Yahoo Finance 8 Gold ETFs to Buy Anytime
A guide for any gold trader or investor.
Anyone who remembers the go-go days of gold back in 2011 has to be just a little surprised how different the landscape is just a few years later. It used to be that you couldn't watch a Wall Street-focused show without being inundated with "WE'LL BUY GOLD" ads, and every pawn shop in existence seemed to suddenly have a marketing presence. Six years later, gold is off more than 30 percent from those peaks, and gold investing has very much lost its luster. But that doesn't mean it's dead. There are a number of ways to trade various gold ETFs -- bullishly, bearishly, even sideways.
SPDR Gold Shares (ticker: GLD)
SPDR Gold Shares is by far the biggest gold offerings in the exchange-traded fund world, at more than $31 billion in assets under management. It's also one of the simplest and most straightforward. Each GLD share represents a tenth of an ounce of gold -- gold that's actually held in a vault in London. So you're literally investing in physical gold via this "grantor trust." However, GLD shares don't automatically give individual investors the right to the physical gold, so should the zombiepocalypse descend upon us, don't set sail for London hoping to reclaim some of your "wealth."
Expenses: 0.4 percent, or $40 annually for every $10,000 invested.
iShares Gold Trust (IAU)
For all practical purposes, the iShares Gold Trust gives you the same kind of action as the GLD. The primary difference? IAU costs 15 basis points less, or $15 annually for every $10,000 you invest. So, why does IAU have less than a quarter of GLD's assets under management? IAU represents a hundredth of an ounce of gold, whereas GLD represents a tenth, which means you have to buy fewer GLD shares to invest in the same amount of gold. That makes GLD slightly more attractive to any institutional investors dealing with per-share commissions. However, individual investors don't have that concern, and they are better served by IAU's lower expense ratio.
Expenses: 0.25 percent.
Market Vectors Gold Miners ETF (GDX)
Gold doesn't fall from the sky. Specialized mining companies have to pull the yellow metal out, and costs rise and fall heavily based on the price of gold. Each mining company has a certain cost of obtaining an ounce of gold, and anything above that is gravy. Sinking gold prices naturally have wreaked havoc on margins, but a revival in gold prices would mean a revival of thicker profits. The Market Vectors Gold Miners ETF is the most well-known way to invest in the space, with some $10 billion in AUM being spent to gain exposure in a group of roughly 50 global gold mining companies.
Expenses: 0.52 percent.
Market Vectors Junior Gold Miners ETF (GDXJ)
The Market Vector Junior Gold Miners ETF is a slight twist on the gold mining theme. "Junior" miners are simply smaller, earlier-stage gold miners, sometimes actually producing gold, though many are merely exploration companies that look for mineral deposits and determine how much they'll yield. The latter typically partner with larger miners to develop the mining operations, or simply are bought out for their holdings. Junior miners are typically more risky companies, then, though holding them in an ETF like GDXJ, which invests in 62 of these firms, is a way to defray that risk.
Expenses: 0.55 percent.
Vanguard Precious Metals and Mining Fund Investor Shares (VGPMX)
If you've been waiting for the inevitable Vanguard Gold ETF, here it is. Technically speaking, the Vanguard Precious Metals and Mining Fund is actually a mutual fund, so it doesn't have the extreme liquidity that helped make exchange-traded funds famous. (There's also a $3,000 minimum investment). Since this fund buys stock in companies that mine for all precious metals, it's not a pure play on gold, but it is the closest thing to a Vanguard Gold ETF today. Vanguard warns that the fund's returns can be quite volatile from year to year, so it should be "complementary to an already diversified portfolio."
Expenses: 0.35 percent.
VelocityShares 3x Long Gold ETN (UGLD)
Shorter-term traders looking to game quick swings higher in the price of gold have few better tools than the VelocityShares 3x Long Gold ETN. UGLD is an exchange-traded note that specifically allows investors to gain three times the daily return of the S&P GSCI Gold Index tracking COMEX gold futures. That "daily return" part is important, too, because it means that over time, the return of UGLD might be nowhere near three times the index's longer-term returns -- it could be, say, 3.5 times more, or only double. But the potential for triple the gain means the potential for triple the pain. This product should only be used by experienced investors.
Expenses: 1.35 percent.
VelocityShares 3x Inverse Gold ETN (DGLD)
The VelocityShares 3x Inverse Gold ETN is a bearish fund offering three times exposure to the same index tracked by the UGLD, only on an inverse basis. In short, should the S&P GSCI Gold Index decline 1 percent in a day, UGLD would lose 3 percent, but DGLD would go up 3 percent. Again, this is a complex trading product that should only be used by more experienced investors. It's also worth pointing out that funds like this will cost you -- UGLD and DGLD are among the more expensive funds out there.
Expenses: 1.35 percent.
AdvisorShares Gartman Gold/Euro ETF (GEUR)
Gold (and many other commodities) are priced based on the U.S. dollar, so if the U.S. dollar increases in value, it will take fewer dollars to buy an ounce of gold. The AdvisorShares Gartman Gold/Euro ETF offers an interesting end-around on this dynamic. By going long gold futures while borrowing euros, the fund essentially allows investors to "purchase gold in the euro" -- a strategy that wins both when gold itself rises in value, and when the euro declines in value. AdvisorShares also offers a yen-based version of this strategy via the AdvisorShares Gartman Gold/Yen ETF (GYEN).
Expenses: 0.77 percent.
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