With economic uncertainty once again looming in 2023, many investors are looking to add stability to their portfolios with gold. Gold ETFs provide easy gold price exposure without direct physical investment.
In this brief guide, we’ll explore some of the top gold ETFs to consider adding to your portfolio in 2023.
How Do Gold ETFs Work?
A gold ETF or Exchange Traded Fund makes investing in gold super simple for regular investors. Essentially, a gold ETF functions like a mutual fund focusing specifically on gold assets. The ETF pools money from a bunch of investors using it to buy up actual, physical gold. This could mean gold bars stored in a vault or shares of gold mining companies – depending on the fund.
You don’t own any of that precious metal as an ETF shareholder. But your investment mirrors movements in gold prices. When prices rise, the value of the ETF’s gold stash goes up, and so does the share price. And, of course, the reverse is true if the value of gold takes a hit.
There’s no need to actually take delivery of heavy gold bars or find a buyer for physical coins. The ETF handles everything behind the scenes, so you simply benefit from gold price exposure. Now, ETFs do charge annual fees for management, storage, and handling, so do factor that in.
Top 4 Gold ETFs to Consider for 2023
Below are our Top Gold ETFs for 2023.
iShares Gold Trust Micro (IAUM)
The fund is managed by iShares Delaware Trust Sponsor LLC, a subsidiary of BlackRock, and was launched on June 15, 2021.
Performance and Expense Ratio
As of mid-2023, the iShares Gold Trust Micro (IAUM) has shown a solid performance with a one-year return of 7.51%. Boasting a low expense ratio of 0.09%, it’s one of the most affordable gold ETFs on the market. The ETF has assets under management of approximately $993.4 million, a surefire sign of its popularity among investors.
Why it’s a Top Choice for 2023
IAUM makes our 2023 list due to its low cost, strong performance, and simplicity it offers for gold investors. Its structure as a true ETF allows for easy trading, similar to stocks.
VanEck Merk Gold Trust (OUNZ)
The VanEck Merk Gold Trust is managed by Merk Investments LLC and was launched on May 16, 2014.
Unlike some other gold ETFs, it holds its gold bullion as allocated London Bars. Allocated gold bars are individually identified bars held in the fund’s name rather than just a general pool of bullion.
This fund differs from most in that investors have the option to take physical delivery of their gold in exchange for their ETF shares. There is a minimum threshold for taking delivery that is quite high, so this option is mainly targeted at large institutional investors rather than individuals.
Performance and Expense Ratio
Currently, it has a net asset value (NAV) of $18.14. While the expense ratio of 0.40% is higher than some other gold ETFs, the unique features may justify the additional cost for certain investors.
Why it’s a Top Choice for 2023
We picked this Gold ETF as a top choice for 2023 because of its unique feature that investors can exchange their shares for physical gold. The ETF’s focus on gold bullion in the form of London Bars means that investors get direct exposure to gold. The management by VanEck, a reputable asset management firm, also adds credibility to this fund.
Goldman Sachs Physical Gold (AAAU)
Goldman Sachs Physical Gold ETF aims to track the performance of the price of gold, less the expenses of the trust’s operations.
Performance and Expense Ratio
As of writing, mid-way through 2023, it has a net asset value (NAV) of $18.58. The fund has a moderate expense ratio of 0.40%, which is competitive within the gold ETF market.
Why it’s a Top Choice for 2023
Goldman Sachs’s reputation and the fund’s solid performance in 2023 have ensured it a place on our list.
Invesco DB Precious Metals Fund (DBP)
DBP is a commodity pool that tracks the DBIQ Optimum Yield Precious Metals Index Excess Return. DBP’s designed to expose investors to precious metals futures, with 80% of the fund’s holdings made up of gold futures.
Performance and Expense Ratio
DBP has shown a one-year solid performance, at the time of writing, with a return of 7.54%. The fund has an expense ratio of 0.77%, which is a little high, and should be something to consider before investing in this ETF.
Why it’s a Top Choice for 2023
Despite the fairly high expense ratio, Its excellent performance and unique investment strategy led us to add it to our 2023 picks. With its focus on precious metals futures, DBP offers a different approach to gold investment than most other funds we’ve looked at.
Advantages and Downsides of Investing in Gold ETFs
Reasons to Invest in a Gold ETF
Lower fees – Gold ETFs typically have smaller fees than actively managed funds, making them budget-friendly investments.
Portfolio diversification – Investing in gold ETFs can help diversify your portfolio and reduce overall risk.
Reinvested dividends – Some gold ETFs reinvest dividends, which can help increase your ROI over time.
Fluidity – Gold ETFs provide liquidity, meaning they can be easily bought and sold in the market.
Minimal overhead – Gold ETFs don’t require the overhead costs of owning physical gold, such as storage and insurance.
Hedge against inflation – Gold as an investment can act as a hedge against inflation and serve as a safe haven during market volatility and downturns.
Downsides of Investing in a Gold ETF
Liquidity-related risks – Gold ETFs can expose investors to liquidity-related risks, meaning risks related to how easily gold ETFs can be bought or sold in the market and converted to cash.
Recurring Fees – Management and marketing expenses continue to chip away at returns.
No high yields – Gold ETFs are a safe investment but might not have high yields compared to other investments.
Gold ETFs vs. Gold IRAs
When evaluating the best way to invest in gold, two standard options are Gold ETFs and Gold IRAs. While both provide exposure to gold prices, there are clear distinctions between these two vehicles.
Shares in Gold ETFs can be easily traded on stock exchanges, just like regular equities. Though you’ll gain exposure to gold prices in your investment portfolio, ETFs don’t give you direct ownership of physical gold.
In contrast, if you invest in a Gold IRA, you hold actual physical gold in your Individual Retirement Account. The gold is stored securely on your behalf by an IRA custodian. You retain outright ownership of the bars and coins held in your retirement account, having direct exposure to gold as a tangible asset.
When weighing Gold ETFs versus Gold IRAs, for quick speculation on gold prices, Gold ETFs present an accessible option. But for truly stable portfolio diversification, holding physical gold in a Gold IRA is generally the preferred choice.
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Final Thoughts on the Best Gold ETFs
Rather than bearing the burden of owning actual precious metals, Gold ETFs allow investors to tap into gold prices in a simpler manner. In choosing a specific Gold ETF, carefully assess each option’s historical returns, expense ratio, and the governance reputation of the issuing company. Focus on well-performing, low-cost picks managed by established providers.
Article Sources
At Gold IRA Blueprint, we dive deep into the world of gold IRAs, using trusted sources to back up our insights. Our sources range from official documents to expert interviews, ensuring our content is both accurate and reliable. We also draw on research from reputable publishers to give you the most comprehensive understanding possible. Check out our editorial policy to see how we maintain our high standards for accuracy and fairness. Also make sure to check out our Financial Review Process to have a better understanding of our process.
- https://www.investopedia.com/articles/basics/09/precious-metals-gold-silver-platinum.asp
- https://goldprice.org/
- https://money.com/investing-in-gold-for-beginners/
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