusta Precious Metals - Best Gold IRA Company for Customer Support
Augusta Precious Metals was established in 2012 by CEO Isaac Nuriani and specializes in providing silver and gold coins and bars for IRA investments. They ensure that their metals, except the American Gold Eagle coin, have a purity level of 99%.
The pricing structure can be accessed online and is determined by adding a margin to the base price. This margin may fluctuate depending on various factors such as supply, demand, and economic conditions. Augusta actively encourages investors to compare their prices with other dealers to make informed decisions. They offer a seven-day window for new investors to reverse transactions if necessary.
Best Gold ETFs – FAQs
Are Gold ETFs Safe to Buy?
Gold ETFs are typically regarded as a secure investment option. Nevertheless, similar to any other investment, they carry potential risks and may not be suitable for everyone. It’s crucial to thoroughly assess the prospectus of the ETF, grasp the fundamentals of the underlying assets, and consider both the volatility of the gold market and the credibility of its issuer.
Moreover, consulting a financial advisor can help you ascertain whether this investment aligns with your specific needs and goals.
How Are Gold ETFs Taxed?
The tax implications for gold ETFs can differ based on various factors, such as the investor's residency and applicable regulations, along with the structure of the specific ETF. In certain countries like the United States, profits from selling gold ETF stocks held longer than a year might be subject to long-term capital gains taxes.
In contrast, holding the shares for less than a year could be taxed at short-term capital gains rates. The tax consequences associated with gold ETFs are intricate. Hence it’s advisable to seek guidance from a financial advisor to understand how your investments may be taxed before making any decisions.
What Are the Drawbacks of Gold ETFs?
Similar to any other investment, gold ETFs carry their inherent risks. The value of these funds can be affected by factors such as fluctuations in the price of gold, market sentiment, and macroeconomic conditions. Moreover, although gold ETFs offer convenience, they don’t provide the same physical ownership as actual gold, which could be a form of security for certain investors.
Disclaimer: The above is a sponsored post, the views expressed are those of the sponsor/author and do not represent the stand and views of Outlook Editorial.