8 Examples of Gold ETFs in 2024

Gold has historically been viewed as an instrument that holds value, protecting people from economic uncertainties. However, investing in physical gold can be a complicated process for a variety of reasons like storage solutions.

ETFs allow traders to avoid purchasing and storing physical gold, but also diversify an account in the process.

» Did you know you can also trade gold through CFDs?

What Are ETFs?

ETFs (exchange-traded funds) are investment funds that trade on stock exchanges like individual stocks. They hold a basket of instruments, such as stocks, bonds, or commodities, and their value fluctuates throughout the trading day.

Investors can buy and sell ETF shares through brokerage accounts, providing flexibility and liquidity similar to stocks.

» Don't miss this guide on the basics of ETFs

Why Are Traders Investing in Gold ETFs in 2024?

• Diversification: ETFs provide instant diversification by holding various instruments, reducing individual security risks. Gold ETFs add extra diversification, potentially stabilizing returns due to gold's low correlation with other instruments.
• Liquidity: ETFs, including gold ETFs, offer high liquidity with the ability to trade throughout the day, allowing easy adjustments to market conditions.
• Cost-effectiveness: ETFs generally have lower expense ratios and management fees, making them a potentially cost-effective choice for investors.
• Transparency: ETFs disclose holdings daily, offering transparency for informed investment decisions.
• Inflation and market protection: Gold ETFs hedge against inflation and could potentially provide more stability during market turbulence, as seen in 2020 when SPDR Gold Shares (GLD) rose over 25%.

» Find the right instrument for you: ETFs vs CFDs

8 Examples of Gold ETFs

1. SPDR Gold Shares (GLD)

GLD is a physical gold ETF that tracks the price of gold by owning physical gold bars stored in secure vaults. It is regarded as one of the largest and most liquid ETFs globally.

• Managed by: State Street Global Advisors
• Unique features: Largest, most liquid gold ETF; offers direct gold price exposure and daily holdings updates.
• Historical performance: Closely tracks gold prices since 2004; provided stability during the 2008 crisis and COVID-19.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.40%; possible transaction fees and brokerage commissions.
• Liquidity: High liquidity due to large trading volumes; easy entry/exit with minimal price impact.

» Find out if USD is backed by gold

2. SPDR Gold MiniShares Trust (GLDM)

GLDM also tracks the price of physical gold and represents a fraction of a share of GLD. It's designed for traders seeking smaller investment amounts.

• Managed by: State Street Global Advisors.
• Unique features: GLDM offers a lower expense ratio and share price compared to GLD, making gold investment more accessible for small investors.
• Historical performance: GLDM closely tracks gold prices and provides cost-effective exposure, showing reliability and accessibility during market volatility.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.18%; potential transaction fees and brokerage commissions.
• Liquidity: High.

» Need tech help? Here's how AI can help you trade

3. iShares Gold Trust (IAU)

IAU is also a physical gold ETF that tracks the price of gold by holding physical gold bullion stored in vaults. It's often considered a lower-cost alternative to GLD.

• Managed by: BlackRock; iShares Gold Trust (IAU) is noted for its low expense ratio and cost efficiency.
• Unique features: Direct exposure to gold prices with a focus on cost-efficiency, ideal for cost-conscious investors.
• Historical performance: Consistently tracks gold prices; provided potential stability during the 2008 crisis and COVID-19.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.25%; potential transaction fees and brokerage commissions.
• Liquidity: High.

» Learn more about trading precious metals with a Fortrade account

4. Aberdeen Standard Physical Gold Shares ETF (SGOL)

SGOL is also a physical gold ETF that tracks the price of gold by holding physical gold bullions. Its primary focus is providing traders with a low-cost exposure to gold.

• Managed by: Aberdeen Standard Investments.
• Unique features: SGOL features transparent storage and auditing, with gold securely stored in Swiss vaults, ensuring authenticity and security through rigorous oversight.
• Historical Performance: SGOL consistently tracks the spot price of gold; performed reliably during the 2008 crisis and COVID-19, proving effective for long-term, secure gold exposure.
• Minimum Investment: No.
• Additional Fees: Expense ratio of 0.17%; potential transaction fees and brokerage commissions.
• Liquidity: Moderate.
• Underlying Assets: Physical gold bullion stored in secure Swiss vaults, ensuring a strong correlation with gold prices and stability.

» Do you know the difference between ETFs and mutual funds?

5. VanEck Vectors Gold Miners ETF (GDX)

GDX is different from the previous gold ETFs listed as, instead of tracking the price of gold, it invests in the performance of companies that mine and produce gold.

