Best gold ETFs November 2023
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 12:55 p.m. UTC Nov. 2, 2023
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Gold has served as a store of value since the dawn of civilization. Today, the lustrous precious remains a large holding in the vaults of central banks for many nations.
While investors can purchase and store physical gold bullion, this approach has several drawbacks. Namely, storage and insurance costs, along with higher bid-ask spreads when buying and selling. The alternative is a gold exchange-traded fund, or ETF, which can offer gold exposure through many brokerage platforms.
“A gold ETF is a type of investment fund that aims to track the price of gold and provide investors with exposure to the performance of the precious metal,” says Joseph Cavatoni, chief market strategist for North America at the World Gold Council. “As the price of gold fluctuates in the market, the value of the ETF’s shares moves accordingly, which provides a convenient and liquid way to invest in gold.”
While a gold ETF does not grant an investor direct ownership of gold, it does provide them with the ability to participate in the metal’s risks and returns.
“Gold ETFs hold physical gold bullion as their underlying asset, and the gold is held in secure vaults on behalf of the fund,” Cavatoni says. “The quantity of gold held by the ETF is represented by shares or units.”
The main benefit of a gold ETF is accessibility and flexibility. Investors can easily access the asset through a brokerage account, which provides liquidity and economies of scale, resulting in lower transactions and storage costs.
To help investors find the best gold ETFs on the market, our team assessed a range of current offerings against several criteria, including the type of gold ETF, assets under management, liquidity and expense ratio.
Best gold ETFs
SPDR Gold Shares (GLD)
iShares Gold Trust (IAU)
SPDR Gold MiniShares (GLDM)
iShares Gold Trust Micro (IAUM)
abrdn Physical Gold Shares ETF (SGOL)
GraniteShares Gold Trust (BAR)
Compare the best gold ETFs
Methodology
Our curated rankings of the top gold ETFs were created by applying a screen of several “must-have” metrics:
- Type: To qualify for this list, a gold ETF must be physically backed by gold bullion deposits. This means it cannot be synthetically backed by gold derivatives like futures or gold miner stocks, not use leverage or offer inverse exposure, and not be a close-ended trust.
- Total assets: All gold ETFs on this list have accrued at least $800 million in total assets.
- Liquidity: All gold ETFs on this list have an average trailing 12-month trading volume of at least 400,000 shares and a bid-ask spread of 0.2% or lower.
- Expense ratios: To be eligible for inclusion, a gold ETF must have a net expense ratio of 0.4% or lower.
An experienced ETF analyst selected the funds above, but they may not be right for your portfolio. Before purchasing any of these funds, do plenty of research to ensure they align with your financial goals and risk tolerance.
Why other funds didn’t make the cut
We began our rankings by screening for gold ETFs that derived their exposure to gold prices through physically-backed deposits. This meant screening out ETFs that hold gold miner stocks and derivatives-based ETFs that hold gold futures. We also screened out more exotic trading products such as leveraged or inverse gold ETFs.
While these ETFs have their uses, they tend to be too specific to be suitable for a broad one-size-fits-all gold holding. In particular, gold futures and gold miner ETFs may not always track the spot price of gold accurately. Leveraged and inverse gold ETFs are intended to be short-term trading tools and should not be used as a long-term hold.
“These products have a higher risk of tracking errors and tend to be more costly to investors, which is why physically-backed gold ETFs have seen higher levels of adoption,” Cavatoni says.
We also screened out gold ETFs with less than $800 million in total assets. This allowed us to focus on the most popular ETFs that have attracted a large amount of investor capital. Higher total assets usually indicate greater investor confidence in an ETF and a lower risk of shutting down.
To ensure sufficient liquidity, all gold ETFs selected for this list have an average trailing 12-month trading volume of at least 400,000 shares and a bid-ask spread of 0.2% or lower. This ensures investors can buy and sell shares at their intended price.
Finally, we set a cap on fees, with no ETF on this list charging an expense ratio higher than 0.4%. All else being equal, higher ETF fees can impact long-term performance, so keeping costs minimal is paramount.
Final verdict
For most investors, a gold ETF will provide accessible and affordable exposure to gold prices. Compared to buying and storing physical gold bullion, a gold ETF offers lower transaction fees, better liquidity and access to a brokerage account.
Our pick for the best overall gold ETF goes to SPDR Gold MiniShares Trust (GLDM). Despite not having the highest liquidity and total assets, GLDM still excels with its track record and low expense ratio — making it a great all-rounder ETF for gold exposure.
How to buy gold ETFs
Buying a gold ETF involves the same steps as purchasing any other ETF. After researching the various gold ETFs available and selecting one, investors can head to their brokerage platform.
From there, navigate to the trade or buy section and enter the ticker symbol of the desired ETF. Then, select the number of shares you want to purchase, and choose the order type (for example, market order or limit order).
Always review your order for accuracy before confirming the purchase. Once confirmed and executed, ETF shares will be added to your brokerage account and the cost will be deducted from your cash balance.
Keep in mind that depending on your brokerage, buying and selling gold ETFs can result in additional trading commissions and exchange fees.
As of June 2023, Vanguard does not offer a gold ETF among its current lineup of 82 ETFs. The closest ETF with gold exposure that Vanguard offers is the sector-specific Vanguard Materials ETF (VAW), which has a 3.8% allocation to gold mining companies.
Whether or not gold is a good investment depends on your objectives, risk tolerance and time horizon. Historically, gold has a track record of adding diversification to a portfolio. This is primarily due to a low correlation to other assets like stocks and bonds.
During times of economic and market crisis, gold has managed to maintain its value. On the other hand, gold has demonstrated high historical volatility. It also does not pay dividends like stocks or interest income like bonds. Its price is subject to supply and demand shocks, and can swing wildly.
There are several alternative methods of investing in gold other than buying a gold ETF. These include buying physical bullion in the form of bars and coins; investing in gold mining stocks; investing in gold mutual funds or close-ended trusts; trading gold futures and options; or buying gold certificates. Each comes with benefits and drawbacks so make sure to do proper research before investing.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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