The First Gold ETF Guide for Investors

If you're an investor looking to get into gold, you're in luck because the first gold ETF was launched in 2004, making it a relatively new and exciting investment option.

The first gold ETF, SPDR Gold Shares, was listed on the American Stock Exchange (AMEX) in November 2004, and it was a groundbreaking moment for investors.

It was created by the World Gold Council and State Street Global Advisors, and it allowed investors to buy and sell gold in a convenient and cost-effective way.

This ETF was designed to track the price of gold, giving investors a way to invest in the metal without physically holding it.

If you're looking for investment options, there are several gold ETFs that are worth considering. Bankrate selected its top funds based on criteria such as assets under management of at least $800 million and expense ratios under 0.60 percent.

You can choose from a variety of gold ETFs that invest in physical gold, such as those that directly invest in gold bullion. These ETFs offer the advantage of getting exposure to gold without having to hold it yourself.

Some gold ETFs have a strong track record as effective portfolio diversifiers and defensive stores of value. If you're interested in investing in gold ETFs, you can do so via a brokerage account or robo-advisor.

Investing in gold can be a smart move for your portfolio. Gold has a strong track record as an effective portfolio diversifier and a defensive store of value.

During times of market volatility, gold tends to hold its value, as seen during the 2008 financial crisis when gold prices rose 2 percent while the S&P 500 index plummeted 37 percent.

Investing in gold can also provide a hedge against inflation. Historically, gold has performed well during periods of high inflation, particularly in the 1970s.

One of the main benefits of investing in gold is its low correlation to the stock market. This means that gold prices tend to move independently of the stock market, smoothing out a portfolio's returns.

Gold ETFs are a popular option for investors who want exposure to gold. They're convenient, transparent, and liquid, making it easy to buy and sell them.

Here are some key benefits of gold ETFs:

Many brokerages let you trade ETFs commission-free, making it even easier to invest in gold.

Stock investors can consider ETFs that invest in stocks of gold companies. These ETFs provide exposure to gold through shares of companies that mine gold or perform related activities.

Gold miner ETFs are impacted by market conditions and the performances of the companies in their holdings. This means that the value of the ETF can fluctuate based on the overall market and the specific companies it holds.

When evaluating gold ETFs, it's essential to consider their size and assets under management. Bankrate selected its top funds based on the criteria of having at least $800 million in assets under management.

To give you a better idea of what to expect, let's look at some specific funds. For instance, the BetaShares Gold Bullion ETF – Currency Hedged (QAU) is one of the options to consider.

The expense ratios of these funds are also crucial to consider. Bankrate's top funds have expense ratios under 0.60 percent.

Here are some of the top gold ETFs listed on the ASX, along with their characteristics:

It's worth noting that the Global X Physical Gold (GOLD) fund has a sizeable market presence, having been rebranded from ETFS Physical Gold in September 2022.

Gold ETFs offer a convenient and liquid way to invest in gold, with transparent share prices and the ability to trade commission-free. They're also a great option for those who don't want to deal with the complexities of owning physical gold bullion.

Historically, gold has had a low correlation to the stock market, smoothing a portfolio's returns. For example, during the financial crisis in 2008, gold prices rose 2 percent while the S&P 500 index plunged 37 percent.

Gold ETFs can provide exposure to gold without the need for significant upfront investment, and the company that owns the gold is responsible for securing and storing it in vaults. This eliminates the hassle of storing gold yourself.

Investors are drawn to gold because it can act as a hedge against inflation and serve as a safe haven during economic and market volatility and downturns. Gold ETFs are a popular option for investors who want exposure to gold because they're convenient.

Gold ETFs are more liquid than actual gold because they're easier to sell via the market. This makes it easier to buy and sell gold ETFs, and their share prices are transparent.

Here are some key benefits of investing in gold ETFs:

To invest in a gold ETF, you'll want to follow these steps. First, determine your financial goals, as this will help you decide which type of gold ETF is right for you. Consider whether you want exposure to physical gold or public companies involved in gold mining, as these two asset classes have different risk profiles.

Research gold funds by looking at factors such as performance, expense ratios, top holdings, and assets under management. You can find this information in a fund's prospectus. Keep in mind that gold ETFs may have higher expense ratios than conventional index-based funds.

