Last Updated on February 15, 2024 by Ben
Gold prices have been steadily rising these past few decades, and many believe that they will keep on increasing as time goes on. Gold ETFs are a way for investors to invest in gold without actually owning it. But what is a Gold ETF? And what are the Best Gold ETFs for you?
Best Gold ETF Company Reviews:
When choosing a gold ETF, make sure to do enough research on the company releasing such an ETF. The company’s financial standing, liquidity, and payment of dividends should all be considered when deciding on an ETF.
One such company that releases a significant amount of gold ETPs is VanEck. The company has been in the market for over 35 years and has an impeccable reputation. It also provides a wide range of ETFs, including both physical and derivative-based funds. VanEck currently has 7 ETFs related to precious metal gold.
- Offers a broad range of products for every type of investor
- Founded by an experienced and well-respected management
- Great financial standing
- Offers both leverage and inverse leveraged funds
- History of high fund expenses
- High cost associated with trading these funds
- Some VanEck funds are not very popular and hence have low trading volumes
GraniteShares Gold Trust
GraniteShares is another start-up company that provides several ETPs, including gold. The company was established by an association of professionals who have a history in traditional and electronic gold trading.
The company is registered in Boca Raton, Florida, and only has two gold ETPs available. Despite the limited product line, it holds promise and has excellent future potential.
- Low-cost trading in comparison to other big names like Black rock and Van Eck
- Great potential to go alongside rising of the price of gold
- A limited number of products available at this time
- Not very well known in the industry as competition’s products have more popularity
- The website is not very user-friendly and hard to navigate
- Sands BCP ETFs
Aberdeen Standard Investment
It is one of the largest investment management companies in the world. The company currently controls over $750 billion in assets under management across various global markets. The company has been involved in the gold ETF market for many years and continues to be one of the most popular products.
The company is a subsidiary of the Aberdeen Group, a well-known British multinational insurance business with offices worldwide.
- Excellent financial standing
- The company is involved in gold for many years, so there is excellent growth potential.
- Despite a large market share, the product isn’t very popular among retail traders and has low trading volumes.
- The products have very high expenses, and the company isn’t open about this issue.
- Compared to other major gold ETPs available on the market, the difference in trading volume is extremely high.
iShares Gold Trust
iShares, the world’s largest ETF provider, has a reputation for providing efficient investment vehicles. The company controls assets worth over $600 billion in more than 2,000 funds and ETPs.
Gold is one of the cheapest methods to diversify your portfolio. The gold ETF provides investors with an easy way to hold the precious metal without hassle. The product has physical gold and follows the price on the market.
The company has low costs for funds and ETPs, which allows you to hold more assets in your fund. For the convenience of short-term trading, sell orders are executed immediately on the market. This can lead to arbitrage opportunities across various markets.
- One of the highest market shares for an ETN
- The company has a good reputation and has won awards across multiple markets.
- The product is extremely popular with retail traders, especially in the US.
- Physical gold is scarce, and there are restrictions on how much can be bought each year.
- The price is near all-time highs, which can lead to volatile trading across various timeframes.
- The time to react is extremely short when trading this asset, even with the most advanced tools.
Trading gold is one of the most challenging things to do in the market. The slightest difference in price can lead to a significant gain or loss. Without adequate research, it’s easy for beginner traders to get fleeced by the market.
The Perth Mint Australia
The Perth Mint Australia is a well-known precious metals dealer based in Australia. The company is known for its short and transparent trading records. The company holds mining rights for copper, silver, and zinc in Australia.
The company is well respected and has been praised for its diverse range of services and goods. It has also won many awards in the industry.
- Wide range of services and products
- Well-respected and high reputation in the industry
- Offers a large amount of gold at affordable prices
- Award-winning company
- Not ideal for short-term traders
- In comparison to other companies, the website isn’t very modern
- The company isn’t very transparent with its financials
What are Gold ETFs?
Gold Exchange-traded funds, or ETFs, are mutual funds that trade similarly to stocks and invest primarily in assets like gold. Investing in Gold ETFs provides investors with the convenience of trading without having to deal with physical assets. Some ETFs track the price of gold, while others invest in companies in the gold-mining industry.
