It is little wonder why a treasure trove of great fortune is pictured whenever gold is mentioned.
Gold is considered the most coveted metal and a safe haven in times of uncertainty.
Moreover, it has over the years lived up to its expectations as one of the best-performing assets in the stock market.
That is why it makes perfect sense to include gold in your investment portfolio.
In this post, we will explore how to invest in gold through gold ETFs.
Post Summary
This is what I will cover:
Let’s dive in!
An Overview Of Gold ETFs
Well, let us start with “physical gold”.
The earliest method of investing in gold is by buying physical gold items, such as gold bars, gold coins, gold jewellery, and so on.
However, it comes with some drawbacks. I mean you may have to worry about buying counterfeits, theft, security, and other inconveniences.
Luckily, years later, a new method of investing in gold emerged, and that is the gold ETFs introduced by Graham Tuckwell in 2003.
So, what is Gold ETF? For starters, ETF stands for Exchange Traded Fund.
An ETF is a pool of funds that tracks the value of the asset it is backed by and also allows anyone to purchase a share of that asset.
Gold ETF is backed by pure physical gold and is traded on the stock exchange.
Typically, it allows investors to invest in gold without buying the physical gold itself.
If you are considering diversifying your investment portfolio with gold ETFs, you will find the top gold ETFs to invest in below!
Top 5 Gold ETFs
These 5 are my top picks!
1. SPDR Gold Shares (GLD)
This is one of the oldest and most famous gold ETFs.
GLD was incepted in November 2004 as the first gold ETF in the United States.
Soon after launch, it became the second-largest ETF in the world before slipping out of the top 10 in 2014.
It is currently ranked as the 22nd largest ETF by Vettafi as of the time of writing (November 30th, 2022).
GLD is backed by a fixed amount of gold bullion stored in a vault and tracks the price of the LBMA Gold Price.
LBMA Gold Price is the price of physical gold obtained from auctions conducted by the London Bullion Market Association, ICE Benchmark Administration.
https://www.lawinsider.com/dictionary/lbma-gold-price-pm
Furthermore, GLD is the largest gold ETF in the world with an AUM of over $50 million and over $5 million in average trading volume.
As of this writing, the NAV of GLD is $162.73, compared to its ATH of $193.89 in 2020.
* AUM = Asset under management, NAV = Net asset value
2. iShares Gold Trust (IAU)
IAU, founded in January 2005, is the second-largest gold ETF in the world.
Like the GLD, it is backed by a fixed amount of gold bullion stored in a vault and tracks the price of the LBMA Gold Price.
IAU is ranked 56th out of the top 100 largest ETFs by Vettafi. In addition, it holds $25.74 million in AUM and over 14 million ounces of gold in trust.
It also records a 30-day trading volume of $5 million with a 30-day 0.03% spread, which is impressive.
The price of IAU as of this writing is $33.26 compared to its 2020 ATH of $39.42; this shows it is down $6.16 so far.
3. SPDR Gold MiniShares Trust (GLDM)
GLMD was founded in June 2018 as a secondary gold ETF to SPDR Gold Shares (GLD) by the same company.
It was developed in response to the demand for a gold ETF under the SPDR company with a lower share price and lower expense ratio (more about that later).
Also, it is backed by a fixed amount of gold bullion stored in a vault and tracks the price of the LBMA Gold Price like the GLD.
GLDM holds over $4.9 million in AUM and an average trading volume of over $1 million.
It ranks third on the list of all gold ETFs traded in the USA, putting it among the industry leaders.
The price of GLDM as of this writing is $34.8, with a YTD return of -4.48%.
4. abrdn Physical Gold Shares ETF (SGOL)
SGOL is a top-performing gold ETF founded in November 2019.
It is backed by physical gold bullion bars stored in secure vaults in Switzerland, Zurich, and London, UK and, audited twice a year.
It aims to be the ideal ETF for anyone looking to invest in gold in a cost-effective and convenient way.
Like the other listed ETFs, SGOL’s price is based on the price of the LBMA Gold Price.
It is the fourth-largest gold ETF in the United States, with an AUM and average trading volume of $2 million.
SOGL costs $16.78 as of this writing and has a YTD return of – 4.61%.
* YTD = Year to date
5. NewGold Exchange-Traded Fund (NewGold)
NewGold, founded by Absa Capital, is the largest gold ETF in Africa.
It debuted as the third gold ETF in the world on South Africa’s stock exchange, the JSE, in 2004.
