Investing Trading Gold Silver ETF's for Safety and Profit
July 12 2018 - Top 5 Gold Silver ETFs for 2018 By Bloomberg
Gold continues to offer good returns, and investors who are interested in owning the precious metal may consider buying shares in a gold exchange-traded fund. These funds are managed by gold experts, so you stand a better chance of making money than you would on your own. That said, the price of gold will always affect gold ETFs.
We have chosen the top gold silver ETFs based on net assets. None of them pay a dividend. Read the descriptions carefully, because each of these ETFs has different types of expenses. All figures are current as of June 24, 2018.
SPDR Gold Shares - GLD
This fund buys gold bullion. The only time it sells gold is to pay expenses and honor redemptions?. Because of the ownership of bullion, this fund is extremely sensitive to the price of gold and will follow gold price trends closely.
One upside to owning gold bars is that no one can loan or borrow them. Another upside is that each share of this fund represents more gold than shares in other funds that do not buy physical gold. However, the downside is taxes. The Internal Revenue Service considers gold a collectible, and taxes on long-term gains are high.
Average Volume: 6.48 million
Net Assets: $35.54 billion
2017 Return: 12.81% 2018 YTD Return: -0.44%
Expense Ratio: 0.40%
iShares Gold Trust - IAU
This is another fund that buys physical gold. The fund incurs expenses for transportation, warehousing and insuring gold. IAU keeps its gold in vaults scattered around the planet. Interestingly, the fund does not try to profit from the gold by selling it when the price goes up. Instead, fund managers consider IAU a way for investors to buy and hold gold bullion. This makes the fund very stable.
Because of the low expenses for the fund, investors have a cheap way to buy and manage gold in a way they could not by themselves. Owning this fund is considered owning a collectible by the IRS, and it taxes the holdings accordingly. And those taxes are high. In the beginning, one share of the fund equaled 1/100th of an ounce of gold. This number actually goes down as time passes because expenses have to be figured into the cost of a share.
Average Volume: 13.3 million
Net Assets: $12 billion
2017 Return: 12.91%
2018 YTD Return: -0.4%
Expense Ratio: 0.25%
ETFS Physical Swiss Gold - SGOL
SGOL stores gold in a vault in Zurich. Owners of the shares own part of that gold. This fund is very liquid, meaning that you can buy and sell shares easily. This allows you to take profits effectively or to add shares when you want to buy the dips. The primary difference between SGOL and other funds that hold physical gold in storage is that SGOL stores its gold exclusively in Swiss vaults.
Average Volume: 49,236
Net Assets: $1.15 billion
2017 Return: 12.86%
2018 YTD Return: -0.27%
Expense Ratio: 0.39%
GraniteShares Gold Trust - BAR
The GraniteShares Gold Trust is designed to seek the performance of the price of gold. The ETF is committed to less trust expenses. The ETF is relatively new, as it was created on August 31, 2017.
Average Volume: 58,481
Net Assets: $14.3 million
2018 YTD Return: -0.03%
PowerShares DB Gold ETF - DGL
DGL does not buy gold. It tracks the DBIQ Optimum Yield Gold Index Excess Return. The fund does this by buying futures contracts. It should be noted that investors in DGL receive a K-1 form during tax season, meaning they must pay taxes as partners. In addition, the fund's managers must constantly fight contango, which is a situation where the futures contract is higher than the future spot price of gold. Investors lose money because the futures contract must be adjusted downward to match the spot price.
Average Volume: 43,441
Net Assets: $200.02 million
2017 Return: 11.03%
2018 YTD Return: 0.48%
Expense Ratio: 0.76%
The Bottom Line
Gold must always be considered a speculative investment. Investors usually choose ETFs to spread risk among several assets. However, some of these funds invest exclusively in gold, so gains or losses in those cases are tied directly to the price of gold.
Whenever the market experiences its cyclical cataclysms of heady ups and downs, leery investors turn to precious metals. While stocks had a great run in 2017, uncertainty regarding domestic and international events continues to draw attention in the new year. There's a good argument to be made for diversifying your portfolio with commodities such as silver, which is in high demand in many different industries: consumer electronics, automobile manufacturing, solar energy and housing, to name a few.
However, actually owning precious metals is a hassle that many investors would prefer to avoid. Fortunately, exchange-traded funds offer an easy way to gain exposure to this relatively volatile commodity. There are several silver and silver-mining funds that do a good job of tracking the metal's gains and losses. If you're interested in adding silver to your portfolio, these three silver-backed ETFs are a good place to start.
Funds were selected on the basis of both performance and assets under management. All figures were current as of January 26, 2017.
iShares MSCI Global Silver Miners ETF - SLVP
Net Assets: $58.48 million
2017 YTD Performance: 4.58%
2018 YTD Performance: 2.22%
Expense Ratio: 0.39%
This fund aims to track the MSCI ACWI Select Silver Miners Investable Market Index, and it is closely correlated to the price of silver. The fund has a global outlook, investing in mining companies all over the world. It currently holds positions in approximately 30 different companies in North and South America, Europe, Asia and Australia. The fund is tilted toward large-cap mining companies. Canada-based Wheaton Precious Metals Corporation WPM.TO accounts for over 22% of its holdings.
SLVP is a relatively new fund, with an inception date of January 2012. Its one-year, three-year and five-year performance figures are 4.58%, 8.71% and -11.63%, respectively. The fund's reasonable expense ratio, especially for a sector-specific fund, also makes it attractive.
iShares Silver Trust - SLV
Net Assets: $5.41 billion
2017 YTD Performance: 5.82%
2018 YTD Performance: 2.63%
Expense Ratio: 0.50%
It is important to note straight away that SLV is not a typical ETF. As the prospectus notes, "The assets of the Trust consist primarily of silver held by a custodian on behalf of the Trust," which means that the fund will purely reflect the price movements of silver. Investors purchase shares in the physical silver held by the trust, and the fund charges a 0.50% annual sponsor fee to hold the silver. If you want pure exposure to silver without storing bullion in your safe, SLV is the way to go.
The fund currently holds about 320 million ounces of silver in trust. Its one-year, three-year and five-year performance figures are 5.82%, 2.02% and -11.45%, respectively.
Global X Silver Miners ETF - SIL
Net Assets: $413.59 million
2017 YTD Performance: 1.67%
2018 YTD Performance: 1.47%
Expense Ratio: 0.65%
For a different take on silver, this ETF tracks an index of global silver mining companies. It is definitely the dominant player in the space, with exponentially more in AUM than its competitors. With average daily volumes of approximately $4 million, SIL has the liquidity to reassure investors looking to enter this relatively volatile market. However, expenses are also higher than straight silver ETFs. There are currently 28 equities in the fund's portfolio.
The fund's one-year, three-year and five-year performances reflect the trends in silver and come in at 1.67%, 6.84% and -12.86%, respectively.
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