10 Best Gold ETF and How to Invest in Them in Australia

In times of crisis, recession and volatility in the financial markets, gold has always been the go-to asset for preserving the value of investors’ portfolios. 

This is because, as a precious metal commodity, gold has many real-world applications in industrial production as well as within the massive global jewellery and luxury goods industries.

However, for those who wish to add gold to their portfolios, buying physical gold has traditionally been inconvenient, since they would have to deal with the logistics of storing, transporting, and securing physical gold bars, coins or notes. Not to mention expensive, since they would be subject to the pricing whims of physical gold dealers.

Today, investors and traders who wish to take advantage from exposure to the value of gold can do so conveniently and cost-effectively, thanks to gold exchange-traded funds (ETFs). 

In this article, we will introduce you to what Gold ETFs are, how you can invest in them in Australia, and even shortlist 10 popular gold ETFs that might be worth looking into.

What Are Gold ETFs?

Exchange-traded funds (ETFs) are passively managed funds that aim to track the price of an underlying index.

In particular, gold ETFs give investors exposure to the price of gold by mirroring indices like the LBMA Gold Price PM index or other indices that track the price of physical gold bars, ingots and coins held in vaults around the world. There are also gold-related ETFs that track the performance of companies in the gold mining business. ^[1]

How Do Gold ETFs Work?

Investors can pick the specific gold ETF they’d like to invest in and then buy or sell units in a gold ETF as they would any other stock or fund that is listed on the exchange. The fact that gold ETFs are traded just like any other security makes them more liquid compared to physical gold or other gold derivatives.

Management fees for gold ETFs are also competitive and are much lower compared to the costs one would incur when buying, transporting, securing, and insuring physical gold. Thus, gold ETFs provide cost-effective and convenient exposure to the price movements of gold or the gold industry as a whole.

Gold ETFs are worthy considering if you’d like to invest in gold for the long term or simply hedge against a volatile market in the short term. However, before making a trade, investors should be aware of some potential pitfalls of gold ETFs.^[2]

The main weakness with gold ETFs is that they are imperfect representations of the price of spot gold, so you might find that gains (or losses) of physical gold might not be what you actually receive.

Factors Investors and Traders Should Look at When Choosing some of the ‘Best’ Gold ETFs

When picking our gold ETFs, we want to narrow our focus on the biggest and most established funds, since they tend to have the longest track record, and be more liquid. This should help us to potentially achieve better liquidity and narrower spreads. Larger funds also have better economies of scale, which tend to translate to lower total expense ratios.

In our list of 10 “best” ETFs, the selection is based on two criteria: 

1. These gold ETFs must have a minimum of $500 million in Assets Under Management. 
2. The annual expense ratio they charge must be below 0.55%.

All figures are in US Dollars and data cited on the ETFs are accurate as of 26 May 2022.

1. SPDR Gold Shares (GLD)

Issued by State Street Global Advisors, GLD is a gold ETF that tracks gold spot price less expenses, using gold bars held in vaults in London.^[3]

With $63.52 billion in Assets Under Management (AUM), GLD is the largest gold ETF. It’s also the first ETF specifically developed to track the price of gold, launched in November 2004. SPDR Gold Shares (GLD) has an expense ratio of 0.40%.

2. VanEck Gold Miners ETF (GDX)

GDX, issued by VanEck, mirrors the NYSE Arca Gold Miners index which tracks the performance of companies in the gold mining industry. ^[4]

The fund also includes firms mining other precious metals. It has $12.95 billion in under management and has an expense ratio of 0.51%. The fund was launched in May 2006 and listed on ASX.

3. iShares Gold Trust (IAU)

IAU tracks the gold spot price less expenses using gold bars held in vaults around the world. The ETF is issued by Blackrock and has an annual expense ratio of 0.25%.^[5] Launched in January 2005, IAU boasts of the second largest AUM of $30.80 billion.