Subsequently, it has also been successfully launched in Botswana, Nigeria, Ghana, Mauritius, Namibia, and Kenya.
NewGold tracks the price of gold bullion in the international market based on the South African Rand.
The price of NewGold as of this writing is approximately 12,000 NGN with a YTD return of 6% and over 80,000 trading volumes.
NewGold recorded gains of 72%in a single year between 2020 and 2021. Mind-blowing!
There you have my top gold ETFs. All the gold ETFs listed here have over $1 million in AUM and great trading volume, except for NewGold.
I could not find the actual AUM of NewGold.
Did any of the gold ETFs match your investment appetite? Below, I listed the top brokers where you can buy the top gold ETFs.
Where To Buy Gold ETFs
Gold ETFs are listed on stock exchanges; however, to trade them, you need a broker to facilitate the trading.
These are the 4 best brokers to buy these top ETFs
- eToro
- Uphold
- Public.com
- Stanbic IBTC Stockbrokers
eToro
eToro is one of the best and oldest brokers that supports users from everywhere in the world.
It has been in operation for more than 10 years now, having been launched in 2007.
Generally, it is a multi-asset platform that allows you to invest in stocks, ETFs, cryptos, indices, currencies, forex, etc.
You can buy the following gold ETFs on eToro: GLD, IAU, and GLDM.
Uphold
Uphold is a multi-asset trading platform that has been in operation since 2015.
It enables users to invest in and trade between a wide selection of assets.
These assets include over 200 cryptos, stocks, commodities, local currencies, bonds, and equities.
At the time of writing, Uphold supports GLD alone out of the other top gold ETFs listed.
Public.com
Public.com is a global social trading platform for investors of all kinds.
Despite being founded in 2019, the platform has already garnered over 1 million users.
In addition, it has a reputation for being a user-friendly and commission-free broker.
Users of Public.com can access a wide range of asset classes, including stocks, equities, ETFs, cryptocurrencies, NFTs, and more.
The platform allows you to buy all the listed gold ETFs except NewGold.
Stanbic IBTC Stockbrokers
Stanbic IBTC Stockbrokers is a subsidiary of Stanbic IBTC, a company in Nigeria that provides financial services in the banking sector.
The Stockbroker is Nigeria’s largest stockbroking and investment management firm, and it is licenced by the Nigerian Securities and Exchange Commission.
If you are looking to invest in the NewGold ETF, Stanbic IBT Stockbrokers is your sure bet.
Continue to the next section!
Pros And Cons Of Gold ETFs
Pros
- Spot price
Physical gold is sold at a premium, which is a higher price than the actual cost of the gold.
The premium is typically interest added by the dealer for additional gains.
However, with a gold ETF, you do not pay a premium, but rather you are buying gold at the spot or actual price.
- Convenience
You can buy as little as 1 gramme of gold or as much as you want with a gold ETF without worrying about delivery or theft.
This is not the case with physical gold, where you can’t buy as much because of the risk of theft or the cost of delivery.
- Liquidity
You can buy and sell gold ETFs right from the comfort of your home, any time the stock market is open for trading.
- Diversify your investment / Hedge against inflation
Allocating a portion of your investments to gold ETFs is a great way to diversify your portfolio.
The reason is that the price of gold is more stable and does not fluctuate like other assets in the market.
Also, historically, it has often acted as a hedge against market volatility.
Cons
- Trust
Gold ETFs are not actual gold but rather representations of gold held in custody.
The risk is that you need to trust the custodians to store the gold safely.
- Expense ratio
When you buy a gold ETF, you are required to pay a maintenance fee, also known as the expense ratio, to the custodian.
Each gold ETF has a unique expense ratio, as you can see in the table below.
| Gold ETFs | Expense Ratio |
| GLD | 0.4% yearly |
| IAU | 0.25% yearly |
| GLDM | 0.10% yearly |
| SGOL | 0.17% yearly |
| NewGold | 0.3% yearly |
The disadvantage is that the expense ratio, when combined with the broker’s fee, can eat up a significant chunk of your profit.
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Conclusion
That’s all about gold ETFs! We have reached the end of today’s post. I hope you found it insightful.
It’s time to get your feedback.
What do you think about gold ETFs?
Do you think you should give it a shot? Tell us about it below.
Also, which of the listed gold ETFs are you likely to invest in?
Kindly drop all your questions or comments in the comments section below.
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