What are gold ETFs and are they a good investment? Here’s a brief look at five that are worth considering.
Exchange-traded funds, or ETFs, have existed since 1993, though they became much more common in the early 2000s. Since then, gold ETFs have risen in popularity because they are a cheaper investment option than traditional mutual funds.
ETFs represent shares of ownership of a unit investment trust that holds portfolios of stocks, bonds, currencies or commodities. They provide considerable flexibility in implementing various investment strategies and in building investment portfolios.
So which ETFs are the best? Which one will provide long-term capital gains? It depends on the investor and the commodity, but the five gold ETFs below may be worth considering for gold investment. They were the largest gold ETFs on the stock market by asset value as of May 20, 2021.
1. SPDR Gold Trust (ARCA:GLD)
Total assets: US$60,654.2 million
The SPDR Gold Trust tracks the spot price of gold bullion and is determined by market forces in the 24 hour, over-the-counter market for gold. This market accounts for most global gold trade, and any quoted prices available to ETF investors reflect the latest available information.
Physical bullion comprises 100 percent of the ETF’s holdings, and its expense ratio per share is 0.4 percent. It offers investors a way to invest in the gold market that is much less costly than purchasing, storing and insuring gold bars or gold coins.
2. iShares Gold Trust (ARCA:IAU)
Total assets: US$29,343.5 million
Like the SPDR Gold Trust, the iShares Gold Trust aims to track the spot price of gold bullion. Its expense ratio for investors is 0.25 percent, and its holdings are allocated entirely to physical gold bullion. The aim is for the trust’s value to reflect the performance of the price of gold.
The physical gold the trust holds is in vaults in New York, Toronto, London and other locations. Investors can purchase and sell shares through a traditional brokerage account throughout the trading day.
3. SPDR Gold MiniShares Trust (ARCA:GLDM)
Total assets: US$4,421.87 million
The SPDR Gold MiniShares Trust offers investors one of the lowest available expense ratios for a US-listed ETF backed by physical gold. This ETF represents fractional, undivided beneficial ownership interests in the trust, which holds only physical gold bullion and, from time to time, cash.
It is possible to invest in MiniShares continuously throughout the trading day on the exchange at prices established by the market through a traditional brokerage account.
4. Aberdeen Standard Physical Gold Shares ETF (ARCA:SGOL)
Total assets: US$2,423.79 million
Aberdeen Standard Physical Gold Shares are issued by the Aberdeen Standard Gold Trust. The trust aims for shares to reflect the performance of the gold bullion price, minus the trust’s operating expenses.
The shares trade on an exchange like any other securities, and can be created and redeemed as supply and demand for gold in the market dictates and allows.
The gold that the Aberdeen Standard Gold Trust owns is held in Zurich, Switzerland, and it conforms to the London Bullion Market Association’s rules for good delivery.
5. GraniteShares Gold Trust (ARCA:BAR)
Total assets: US$1,108.8 million
GraniteShares’ ETFs are designed to seek the performance of the price of gold, less trust expenses.
The company prides itself on being among the lowest-cost physically backed gold ETFs currently on the market. The gold trust holds physical gold bars in a secure vault located in London and publishes a transparent list of gold bars daily. Its expense ratio per share is 0.17 percent.
Want more details? Check out these articles for more INNdepth coverage:
Want an overview of investing in gold stocks? Check out An Overview of Gold Stocks and Price.
This is an updated version of an article first published by the Investing News Network in 2014.
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Securities Disclosure: I, Melissa Pistilli, currently hold no direct investment interest in any company mentioned in this article.