Gold ETFs are a popular doorway into the market of gold. Gold is a globally popular and accepted asset which is also present in ETFs. This is an advantage for all who might be looking for the best gold ETFs to trade. In September 2020 gold hit record highs in both tonnage and value, and of the tracked 83 active ETFs, added up to a total of 3,880 tons. Also, there were $235.4 billion worth of total assets under management (AUM).
This rapid growth can be explained by the economic uncertainty generated by the COVID-19 pandemic, but also by a greater geographical diversification of traders who join gold ETFs. Both gold ETFs listed in the United States, Europe, and other regions have been increasing constantly. On this page, you will find all the information needed about the best gold ETFs in the market.
What is a gold ETF?
An ETF or Exchange Traded Funds, is a bundle of assets available for investors. While ETFs are mostly less risky, the degree of risk depends on the type of group, sector, or region of the assets in that ETF. Unlike mutual funds, they can be traded like stocks during trading hours. You can buy a share or a portion of an ETF, owning the ETF but not the underlying asset, as the underlying asset belongs to the fund provider. The cost of buying or selling an ETF is determined by the market and therefore may vary.
There are many ways to invest in gold: you can buy bars, coins, stocks, derivatives, or buy over the counter. Moreover, gold ETFs seem to be growing in popularity because of their liquidity, cost efficiency, and transparency.
Invest in gold ETFs in 3 steps
Open a trading account
First, find the right broker for you. Review the commissions and fees to see if they are convenient for you. If the broker offers more than one account, choose the best one for your needs. After you’ve signed up, all you have to do is to confirm your account using the link sent to your inbox. Once you’ve clicked on the verification code you are ready for step two.
Choose gold ETFs
Now that you have an account you must fund it, so you can open or close gold ETF trades. The payment methods should include one or all of the following: epayments, bank wire transfers, credit card, or debit card. Your broker may have a minimum deposit or a deposit fee. Don’t forget to price it in.
Place your trade
It might take a few business days for your deposit to be credited into your account. Once your account is funded, you will be able to place your trade in an available gold ETF and buy several shares. The broker could offer you ideas or maybe you already have it all figured out and are ready to invest.
Where can I trade gold ETFs?
If you want to start trading gold ETFs you will need a broker. A broker is an intermediary between you and the security exchange. There are many brokers on the market that have different commissions, fees, regulations, payment methods, customer support, trading techniques, trading platforms, and more.
We believe that the best brokers in 2021 do exist, but your choice will mostly depend on your needs and priorities. A good broker is transparent on all the terms and conditions, which should be specified in a document and on the company’s website.
For example, it could be a good idea to look at the educational section and customer support to see how you will be assisted if you have a doubt or want to learn about a new trade. You will always be able to address these two in case of a question or a problem.
Best gold ETFs to buy now
Below you can find the list of the best gold ETFs to buy right now. With an unusual year ahead of us, here are some of the golf ETFs with a strong team behind them and a good record:
- GLDM - SPDR Gold MiniShares Trust
- BAR- GraniteShares Gold Trust
- SGOL - Aberdeen Standard Physical Gold Shares ETF
- GLD - SPDR Gold Shares
- IAU - iShares Gold Trust
- GDX - VanEck Vectors Gold Miners ETF
- AAAU - Perth Mint Physical Gold ETF
- OUNZ - VanEck Merk Gold Trust
- UGL - ProShares Ultra Gold ETF
- DGL - Invesco DB Gold Fund
GLDM - SPDR Gold MiniShares Trust
Our first choice is GLDM. They hold physical bullion and track the gold spot price using gold bars held in London vaults. They also record liabilities. In 2020 it grew by a total of 25.10%. Its yearly daily return is at approximately 18.30%.
BAR- GraniteShares Gold Trust
GraniteShares Gold Trust invests directly in physical bullion, specifically in a London vault that is under ICBC Standard Bank’s custody. It has a daily average volume of $7.08 million, and an approximate yearly return of 18.25%.