Outline your asset mix by doing an inventory of all your assets and calibrating your portfolio accordingly. Remember, the key is to remain diversified. It's also a good idea to periodically review your investments and make any necessary adjustments.

One of the biggest advantages of buying a gold ETF is that it's more convenient than buying physical gold, and trading is simple with transparent pricing. However, tax expenses are an associated cost, and you'll want to consider this when making your decision.

Here are some popular gold ETFs to consider:

* ETF NameAssets Under ManagementSPDR Gold Shares$80 billioniShares Gold Trust$50 billionVanEck Vectors Gold Miners ETF$2 billion

Ultimately, whether or not to buy a gold ETF depends on your overall investment profile, risk tolerance, and long-term financial goals. Consider allocating no more than 5% to 10% of your portfolio to precious metals, including gold.

Investing in a gold ETF can be a smart move, but it's essential to consider your overall investment profile and risk tolerance. Diversification is key, and gold can help minimize risk by having a low correlation to the stock market.

Historically, gold has performed well during times of high inflation, particularly in the 1970s. But it's crucial to remember that there's no guarantee gold will increase alongside inflation over time.

When deciding whether to invest in gold ETFs, consider allocating no more than 5% to 10% of your portfolio to alternative asset classes like precious metals. This is a general guideline recommended by mainstream financial advisors.

Tax expenses are an associated cost of investing in gold ETFs, and they may have higher expense ratios than conventional index-based funds. Trading in gold ETFs is simple and pricing is transparent, making it a convenient option for investors.

GOLD is the largest gold ETF in the Australian market with almost $3.4 billion in funds under management (FUM).

PMGOLD is significantly smaller, with around $980m in FUM, which is just over a quarter of the size of GOLD.

NUGG, the newest gold ETF, has grown rapidly since its launch in December 2022, increasing to over $71 million FUM today.

QAU's size has fluctuated, shrinking from $699 million in September 2023 to $543 million in March 2024, before rebounding to almost $710 million again in September 2024.

Liquidity is a crucial factor to consider when investing in gold ETFs. Gold ETFs offer a high level of liquidity, making it easy to quickly buy and sell your investments.

One of the most liquid gold ETFs is GOLD, trading approximately $7.7 million in average daily volume. This is significantly higher than other gold ETFs like PMGOLD, which trades at about a quarter of the size of GOLD at almost $2m.

The liquidity of gold ETFs is one of the key advantages of using them to gain exposure to gold. This allows you to quickly buy and sell your investments if needed.

QAU has $2.4m traded every day, making it another relatively liquid option. In contrast, NUGG trades just over $240,000 per day, which is significantly lower than the other three gold ETFs mentioned.

Gold has been a standout performer in 2024, hitting an all-time high price due to market uncertainty and global unrest.

Investors have been flocking to gold as a safe-haven asset, and it's not hard to see why given its impressive returns.

GOLD, PMGOLD, and NUGG have all topped 30% for their 1 year total return, but QAU has outperformed them with a 1 year return of almost 39%.

PMGOLD has a slight edge over GOLD due to its lower management fee.

Here's a breakdown of the 1 year returns for these investment options:

It's worth noting that QAU's performance has been impressive, rebounding from a period of underperformance to deliver almost 40% returns in the last year.

If you're considering buying gold ETFs, it's essential to think about your overall investment profile and risk tolerance.

Your long-term financial goals should also play a significant role in deciding whether gold ETFs are right for you. If you plan to invest in physical gold, gold ETFs might be a better choice than buying gold bars or coins because they are more convenient.

Tax expenses are an associated cost of investing in gold ETFs, and they may have higher expense ratios than conventional index-based funds. This is something to keep in mind when evaluating your investment options.

Most mainstream financial advisors recommend allocating no more than 5% to 10% of your investment portfolio to precious metals, including gold.

Here's a quick summary of the key considerations:

Decide whether you want exposure to physical gold or public companies involved in gold mining before investing in gold ETFs, as these two asset classes have different risk profiles.

To avoid any surprises, factor in the higher capital gains tax rates for commodities, which can be as high as 28% for long-term investments. This is in contrast to the up to 20% tax rate for most other types of capital gains.

Consider consulting a financial planner or reviewing your investments periodically to make any necessary adjustments and take charge of your finances.

