Which ETF Has the Most Gold?
Gold has long been a sought-after investment by those seeking protection against inflation and political uncertainty. Exchange-traded funds (ETFs) provide an efficient means of tracking its price movements without needing to buy physical bullion and store it at their respective facilities.
Selecting an effective ETF for gold depends on several key considerations, with expense ratio and liquidity being of particular relevance.
SPDR Gold Shares
SPDR Gold Shares represent fractional, undivided beneficial ownership interests in the SPDR Gold Trust, which primarily holds physical gold bullion and cash as assets. The Trust’s sole asset consists of gold itself; other than certain necessary items (insurance and storage for instance). Designed as an easy way to use gold as an investment strategy by eliminating many of its barriers like logistics involved with purchasing, storing and transporting it.
SPDR Gold Shares, which track the price of gold, is the largest ETF dedicated to this precious metal and often serve as an indicator for its performance. SPDR Gold Shares can be traded like regular stocks on NYSE Arca.
GLD is priced based on the value of gold held in its vault, which will fluctuate throughout each day. On days where an LBMA gold spot price PM is unavailable, the Trustee (in consultation with WGTS) may use either AM or PM spot prices instead as the benchmark price.
iShares Gold Trust
The iShares Gold Trust is an exchange-traded fund that tracks the spot price of gold. Backed by physical bullion, its shares represent one hundredth of an ounce. As this fund is passive – meaning its shares trade at market price instead of net asset value (NAV), commissions may reduce returns while theft or loss could reduce their value further.
The Trust only sells or redeems shares in large aggregated units called Baskets. Once determined, this Basket Gold Amount is communicated to Authorized Participants through facsimile or electronic mail message and published on both Sponsor’s website for the Trust as well as NYSE Arca. Gold in the Trust is identified on Custodian books as belonging to New York, Toronto and London locations and held there until redemption takes place.
VanEck Vectors Gold Miners ETF
This ETF gives investors access to a diversified portfolio of gold mining companies. Introduced in 2006 and trading on the NYSE Arca Exchange, its underlying index is designed to track the overall performance of companies engaged in gold mining activities.
Gold is considered a precious metal, and tends to appreciate during periods of inflation or economic uncertainty. Investors also look toward gold as an insurance against financial crises; however, investing in it should only be undertaken by sophisticated individuals who understand its risk.
Correlation measures how closely two investments move together. An increase in correlation can increase risk in one investment while lower correlation can lower portfolio risk. VanEck Vectors Gold Miners ETF has an impressive correlation of 0.36 and beta of 0.31 when compared to its peers.
Market Vectors Gold Miners ETF
VanEck Vectors Gold Miners ETF (GDX) provides exposure to global gold mining companies through a commodity exchange-traded fund traded on NYSE Arca. Commodity ETFs may help diversify your portfolio while mitigating risk.
This ETF tracks the NYSE Arca Gold Miners Index and was introduced in 2006. Its portfolio of 51 stocks are diversely represented between small-, mid- and large-cap firms – Newmont Mining holds 9.8%.
Gold mining ETFs may be considered risky investments since their earnings depend on gold’s price, which typically performs better during times of economic instability and inflation; conversely they tend to see their prices increase as interest rates decline due to investors losing trust in yield-generating assets such as bonds. Over longer time frames they typically display strong correlation with gold prices; this may not always be true within shorter time frames.
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