The company that issues ETFs buys stocks in gold-related companies, or they buy and store gold bullion. Investors purchase shares of the fund; the value of the fund changes based on the price of gold or company stocks.
These ETFs are some of the best defensive assets in the market. Investors use gold as a way to make sure that their investments are not lost in times of economic fluctuation. They also can use it if the currency is not doing well or has been debased.
The price of gold can rise up when the dollar falls. That is because people have to buy gold instead of dollars. Investing in a gold ETF allows you to profit from this sudden drop.
Why Invest in Gold ETFs?
Gold ETFs are a kind of investment that lets you invest in the price of gold. They change with the price of gold, and they happen in real-time. You can trade on the precious metal if you do not want to own it. You can put your money into exchange-traded funds. It is an option for investors who wish to gain market exposure to the price and performance of gold.
Gold-based traded funds have outperformed the stock market for some time now, making them an attractive investment choice. Gold exchange-traded funds are good because they do not charge a lot of money to buy them. They only charge 0.5% to 1%. Gold exchange-traded funds are suitable for people who want to save money on commissions.
However, it is a good idea to invest in 5% – 10% of your investment portfolio in gold. Gold ETF will help you have a well-rounded investment plan and maintain stability.
The Gold Price
The market price of gold is measured in troy ounces, and the value will differ from that of the futures price. The currency used to measure the current value of a troy ounce of gold will depend on where the purchase is made, or the exchange is happening. This is why a fluctuation in currency can cause an increase or decrease in the value of one’s investment. Gold is a universal currency, and unlike most other commodities, you can buy it no matter where you are in the world.
The current market price of gold changes every instant as supply and demand fluctuates. The number of people buying and selling precious metals at any time has an effect on this value.
The Difference Between Gold ETFs and Gold ETCs
These types of funds work differently, despite using gold as the underlying investment. While ETFs trade like common stocks on a stock exchange, ETCs trade over the counter. This means that the latter cannot be traded as quickly or easily cashed out. To add to this, only central banks and brokerage houses deal in ETCs.
How to Choose the Best Gold ETFs?
There are many types of gold ETFs to choose from, which means investors have many options to trade-in. The choice, however, should be dependent on how much risk an investor is willing to take. Investors can either buy physical gold stored in vaults or opt for a representative certificate that mirrors the worth of such metal.
Any investor looking to increase his holdings in gold and not concerned about the small premiums that go with storage should go in for a simple certificate. Such a structure works best for people who are looking to preserve their wealth without the bother of storing the commodity themselves.
Just because a fund has shown remarkable performance in the past, it does not mean that the same will be repeated in the future. Keeping this in mind, an investor should always check how liquid a gold ETF is. This can be easily looked up, and there are many websites that give this information right at your fingertips.
With so many choices to select from, the bottom line is that choosing the best gold ETF can prove to be a daunting task for any first-time investor.
Fund Track Record
Just like any other fund, it is wise to check the past performances of gold ETFs before making an investment decision. A great way to do this is to look up the fund’s track record for at least five years. This will give an idea of how the fund has been performing since its start.
Some funds are more volatile than others, and an investor should be aware of such risks before stepping in.
Also, it is vital to be aware of tracking errors for a fund. It can be looked upon on many sites as well and is essentially the difference in returns between what the fund actually earns and what it is expected to earn.
It could either be positive or negative and should always be kept in mind while comparing different funds.
How to Invest in Gold ETFs
The process involved in investing in gold ETPs is not too different from investing in other funds. You will need to set up a brokerage account and fund it with cash or margin if you decide to go for leveraged ETFs.
Another set of choices you will have to make is related to taxes. ETFs are treated as a stock sale and taxed accordingly. This is in addition to any gains or losses caused due to the fluctuation in the price of gold.
When trading gold, it’s important to understand just how the market works. It takes experience and skill to make money in this market. For beginner traders, it’s best to study price charts and analyze market cycles before making the jump into this complicated industry. When trading, it’s essential to set stop losses and trade small. Gold trading isn’t for everyone, but neither is any other market. For some, depending on the market, the pay can be just as good in the long run. Just remember to turn your screen sideways before you snap that “selfie” with your five-million-dollar trade.