When comparing the costs of various gold ETFs, it's essential to consider the management fees and slippage. PMGOLD has the lowest management fee at 0.15%, which is almost half the cost of similar products.

This is due to the smaller storage cost as a result of the structure of the ETF. On the other hand, QAU is the most expensive gold ETF at 0.59%, given the additional cost of hedging back into AUD.

However, the spreads on GOLD are much narrower, at 0.05%, whereas PMGOLD and QAU have spreads of 0.09% and 0.10% respectively. This means that if you buy or sell GOLD, you'll pay less in slippage compared to PMGOLD or QAU.

Here's a quick comparison of the costs and slippage of the gold ETFs mentioned:

If you're looking for a more affordable option, NUGG launched slightly undercutting GOLD's 0.40% management fee, charging 0.14% pa. However, it's worth noting that NUGG has triple the spreads compared to GOLD.

Investing in gold ETFs can be a smart move, but it's essential to understand the tax implications first. The top tax rate for long-term investment in commodities is 28%.

You should be aware that gold ETFs backed by physical gold have higher capital gains tax rates compared to other types of investments. This is something to factor into your investing plans.

Commodities like gold have a higher tax rate because of their unique characteristics. The tax rate for commodities is significantly higher than for other investments.

ETFs, in general, have a reputation for being more tax-efficient than mutual funds due to the way their underlying assets are bought and sold.

Buying in Australia can be a bit tricky, especially when it comes to gold ETFs. Investors might face barriers such as high minimum investment amounts, low liquidity, and accessibility issues.

One of the simplest approaches to owning gold in Australia is through Exchange Traded Funds (ETFs) listed on the ASX. They offer a cost-effective way to access physical gold.

Gold mining shares can be easily traded on the share market, but they don't provide the same defensive characteristics as physical gold. They're an indirect exposure to gold and can sometimes be more volatile.

Investors can use ETFs to get a return equivalent to the movement of the gold price without the hassle and costs of transport, storage, and insurance.

Gold ETFs offer a convenient way to invest in gold without holding physical bullion. They're also more liquid than gold itself.

The iShares Gold Trust (IAU) is one of the biggest gold ETFs by assets, with $32.7 billion under management. Its expense ratio is 0.25%, or $25 annually for every $10,000 invested.

Trading gold ETFs is simple, and their share prices are transparent. Many brokerages let you trade ETFs commission-free, and ETFs tend to come with lower fees than mutual funds.

The iAU's cheap fees and relative longevity have helped it amass about $33 billion in assets under management. Its shares are meant to represent a fraction of an ounce of gold.

Here are some key features of the iShares Gold Trust:

The SPDR Gold Shares (GLD) is a popular investment option that tracks the price of gold. It invests in physical gold and has a high correlation with gold spot prices.

GLD has a 2024 YTD performance of 29.4 percent and a five-year annual return of 12.3 percent. The fund's expense ratio is 0.40 percent, which is relatively high compared to some of its competitors.

One of the benefits of investing in GLD is its extreme liquidity and tight bid-ask spreads. This makes it an attractive option for short-term traders. However, the fund's high expense ratio is a notable drawback.

Here are some key facts about GLD:

GLD was founded in 2004 and has assets under management of $56.4 billion. It is the largest U.S.-traded gold ETF by a significant margin, with a market capitalization of over $72 billion.

The VanEck Miners ETF (GDX) is a popular choice among investors looking to play the gold mining industry. It owns all the major names in the mining space, including gold, silver, and copper miners.

GDX has a 2024 YTD performance of 21.4 percent, which is a significant return. Its five-year annual return is 7.7 percent, indicating a steady long-term performance.

The fund is weighted by market cap, meaning the bigger the stock, the greater the percentage of assets GDX invests in it. This results in a heavily weighted fund, with 62% of its assets concentrated in just the top 10 holdings.

Some of the top holdings in GDX include Newmont (12% of assets), Agnico Eagle Mines (10.5%), and Barrick Gold (7.6%). These companies are among the largest miners in the industry.

Here are some key facts about the VanEck Miners ETF (GDX):

GDX is an indirect play on gold prices, meaning its holdings will move somewhat similarly based on the underlying commodity. This can be both a benefit and a drawback, depending on market conditions.