7 Best Gold ETFs Canada

ETF Jul 17, 2024 7 min read
7 Best Gold ETFs Canada

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The top 7 gold ETFs Canadian investors should consider are:

1. SPDR Gold Shares (GLD)
2. iShares Gold Trust (IAU)
3. Sprott Physical Gold Trust (PHYS)
4. VanEck Vectors Gold Miners ETF (GDX)
5. iShares MSCI Global Gold Miners ETF (RING)
6. BMO Equal Weight Global Gold Index ETF (ZGD)
7. Horizons Gold ETF (HUG)

1. SPDR Gold Shares (GLD)

The SPDR Gold Shares ETF solely invest in gold bullion.

GLD is highly liquid, allowing investors to buy and sell shares at any time during market hours.

Rebalancing or taking advantage of short-term trading opportunities is easy.

Investors get transparency and peace of mind with GLD.

It discloses holdings and verifies the amount of physical gold backing their shares.

This builds trust and ensures investments are backed by tangible assets.

Cost-conscious individuals will be drawn to GLD’s low expense ratio compared to other gold ETFs.

The convenience and accessibility outweigh the management fee.

2. iShares Gold Trust (IAU)

The iShares Gold Trust (IAU) is a top choice for Canadians who want to invest in gold.

It’s reliable and trustworthy, and investors get exposure to gold prices without owning it.

Investing in IAU has a lot of benefits.

Firstly, it offers portfolio diversification.

Secondly, IAU is liquid and flexible.

Shares can be bought or sold easily with a brokerage account.

This makes it convenient for those wanting to actively manage investments or adjust positions.

Plus, investing in IAU has transparency and peace of mind.

The trust holds physical gold bullion in secure vaults, and its holdings are audited by an independent accounting firm.

This ensures the trust’s physical gold matches reported holdings.

To make the most of IAU, it’s important to do thorough research and understand risks associated with gold and ETFs.

This will help decide how much of a portfolio to allocate to IAU.

3. Sprott Physical Gold Trust (PHYS)

If you’re a Canadian investor looking for gold ETFs, the Sprott Physical Gold Trust (PHYS) provides direct exposure to physical gold bullion, so you actually own a portion of the trust’s gold.

Plus, the value of your PHYS holdings rise as gold prices go up.

Investing in PHYS is attractive because it can be held in registered accounts like RRSPs and TFSAs – giving you the chance to save on taxes while still investing in gold.

4. VanEck Vectors Gold Miners ETF (GDX)

GDX – the VanEck Vectors Gold Miners ETF – gives Canadian investors exposure to the gold mining industry.

It tracks the performance of global gold miners, giving investors a diversified portfolio in this sector.

GDX has something unique: it includes all types of companies involved in gold mining – exploration, extraction, and production.

This offers diversification and reduces risk from individual company or sub-sector performance.

It also includes large-cap gold mining stocks, plus small and mid-cap companies, so investors can potentially capture growth from all types of players in the industry.

5. iShares MSCI Global Gold Miners ETF (RING)

Investing in RING comes with several advantages, like diversifying risk by investing in a broad portfolio of gold mining companies.

The holdings are screened and weighted based on their fundamentals and market capitalization.

Something unique about RING is its focus on global gold miners rather than physical gold.

This strategy may provide additional upside potential compared to investing solely in physical gold.

It’s important to note that RING is managed by iShares Canada – a subsidiary of BlackRock, one of the world’s biggest asset management firms.

This gives investors the confidence that comes with a reliable expert behind the fund’s management.

6. BMO Equal Weight Global Gold Index ETF (ZGD)

The BMO Equal Weight Global Gold Index ETF (ZGD) provides exposure to a global portfolio of gold mining companies, utilizing an equal-weighted approach.

Investors can benefit from gaining access to gold mining companies across the world, instead of being restricted to a certain region.

By diversifying, this ETF can help reduce risks associated with an individual mining company or region.

Furthermore, the equal-weighted approach ensures that all companies have the same impact on the fund’s performance.

This allows smaller companies to have the same influence as larger ones, opening up potential opportunities.

