Which is the Best Gold ETF?
Gold ETFs provide investors with an easy, low-cost way to invest in gold. Furthermore, these ETFs act as a hedge against inflation while providing safe haven assets during periods of political or economic unrest.
The best gold ETFs are physically-backed and don’t use leverage or provide inverse exposure, with high trading volumes and tight bid-ask spreads.
iShares Gold Trust
iShares Gold Trust (IAU) is an exchange-traded fund that tracks the price of gold bullion as one of the oldest and most trusted stores of wealth. Trading like stocks, this fund actually holds physical gold bullion stored safely away.
Investors should be mindful that gold prices can be subject to the same market forces that influence other commodities, and derivatives can exacerbate any changes in value of underlying assets.
ETFs often have higher expense ratios than physical gold storage costs, which may significantly diminish long-term returns for investors. However, many ETFs offer redemption rights to physical gold for an attractive alternative to storage fees for those prioritizing liquidity and simplicity. 2019 Morningstar Inc. All rights are reserved by this rating system that utilizes independent research providers.
OUNZ
OUNZ offers investors an efficient and tax-efficient method of investing in gold. Through its unique structure, investors can redeem their shares for physical gold bullion through Merk Investments LLC’s proprietary method allowing conversion of London Bars into coins or bars of whatever denomination investors desire – providing tax efficiency by not creating taxable events upon taking possession.
Gold’s longstanding status as a safe haven asset and inflation hedge has made it an attractive asset in many portfolios, making OUNZ an attractive addition. OUNZ’s solid performance, low volatility and tax efficiency has resulted in steady inflows into this ETF over the years; its market cap has rapidly expanded since. Investors should remain mindful of potential price declines associated with investing in this ETF as well as risks such as lack of income generation; it would be wiser for them to diversify their holdings with other sources that produce income such as other income-generating assets rather than investing solely into OUNZ.
UGL
UGL is an ETF designed to generate daily investment results before fees and expenses that mirror two times (2x) the price performance of the Bloomberg Gold Subindex. As this leveraged ETF is designed for short-term tactical trading rather than buy-and-hold, investors should carefully consider its objectives, risks and charges and expenses before investing. As this fund is structured as a commodities pool it will issue K-1 tax forms as evidence of ownership.
UGL is an attractive choice for investors bullish on precious metals. With 2x daily leverage and the option to express that opinion through long-term holding periods in volatile markets, this instrument can lead to substantial losses if held for too long. Below is UGL’s historical price performance against its chosen benchmark and risk-adjusted metrics such as Sharpe ratios that measure an investment’s risk-to-return relationship.
GDX
GDX is an exchange traded fund (ETF) designed to track the prices and performance of companies involved in gold mining. Based on the NYSE Arca Gold Miners Index, its weighting system modifies market capitalization weighting.
This ETF was established in May 2006 and now holds net assets totalling $15.1.1 billion as of April 22, 2021. With an expense ratio of 0.52% and average daily trading volume of 18.5 million shares per day.
This ETF’s performance is closely tied to gold’s price and USD exchange rates; rising greenbacks may have an adverse effect on its performance. Furthermore, it tends to perform best during periods of economic uncertainty or inflation and when interest rates fall; people often turn towards hard commodities like gold for security at these times and its price tends to go up accordingly – leading to both rising simultaneously.
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