Getting gold exposure by tangibly holding the metal is an obvious option. However, financial experts actually suggest holding exchange traded funds (ETFs) for easy access to gold exposure.
“While there is no one-size-fits-all recommendation that applies to all investors, a consensus did emerge among the experts we spoke with: Most investors are better off investing in gold indirectly,” a CBS News article suggested.
Holding gold itself can present logistical challenges related to safety and storage. In essence, “storing and insuring physical gold can come with additional costs,” says Hanna Horvath, CFP, in the aforementioned CBS News article.
Rather than holding gold, another way to get exposure is by adding assets that can closely track its price. In the current market environment, rising inflation and interest rates have been feeding into higher gold prices — to alleviate a fear of missing out, exchange traded funds (ETFs) offer a prime option for exposure.
Gold-focused ETFs offer investors cost-effectiveness in a dynamic investment vehicle. Adding gold ETF exposure gives investors more liquidity if they wish to sell their shares of the gold ETF as opposed to selling gold bars.
2 Options for Gold Exposure via ETFs
ETF provider Sprott offers a couple of ways to get gold exposure. One is the Sprott Physical Gold Trust (PHYS), which is a fund that provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with being traded on an exchange.
For an alternate play on gold prices via ancillary gold services like mining, investors can also consider the Sprott Gold Miners ETF (SGDM). If demand continues to rise for gold, this can have a domino effect on miners.
Per SGDM’s fund description, the ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index. The index aims to track the performance of larger-sized gold companies. In particular, it tracks those whose stocks are listed on Canadian and major U.S. exchanges.
“One of the better ways to gain exposure to gold is to invest in gold mining companies or companies that transact with gold,” said Scott Sturgeon, CFP, founder of Oread Wealth Advisors. “While you could buy individual company stock, it’s probably best in that situation to look for exchange-traded funds (ETFs) or mutual funds that track gold mining companies, the metal itself or some combination of both.”
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