This approach also lessens concentration risk and avoids too much exposure to any single company or sector.

The BMO Equal Weight Global Gold Index ETF (ZGD) also has low fees compared to actively managed funds.

The management expense ratio (MER) for this ETF is relatively low, making it an attractive option for those looking to save money.

7. Horizons Gold ETF (HUG)

The Horizons Gold ETF (HUG) is an easy and inexpensive way to get exposure to gold without physically owning it.

Low management fees and diverse holdings make this ETF an attractive choice.

Investing in gold can be a wise decision, especially during uncertain economic times.

With the Horizons Gold ETF, investors can take advantage of its potential by tracking gold prices.

What makes the Horizons Gold ETF stand out is its ability to provide hedged currency exposure.

Canadian investors can benefit from changes in the value of the Canadian dollar compared to other currencies when investing in this ETF.

This can boost diversification and add potential returns.

Pro Tip

Before investing in any gold ETF, do your research and assess your risk tolerance. Consider talking to a financial advisor for personalized advice tailored to your investment goals and needs.

What is a Gold ETF?

A Gold ETF, or Exchange Traded Fund, is a great way to invest in gold.

It allows individuals to gain exposure to the price movements of gold without needing to own the metal.

This type of investment trades on stock exchanges and works similarly to a mutual fund.

Investors pool their money to buy a portfolio of gold assets.

The convenience of Gold ETFs is key.

You don’t need to buy physical bars or coins.

You can buy and sell shares through a brokerage account with a few clicks.

Diversification benefits are another plus.

Instead of investing in one gold asset, a Gold ETF can hold many different gold-related assets, reducing risk.

Plus, they provide liquidity.

You can buy and sell shares throughout the trading day.

This flexibility lets you quickly react to changes in the market.

Gold ETFs also offer transparency.

Their holdings are publicly disclosed, so investors can track the performance and composition of the fund.

It’s important to note that Gold ETFs don’t give investors physical possession of the metal.

But, if you want an easy way to invest in gold, Gold ETFs are a great option.

Key Considerations When Investing in Gold ETFs

  • Cost: Look for a gold ETF with low expense ratios and trading costs. This will help you get a better return.
  • Liquidity: Make sure the ETF has enough trading volume and strong liquidity. This will make it easier for you to buy and sell shares when needed.
  • Tracking Error: Check the tracking error of the gold ETF. A lower tracking error indicates that the ETF follows the price of gold closely.
  • Physical or Synthetic: Pick whether you want a physical or synthetic gold ETF. Physical ETFs have actual gold bars, while synthetic ETFs use derivatives to track the price of gold.
  • Provider Reputation: Research the provider’s reputation and experience in managing gold ETFs. Choose a well-known provider with a good record.

DISCLAIMER: This is not investment advice. Recommendations are for educational purposes only, presented as a path for you to further research. Please seek independent financial advice before making any financial decisions. PiggyBank is not liable for any investment decisions you make based on the information presented on this website.

Frequently Asked Questions

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What is an ETF?

An ETF, or Exchange-Traded Fund, is a type of investment fund that trades on stock exchanges. It holds assets such as stocks, bonds, or commodities and aims to track the performance of a specific index.

Why should Canadians consider investing in gold ETFs?

Canadians may consider investing in gold ETFs as they offer exposure to the price of gold without the need for physical ownership or storage. Gold can act as a hedge against inflation and market volatility, providing diversification to an investment portfolio.

How do I invest in gold ETFs as a Canadian?

To invest in gold ETFs as a Canadian, you will need to open a brokerage account with a Canadian brokerage firm. Once the account is opened, you can search for the desired gold ETFs and purchase shares through the brokerage platform.

Are gold ETFs a safe investment option?

Gold ETFs are generally considered a relatively safe investment option compared to other investment instruments. However, it’s important to note that all investments come with risks, including the potential for loss of capital.

What factors should I consider before investing in gold ETFs?

Before investing in gold ETFs, it’s essential to consider factors such as expense ratios, tracking error, liquidity, historical performance, and the overall investment strategy. Consulting with a financial advisor can also provide valuable insights.

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