During the go-go days of growth, gold exchange-traded fund investments weren’t all that popular in many portfolios. But thanks to recent market uncertainty, precious metals have gotten their glitter back as investors look for safe havens amid the volatility.
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One of the biggest drivers lately is, of course, inflation. Historically, gold has been a go-to haven for many to avoid the decline in purchasing power we see in currencies like the dollar or euro, and instead find a commodity that holds value. Alongside inflation is the risk of rising interest rates, which the Federal Reserve uses to fight rising prices.
While inflation has cooled from its 2022 peak, it still remains above the Fed’s target 2% rate. If you’re looking to invest in gold amid persistent inflation, consider one of the following funds:
| Gold ETF | Expense Ratio |
| SPDR Gold Shares (ticker: GLD) | 0.40% |
| SPDR Gold MiniShares Trust (GLDM) | 0.10% |
| Abrdn Physical Gold Shares ETF (SGOL) | 0.17% |
| iShares Gold Trust (IAU) | 0.25% |
| VanEck Merk Gold Trust (OUNZ) | 0.25% |
SPDR Gold Shares (GLD)
The largest gold exchange-traded fund, or ETF, by a wide margin, is the SPDR Gold Trust, the go-to way for investors looking to play the precious metal. It boasts roughly $59 billion in assets under management, more than double that of the next closest gold ETF. About 8.5 million shares trade daily on average, so you can trust this one is plenty liquid.
GLD’s high trading volume and size also ensure tight bid-ask spreads, making it a cost-effective option, says Jason Werner, founder and accredited investment fiduciary at Werner Financial in Indianapolis. This spread is the difference between the highest price buyers are willing to pay and the lowest price sellers are willing to accept. A wider spread means investors are incurring a higher transaction cost each time they trade.
It’s not the cheapest option out there based on annual expenses, but it’s one of the most established options. And as the fund is benchmarked to physical gold, you can get a direct play on gold bullion prices via this ETF. The fund charges 0.4% in annual expenses, or $40 per $10,000 invested.
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SPDR Gold MiniShares Trust (GLDM)
With about $7 billion under management, this sister fund offered by SPDR isn’t quite as large, but it does offer a significantly smaller expense ratio of just 0.1% annually. As an added bonus for small-time investors, it trades at about $46 per share as of April 25 — meaning that you don’t need thousands or even hundreds of dollars to gain exposure to physical gold. The beauty of ETFs is that you can buy just a single share to invest strategically in gold.
GLDM tracks the price of gold rather than holding physical gold. It does this by being benchmarked to the London Bullion Market Association (LBMA) Gold Price. GLDM isn’t as highly traded as GLD, but about 4 million shares still change hands each day on average. So you don’t have to worry about not finding a counterparty to your trade.
Abrdn Physical Gold Shares ETF (SGOL)
SGOL is another popular gold ETF backed by physical gold bullion. What sets SGOL apart is its allocated gold storage system, Werner says. Each share is backed by a specific amount of gold held in a secure vault.
“This feature provides peace of mind regarding the authenticity and security of the underlying assets,” he says.
SGOL is also reasonably priced with a 0.17% expense ratio. Around 3.4 million shares trade hands each day on average. It’s not the biggest fund of the bunch with less than $3.1 million in net assets, but it has a solid track record dating back to 2009.
iShares Gold Trust (IAU)
Ronnie Thompson, investment advisor representative and owner of True North Advisors in Michigan, often recommends IAU. Like SGOL, the fund backs its shares by holding gold bars in vaults around the world.
This can be an important factor if you’re interested in investing in gold as “physical ownership,” rather than simply tracking the value of gold on paper, Thompson says.
IAU costs a bit more than GLDM and SGOL but less than GLD at a 0.25% expense ratio. It currently trades for the lowest share price of all three at about $44 as of April 25. It also boasts about $28.5 billion in assets and an average trading volume of about 7.2 million shares, making it a highly liquid option.
VanEck Merk Gold Trust (OUNZ)
The VanEck Merk Gold Trust is another gold ETF backed by physical gold, but it does one thing no other ETF does: You can redeem your OUNZ shares in exchange for physical gold bullion.
Yep, you read that right. You can trade in your ETF shares for gold bars or coins. You’ll receive your gold via good old USPS, FedEx or UPS, or possibly armored transportation service. There is no delivery fee if you live in the mainland U.S., but expect an exchange fee to cover the costs of converting OUNZ shares to physical gold. This fee represents the premium your chosen gold bars or coins are trading at relative to the spot price of gold when you decide to convert.
With less than $1 billion in net assets and only about 1.2 million shares trading hands each day on average, OUNZ isn’t the most liquid option on the list. The main reason to choose it over the other funds is if you think you’ll want to take advantage of the conversion to physical gold feature.
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5 Best Gold ETFs for Sticky Inflation in 2024 originally appeared on usnews.com
Update 04/26/24: This story was previously published at an earlier date and has been updated with new information.
