What if I Want to Buy a Gold ETF?

From ETFs backed by bullion to miners with more upside potential - here's how to get yourself some gold

Ruth Saldanha 18 February, 2021 | 12:47PM
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This is a new video series that answers your 'What If...' questions

Narrator: With all the uncertainty around, you’d be forgiven for wanting to hold on to something safe to protect yourself and your family. I mean, stocks sound great and all, but they’re just numbers on a screen. Now gold, that’s something you can hold.

But if you’d rather not be pitched headfirst into a volcano, or pay storage and security costs to ensure Hobbit thieves don’t get their hands on your gold, you could hold paper gold – through an Exchange Traded fund.

What If You Want to Buy a Gold ETF?

The first thing to remember is you could get gold exposure in three ways. A bullion ETF, A gold-miner ETF, or a miner stock. They’re all different though. Here’s how. 

Kristoffer Inton: A bullion ETF buys and stores the gold for you, and trades on an exchange, which makes buying and selling your gold a lot easier. But you’ll have to pay a fee for the convenience. A gold-miner ETF gives you levered exposure to gold prices, so when gold prices rise, a miner should outperform bullion, all else equal. Plus, the nice thing about a miner ETF is that you diversify away some company-specific risk. Which brings us to miner stocks. Remember, company-specific risk can also be an opportunity. For example, if a miner boosted production or lowered costs, we’d expect to see that reflected in the stock, but it would be averaged away across the portfolio of miners in the ETF.

Narrator: That’s how you can have your gold – and hold it too!







The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Ruth Saldanha

Ruth Saldanha  is Senior Editor, Morningstar.ca


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