Gold is considered safe heaven during market turmoil and economic uncertainty, but gold can be scary to invest in.
Are you buying physical gold bars? Are you buying a gold miner without understanding all of the socio-economic challenges a miner might face? Or do you just opt for a gold ETF?
These are the 3 options available to you to get a gold exposure. In fact, you can actually use a Canadian gold ETF to expose yourself to the physical gold, or the gold miners, or both. The options with gold ETFs are here.
While exchange traded funds (or ETFs for short) were introduced in the 1990s, recently they have become a powerful investment vehicle for many investors to avoid the abusive management fees of mutual funds.
ETFs can offer a way to get exposure to gold if that is of interest. Below are the Canadian gold ETFs to choose from.
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List of Canadian Gold ETFs
Here is the full list of Canadian Gold ETFs and their performance over the past 5 years. While they focus on gold, the performance is nowhere near the same.
I excluded ETFs that invest in “Future” Derivatives as it falls outside of gold bars and stocks and is more like trading a currency.
Although I don’t have gold in my portfolio, gold has long been considered a defensive investment. Holding gold can put you at ease in poor market conditions or market volatility. Another option is to hold bonds, but they don’t have the same inflationary performance as some would say.
Obviously, nobody can predict the price of gold, and your guess is as good as mine when it comes to how gold will be valued in the future, but for now we can evaluate the different approaches used by the listed Canadian gold ETFs.
Now it is important to separate the asset classes in order to compare apples to apples. As such, you can see the bullion ETFs doing separately from the gold miners.
Best gold bullion ETF
The aim of the following ETFs is to replicate the performance of gold bars for investors minus costs and fees. Many also have a $ USD option upon request.
If you’re looking to invest in gold as one of the long-standing ETFs, this is the PHYS ETF is the best gold ETF to hold. It is a real game with the value of gold.
It stays closer to the gold value as you can see in the second graph where everything is relative to the gold price. It is also the largest and therefore easy to trade.
Best gold stock ETF
The primary purpose of these ETFs is to help investors get into gold stocks through various strategies.
Investing in gold stocks is a proxy for gold. It doesn’t just fluctuate because of the price of gold as the ETFs hold companies and companies need to be well managed. This is mainly about gold mining and pricing versus inventory (or future inventory).
Each of the ETFs will hold the various gold stocks that trade on the Canadian and US stock exchanges.