4. SPDR Gold Minishares (GLDM)

GLDM is a smaller version of the colossal GLD, which makes it appealing to investors wishing to place small orders. It tracks the gold spot price less expenses using gold bars held in London vaults. ^[6]

Managed by State Street Global Advisors, GLDM has a lower expense ratio of 0.18%. It was launched in June 2018 and has $5.16 billion in AUM.

5. Aberdeen Standard Physical Gold Shares ETF (SGOL)

SGOL tracks the gold spot price less expenses by holding gold bars in vaults in Germany. ^[7]

Issued by Abrdn Plc, SGOL has an expense ratio of 0.17% and $2.65 billion in AUM. It was launched in September 2009 but was purchased by Abrdn Plc in April 2018.

6. GraniteShares Gold Trust (BAR)

BAR tracks the gold spot price less expenses using physical gold stored in vaults in London. ^[8] The issuer, GraniteShares, outsources physical audits of its vaults conducted twice a year. This provides an additional layer of trust and confidence among investors.

It has an expense ratio of 0.17% and $1 billion in AUM. The fund was launched in August 2017.

7. iShares Gold Trust Micro (IAUM)

IAUM, launched in June 2021 and issued by Blackrock, was designed as a micro version of IAU. ^[9]

It has a lower expense ratio of 0.15% and has $1.08 billion AUM. The fund tracks the price of the gold spot less expenses using gold bars held in vaults.

8. iShares MSCI Global Gold Miners ETF (RING)

Another of the Blackrock family, RING mirrors the MSCI ACWI Select Gold Miners Investable Market index. The index tracks the performance of companies primarily in the gold mining business. ^{[10] [11]} The fund was launched in January 2012 and has an expense ratio of 0 39%.

iShares MSCI Global Gold Miners ETF (RING) has $518.45 million in AUM, invested in 39 companies, representing 99.81% of its composition, 0.16% cash and derivatives, and 0.03% ETFs and mutual funds.

9. VanEck Merk Gold Trust (OUNZ)

Issued by Merk, OUNZ tracks the gold spot price less expenses using gold bars and coins held in vaults in London. It gives investors the option to redeem their shares for physical gold. ^[12]

The fund, launched in May 2014, has $649.29 million in AUM and a 0.25% expense ratio.

10. Goldman Sachs Physical Gold ETF (AAAU)

AAAU, issued by Goldman Sachs, tracks the gold spot price less expenses. It holds gold bars in vaults in Perth, Australia. Like OUNZ, investors can redeem their shares for small bars and gold coins.^[13]

The fund was started in July 2018 and has $559.68 million assets under management with an expense ratio of 0.18%.

Other Gold ETFs to consider

1. Global X Gold Explorers ETF (GOEX)

The Global X Gold Explorers ETF (GOEX) tracks the stocks of companies involved in the exploration of gold deposits. ^[14]

2. Direxion Daily Gold Miners Index Bull 2X Shares (NUGT)

The Direxion Daily Gold Miners Index Bull 2X Shares (NUGT) is a higher risk ETF that seeks daily investment results of 200% of the performance of NYSE Arca Gold Miners Index.^[15]

3. VanEck Junior Gold Miners (GDXJ)

VanEck Junior Gold Miners ETF (GDXJ) tracks the overall performance of small capitalisation companies which are involved in gold and/or silver mining. ^[16]

How To Buy CFDs on Gold ETFs with Vantage

Vantage offers CFDs on some of the most popular Gold ETFs, with leverage of up to 5:1.

Sign up for an account to trade Gold ETF CFDs, and take advantage of opportunities across multiple sectors and asset classes today.

Disclaimer

This is intended for education purposes only and constitutes general information only. The Company does not take into account the specific investment objectives, needs or financial situation of any person, makes no representation and assumes no liability to the accuracy, completeness, suitability and timeliness of the published content. The 10 “best” Gold ETFs listed above are not ranked in any order and not intended as, and shall not be understood or construed as, a recommendation, or basis to make any specific investment decision. Reliance on such information is solely at your own risk and we cannot be held liable for any outcome of decisions resulting directly or indirectly from such reliance. Past performance is not an indication of future results.

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