• Managed by: VanEck.
• Unique features: GDX offers exposure to gold mining companies, providing leverage to gold prices and potentially benefiting from both price movements and the growth of mining firms.
• Historical performance: GDX outperforms during rising gold prices due to the leverage effect but is more volatile, reflecting mining risks.
  
• Minimum investment: No.
• Additional fees: Expense ratio of 0.52%; potential transaction fees and brokerage commissions.
• Liquidity: High.
• Underlying instruments: GDX holds shares in gold mining companies, offering leveraged exposure to gold prices with higher return potential.

6. GraniteShares Gold Trust (BAR)

BAR is another physical gold ETF that tracks the performance of gold by holding physical gold bullions. It offers a way to invest in gold with a focus on physical holdings.

• Managed by: GraniteShares.
• Unique features: BAR offers ultra-low expense ratios, ideal for cost-conscious investors seeking direct, low-cost exposure to physical gold.
• Historical performance: BAR closely tracks gold prices, offering potentially stable, low-cost gold exposure with consistent performance during market volatility.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.17%; potential transaction fees and brokerage commissions.
• Liquidity: Moderate.

» Here's how to use SQQQ ETFs in trading

7. Sprott Physical Gold Trust (PHYS)

PHYS is a physical gold ETF widely known for its extremely strict policy of backing each and every share with physical gold while attempting to offer low expense ratios.

• Managed by: Sprott Asset Management.
• Unique features: PHYS allows investors to redeem shares for physical gold, offering tangible instruments and flexibility.
• Historical performance: PHYS closely tracks gold prices, offering potential stability with the added option of physical gold redemption, especially during market turbulence.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.42%; potential transaction and redemption fees.
• Liquidity: Moderate.

8. Invesco DB Precious Metals Fund (DBP)

Unlike some of the other ETFs on this list, DBP doesn't actually hold physical gold or shares in mining companies. It's a commodity-based ETF that uses derivatives to track the price of various precious metals, including gold.

• Managed by: Invesco.
• Unique features: DBP offers exposure to both gold and silver, enhancing diversification within the precious metals sector.
• Historical performance: DBP reliably tracks gold and silver prices, offering a balanced risk-return profile and potential stability during economic uncertainty.
• Minimum investment: No.
• Additional fees: Expense ratio of 0.75%; potential transaction fees and brokerage commissions.
• Liquidity: Moderate.
• Underlying instruments: DBP holds derivative contracts on gold and silver, providing diversified exposure to precious metals.

Key Features for Selecting a Gold ETF

• Expense ratio: ETFs with lower expense ratios could reduce costs and enhance potential long-term returns.
• Liquidity: Opt for ETFs with high to moderate trading volume for easier buying and selling at competitive prices.
• Holdings transparency: Ensure the ETF provides regular, clear disclosures of its holdings.
• Historical performance: Check the ETF’s track record, especially during market volatility, for assessing its previous performance. Please note that this is only to assess how the ETF could perform under certain conditions and that previous performance doesn't guarantee future performance.
• Physical backing: Confirm the ETF is backed by physical gold rather than derivatives.
• Custodian and storage: Choose ETFs with reputable custodians and secure storage facilities.
• Issuer reputation: Select ETFs from well-established issuers with strong track records.

» Don't miss this guide on how to trade gold as a beginner

Risks of Trading Gold ETFs

• Market: Subject to gold price fluctuations.
• Currency: Affected by USD value changes.
• Regulatory: Potential impact from regulatory changes.
• Storage: Involves risks related to physical storage, including security and insurance.
• Geographic: Some ETFs have potential geopolitical risks due to storage in Swiss vaults.

» You should be aware of the other risks when trading ETFs

Risk Management for Gold ETF Investment

Dollar-Cost Averaging

This risk-management strategy involves regularly investing a fixed amount in gold ETFs at set intervals to minimize market timing risk and reduce volatility impact. This strategy could lower the average cost per share and enhance returns over time.

Monitor Economic Indicators

Watch inflation rates, interest rates, and geopolitical events. Gold typically performs well during economic uncertainty and high inflation. Traders watching economic indicators might adjust their holdings based on these indicators to focus on favorable conditions.

» Following indicators with an economic calendar will help your trading psychology

Understand Seasonal and Geopolitical Trends

Gold prices often rise in fall and early winter due to increased demand from festivals and weddings, especially in India. Geopolitical events, like trade wars and political instability, could also drive gold prices up.

» Take a look at some advanced ETF trading strategies

Investing in Gold ETFs

Carefully consider the examples listed above and remember that traders need to do their own research throughout their trading journeys, and make sure to take the key factors in consideration.

» Stay up to date with our morning analysis of gold