5 Best Gold ETFs

Investing in a gold ETF is one of the easiest ways to add exposure to gold within your portfolio. We've reviewed the best gold ETFs and highlighted how you can trade them.

In this article:

• Physical Gold ETFs
• Gold miners ETFs
• Leveraged ETFs
• Which gold ETF is best for you

Physical Gold ETFs

A gold ETF is an Exchange Traded Fund whose shares are physically-backed by gold bars. Investing in a gold ETF will give you one-on-one exposure to the price of the precious metal, less any of the fund's management fees.

GLD

The SPDR Gold Shares ETF, also known as GLD, is the world's largest gold ETF. The Trust owns gold bullion stored in secure vaults, and each share represents a unit of beneficial interest in, and ownership of the Trust. Shares are listed and traded on the NYSE Arca, a subsidiary of the New York Stock Exchange. Each share represents one-tenth of an ounce of gold and aims to reflect the performance of the price of a gold bullion, less the Trust’s expenses (around 0.40% of the trust’s net asset value).

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Gold miners ETFs

Some investors are drawn to gold miners because they usually see their profits change more than the price of gold. For example, a 1% increase in the price of gold should lead to an even larger increase in their profits because miners have high fixed costs. For example, the GDX gold mining ETF rose by 35% between its January low and March 2022, even as the price of gold rose 11%. This is known as operating leverage.

However, you should also be aware that a miner’s performance will also be affected by their sales volumes, operational issues (such as strikes or natural disasters), their financial standing and liquidity, as well as political risks in the countries in which they operate. Recently, gold miners have faced labour shortages and high energy prices as a result of the war in Ukraine.

GDX

The VanEck Vectors Gold Miners ETF (GDX) invests in the largest gold mining companies in the world. Its 10 largest holdings, which include stakes in Newmont Corporation and Barrick Gold Corporation, account for 64% of assets under management. GDX has $17.4 billion of assets under management and a 0.53% expense ratio.

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GDXJ

Alternatively, the VanEck Junior Gold Miners ETF (GDX) tracks the performance of the most liquid junior companies in the global gold and silver mining industries. It invests in 100 such companies and its 10 largest holdings account for 37% of assets under management. Junior mining companies are typically early-stage miners still in the exploration and development phase, and may have yet to mine any resources.

Trade it through: FP Markets RoboForex Stock Price Fact Sheet

Leveraged ETFs

Last but not least, you could also turn to a leveraged ETF if you're a gambler at heart. A leveraged ETF will seek to replicate two or even three times the daily change in a reference index. Importantly, leveraged ETFs aren't designed for long term investors, as they tend to experience big moves up or down that will materially affect your return over time.

NUGT

The NUGT ETF seeks daily investment results (before fees and expenses) of 200% of the performance of the NYSE Arca Gold Miners Index, more often known as GDX.

Trade it through: FP Markets AvaTrade Stock Price Fact Sheet

JNUG

The JNUG ETF seeks to replicate twice that of the MVIS Global Junior Gold Miners Index, more often known as GDXJ.

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Which gold ETF is best for you

When choosing between ETFs, you should consider each ETF’s liquidity, costs and tax treatment.

• Liquidity: size really does matter when it comes to ETFs. The larger the gold ETF, the closer it will track the price of gold bullion, and the less its price will depart from the fund’s net asset value.
• Expenses: gold ETFs regularly sell gold to cover their everyday expenses. Accordingly, the amount of gold represented by each share will decline by that amount, over time. The lower an ETF’s expenses, the higher your potential return.
• Tax treatment: you should also consider how any gains will be taxed. If you are a non-corporate investor in the US, it may be beneficial to invest in PHYS, a Canadian ETF, over most other precious metal ETFs, coins and bars. If in doubt, always speak to a tax advisor.