These gold ETFs provide investors with numerous ways to play the metal, from direct exposure to stock-related angles, on the cheap.
It’s a good time to be an aficionado of gold and gold exchange-traded funds (ETFs). The cost of investing in gold through funds continues to trickle lower, and the variety of ways to get exposure to gold continues to grow.
On top of that, 2023 is turning out to be a good year for the yellow metal.
Gold spent much of last year on the downswing amid rocketing interest rates and, eventually, strength in the U.S. dollar. The former tends to hurt gold demand because institutional money migrates to the improving yields on bonds and other interest-bearing debt; the latter because gold is priced in U.S. dollars but most often bought in other currencies that are weakening by comparison.
Why should I invest in gold?
However, a slowing (and potential end) to rate hikes this year bodes much better for gold strength moving forward.
“In the short to medium-term, we see macroeconomic support for gold” as we expect the Federal Reserve to pause rates at the next Fed meeting, says Gargi Chaudhuri, head of iShares Investment Strategy Americas at BlackRock. In addition to a potential pause and a weakening U.S. dollar, “the gold market is largely supply and demand driven, so we can expect support on gold prices from elevated international demand,” Chaudhuri says.
Gold investors typically tout several virtues of the yellow metal: It hedges against inflation, they say, it’s an uncorrelated asset that doesn’t move with the stock market and it can grow in value when national or even global uncertainty is high. Those features help build the bull case, which you can leverage via gold ETFs.
What are the best gold ETFs?
We recommend that if you look to use these commodity ETFs to diversify your portfolio, you first learn the ins and outs of gold investing. While gold is performing well this year, it “has generated disappointing long-term returns compared to stocks,” says Dan Burrows, senior investing writer at Kiplinger.com, in his article on 10 facts you need to know about investing in gold. Even then, make it a small portion (5%) of your portfolio.
And we recommend investing in ETFs for several reasons, including liquidity, low expenses and ease of use.
Using my professional experience as editor-in chief for Young and The Invested, as well as former senior investing editor at Kiplinger and managing editor at InvestorPlace, I looked for the best ETFs to buy that gave different degrees of exposure to gold.
With that in mind, here’s an introduction to seven low-cost gold ETFs. This list includes the most ubiquitous gold ETFs on the market – funds you typically can read about in just about any daily commodity wrap-up – as well as a few that aren’t as well-covered by the financial media but might be better investments than their high-asset brethren.
