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GOLD ETFs

GOLD ETFs


iShares Gold Trust (ticker: IAU)

 

Investors who don't want the hassle of buying and storing physical gold at home should consider buying bullion via an ETF like the IAU. Every penny you invest is used to purchase gold, and the movement of this fund correlates to gold prices as a result. Many investors may be familiar with the popular SPDR Gold Trust (GLD), a fund with more than $30 billion in assets held directly in gold bullion. That fund, however, charges 0.4 percent in annual expenses compared to just 0.25 percent for the IAU -- a savings that can add up over time.
 
Expenses: 0.25 percent, or $25 annually per $10,000 invested.
 
ETFS Physical Swiss Gold (SGOL)
 
For a little extra in expenses, a few other products offer a twist on investing in physical gold through an ETF. Some investors have raised concerns over the years about just where all this gold is stored that makes up physical gold trusts like IAU and GLD, and how secure those holdings are. SGOL keeps all its hard assets in a vault in Switzerland -- a nation with a laissez-faire financial industry known for privacy and security. So if you're a skeptical investor who worries just how safe your "paper" gold investment is, this Swiss alternative to conventional gold trusts should set those fears to rest.
 
Expenses: 0.39 percent
 
VanEck Merk Gold Trust ETF (OUNZ)
 
Like the preceding two ETFs, OUNZ buys physical gold and largely tracks the movement of the precious metal. But unlike other funds where your gold investment exists only on paper and gets converted to cash in your investment account when you sell, OUNZ allows investors to redeem their shares for physical gold and take delivery of the bullion. The fund charges a fee for the service, of course, but investors can redeem as little as 1 ounce of their physical gold holdings whenever they see fit. For those who invest in gold because they see it as the only hard asset of value, this feature could be a big plus.
 
Expenses: 0.4 percent


VanEck Vectors Gold Miners ETF (GDX)

 
Investing in gold can also take the form of investment in the companies that mine the precious metal. One of the most popular ETFs to play this sector of the market is VanEck Gold Miners ETF, which holds a position in 51 of the largest gold companies on Wall Street. The fund is weighted by market value, so the largest miners -- including Newmont Mining Corp. (NEM), Barrick Gold Corp. (ABX) and Franco-Nevada Corp. (FNV) -- make up about 23 percent of the portfolio. That makes the fund a bit top-heavy in a small group of stocks, but to play gold's major miners, this is a good one-stop shop.
 
Expenses: 0.5 percent
 
ALPS Sprott Junior Gold Miners ETF (SGDJ)


What if you don't want to buy the big miners? Well, there's also a "junior" miners fund. The largest stock in this ETF's portfolio is about $2 billion in market value -- roughly a tenth of the size of top holdings in the previous gold miners fund. SGDI holds 30 to 40 stocks, which is good because smaller gold miners often come with bigger risks. These companies are not as well capitalized and can suffer greatly from volatility in commodity prices. Small has advantages, however. When gold prices are rising, the smaller companies tend to get a bigger boost than their larger competitors.

 
Expenses: 0.57 percent

VelocityShares 3x Long Gold ETN (UGLD)
 
prices on gold to sell at big-time profits. This high-octane fund can deliver nicely in an up market for precious metals. For instance, UGLD jumped about 20 percent in the last 30 days as gold rallied from its December lows. Investors, though, should remember that the strategy works both ways, and if gold drops, this fund will inflict three times the pain.">Even more aggressive is a "leveraged" play on gold prices via the UGLD, which attempts to deliver three times the performance of gold, minus expenses. UGLD achieves this strategy by buying gold futures instead of gold itself. If all goes well, that allows the fund to lock in low prices on gold to sell at big-time profits. This high-octane fund can deliver nicely in an up market for precious metals. For instance, UGLD jumped about 20 percent in the last 30 days as gold rallied from its December lows. Investors, though, should remember that the strategy works both ways, and if gold drops, this fund will inflict three times the pain.
 
Expenses: 1.35 percent
 
Credit Suisse X-Links Gold Covered Call ETN (GLDI)
 
The flip side of chasing volatility using a leveraged fund is to marry gold investing with income investing in a long-term strategy. That's what the GLDI does by selling covered calls on the fund's underlying gold holdings. Covered calls are call options that you sell on investments you already own. These instruments give another investor the right (but not the obligation) to purchase gold at a fixed price in the future. If gold never hits that price? Well, you get to collect the payment for the options contract anyway -- and it's those option sales that generate the roughly 8 percent annual yield for this fund.
 

Expenses: 0.65 percent