Best Gold ETFs

gold exchange traded funds
Are you considering investing in gold? Are you curious about other ways to do it besides buying it in a physical state?

As it turns out, there is only one other way to do so and that is via an exchange-traded fund. While you may have to deal with a yearly expense ratio, you will not have to insure or store your gold all on your own.

Of course, if you are going to trade ETFs, you will need a broker. And some of the best brokers that allow you to trade ETFs as well as gold are eToro and Pepperstone.

The bottom line is there are 3 main gold ETFs right now.

  1. SPDR Gold Shares
  2. iShares Gold Trust
  3. ETFS Physical Swiss Gold Shares

SPDR is by far the largest of the three. However, the other two are also pretty substantial in their own right. But before we go any further, let us ask ourselves if gold is a worthy pursuit to have in our portfolios.

Why would you want gold in your portfolio?

It is not merely because it is – well, gold. There are plenty of other reasons that make it a highly sought after commodity in the online market at least.

Value is certainly a driving factor. The value of gold usually stays apace with inflation because the US Treasury will keep producing more money, but the amount of gold in the world is finite. Of course, we have not reached the end of that supply yet. But the fact that the supply gold is not unlimited gives it an inherent capability of keeping up with inflation rates year after year.

Moreover, gold has been shown to perform better than other assets in times of difficulty. If we look back at the financial crisis of 2008, we can see that gold was still able to generate a 4.3% rise while S&P 500 sunk by a whopping 38.5%.

Finally, as an investor interested in ETFs, you obviously care a lot about diversifying your portfolio and here again, gold can be very useful. This is because its movements are largely independent of the movements of other assets. Very often, you can find gold shifting in the direction opposite to that of other stocks. It is no surprise then that investors have deemed it a “safe” asset.

Best Gold ETFs To Invest In

  1. SPDR Gold Shares

This is a fund where purchases are made in gold bullion. Selling gold only happens only when there are expenses to be paid for or redemptions to be honored. Being so heavily invested in bullion, it very closely follows the trending prices of gold.

There are some neat benefits to be had from owning gold bars. First off, they cannot be loaned and every share has more value in gold than shares that do not purchase gold in its physical form. The drawback here is taxes. Since the IRS has labeled gold to be a collectible, the taxes imposed on long-term gains are pretty high.

  1. iShares Gold Trust

If for some reason, you have overruled SPDR in your list of options, this is another fund for you to try. Be informed that it sustains bills for insurance, transportation, and warehousing. The gold is stored in a series of vaults spread out across the globe. IAU has also developed a reputation for being a safe fund because of its unusual policy of not selling gold when prices are up to make a profit. Rather, its management focuses on investors being able to purchase and hold their gold bullion.

We mentioned at the beginning that there are certain expenses that must be paid. The good news is that these expenses are considerably low, making this fund a cost-efficient way of purchasing and managing gold. However, once again you will be subjected to taxes from the IRS which has labeled this fund a collectible as well.

  1. ETFS Physical Swiss Gold

This fund has its gold sealed tight in a vault in Zurich. It is also a very liquid fund so you can make purchases and sales without too much trouble. The only real standout feature about this particular fund is that unlike others that store real gold, it has all of its supply stored only in Swiss vaults.

But then again there is no reason to own Gold ETFs.

Conclusion

If you have by now already assumed gold to be a completely safe investment, hold your horses, because that notion, although backed by some strong evidence, is not entirely proven.


Page Updated: April 20, 2018

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