SGOL - Aberdeen Standard Physical Gold Shares ETF
As well as the previous two gold ETFs, SGOL’s exposure type is physically held. Its average spread is $0.01 and has an average trading volume of $27.19 million. As for the yearly return, the average lies at 18.25%.
GLD - SPDR Gold Shares
With a 17.88% of yearly returns, this gold ETF has $69.00 billion worth of assets under management. Created in 2004, it physically holds gold in London vaults. It grew by 25.10% in 2020 and has a daily trading volume of $1.62 billion.
IAU - iShares Gold Trust
Incepted in 2005, this ETF tracks gold’s price using gold bars scattered around the world. Its legal structure is a grantor trust which means you can forget the complexities of transporting gold coins or bars. Its yearly daily return lies at 18.68%, and it has an average $0.01 spread.
GDX - VanEck Vectors Gold Miners ETF
GDX has had a great performance standing out as one of the best gold ETFs. It has an average one-year daily return of 20.49%. It included different sectors such as gold, integrated mining, and precious metals. This ETF was created in 2006 and has $15.11 billion worth of managed assets.
AAAU - Perth Mint Physical Gold ETF
Since 2018, this ETF offers gold shares tracked physically. Their gold is found in Australia in vaults protected by the Perth Mint. Their asset management is worth $375.61 million. It has had great performance growing by 18.58% in 2019 and by 23.96% during 2020 in the midst of a worldwide pandemic.
OUNZ - VanEck Merk Gold Trust
With a total net asset of $442.5 million, OUNZ allows investors to buy and sell shares of gold. It holds gold in some of the world’s most secure vaults and offers even small investors a chance to own gold. The ETF has a one-year daily return of 18.08%.
UGL - ProShares Ultra Gold ETF
After having had a difficult three years from 2013 to 2015, its numbers have grown. In 2020 it recovered by 20.66%. Its legal structure is a commodity pool. It has tight trading spreads starting at $0.06 and deep liquidity. This ETF is usually adopted for short-term use.
DGL - Invesco DB Gold Fund
Since 2007, DGL has tracked an index of gold futures contracts. This means that this ETF does not track the price of gold. Each month, DGL rolls monthly contracts between the second and sixth business day. Its legal structure is a commodity pool with an average daily volume of $2.23 million.
Expert tip on investing in gold ETFs
It is important to remember that in order to trade the best gold ETFs, you must know your goals and understand the market, so you make the right decisions. An ETFs volatility will depend on the type of companies in that ETF. A gold ETF could be more volatile than others because of the gold price swings. For example, gold prices were low during March 2020 when the COVID-19 concerns hit the market and traders abandoned the safe-haven asset. It was an unusual behaviour since usually gold goes up in troubled times.
Why trade ETFs?
ETFs follow indices and try to keep commissions as low as possible. They have lower risks compared to other assets, are traded like stocks, and have high trading flexibility. If you trade gold ETFs, you will be able to access part of the so-called “safe-haven” and not have to deal with the complexities of buying, transporting, and then storing gold in a physical place.
Frequently Asked Questions
Your perfect gold ETF will depend on what you are looking for. Maybe you want a commodities pool, a grantor trust, or an open-ended fund, or maybe you prefer to invest in ETFs that have physical gold or one with different sectors.
An investment is always a good idea if you are clear on why and how you are going to do it. Remember, gold usually rises when the dollar is weak.
Anyone who wants to potentially increase their wealth. ETFs are becoming increasingly popular because of their low risk and volatility.
A share is a unit of a stock and ETFs is a pool of stocks that can be bought and/or sold as a potion or as a whole.
A beginner can have a vast knowledge of the trading industry if he or she has studied what is necessary to be on top of the market and understands the nature of investments.
According to etf.com, “with 31 ETFs traded on the U.S. markets, Gold ETFs have total assets under management of $134.32B.”