Invest in the best precious metals ETFs with Interactive Brokers.
Precious metals can be a great way to hedge against inflation. But before you start stockpiling gold and silver bars, you should know there’s another option: investing in precious metal exchange-traded funds (ETFs).
Investing in these funds gives you all the benefits of investing in precious metals directly without worrying about how to transport or store the actual metal. Not sure where to start? Check out some of the best precious metals ETFs.
If you’re new to the world of precious metals ETFs, knowing where to begin can be a challenge. Here are six of the best funds to start with.
1. iShares MSCI Global Gold Miners ETF (NASDAQ: RING)
As you likely can tell by the name, RING is connected to various companies whose income comes from mining gold — it tracks the MSCI ACWI Select Gold Miners Investable Market Index.
With a year-to-date total net asset value (NAV) return of 7.18% as of June 2023 and an expense ratio of 0.39%, this proven ETF is a solid investment — even for beginners.
2. Global X Silver Miners ETF (NYSEMKT: SIL)
This ETF is one of the largest on the list, boasting over $974 million in assets. It tracks the Solactive Global Silver Miners Total Return Index, and it’s a great way to invest in silver without visiting a precious metals dealer. At 0.65%, its expense ratio is higher than some.
3. iShares MSCI Global Metals & Mining Producers ETF (NYSEMKT: PICK)
This precious metals ETF tracks the MSCI ACWI Select Metals & Mining Producers Ex Gold and Silver Investable Market Index. That index is a mouthful, but it tracks companies that mine steel, aluminum and various precious metals, just not gold and silver.
Because it excludes the two most common precious metals most people choose to invest in, PICK is perfect for diversifying your portfolio. It has a reasonable expense ratio of 0.39%.
4. iShares Gold Trust Micro ETF (NYSEARCA: IAUM)
If you want extra certainty in your ETF investments, go with a physical-backed precious metals ETF. This means that the fund holds actual precious metal, not just the promise of it. IAUM has the distinguished honor of being the lowest-priced physical gold ETF. As you might imagine, that makes it popular with new investors.
IAUM tracks the LBMA Gold Price, so if you follow it, you’ll get a front-row seat to the daily price fluctuations of gold. As a bonus, it has a very low sponsor fee of 0.09%.
5. VanEck Rare Earth/Strategic Metals ETF (NYSEMKT: REMX)
Like PICK, REMX is a good choice if you’ve already invested in gold or silver and want to counterbalance with another precious metals investment. It tracks the MVIS Global Rare Earth/Strategic Metals Index.
Rare earth and strategic minerals are indispensable when it comes to manufacturing computers and other electronics. As such, REMX is likely to perform well even in the event of a market downturn. It has a reasonable 0.53% expense ratio.
6. ETFMG Prime Junior Silver Miners ETF (NYSEMKT: SILJ)
This ETF tracks the Prime Junior Silver Miners & Explorers Index, an index of smaller companies involved in silver mining and refining. Because it’s tied to developing companies and newer mines, this fund has the potential for substantial growth.
That said, high-reward investments tend to be riskier, and SILJ is no exception. Newer companies often take on substantial debt and aren’t always successful in the long run.
SILJ is a great ETF to add to your portfolio, but it’s wise to also invest in a more stable precious metals ETF.
A precious metals ETF is an investment fund that holds precious metals as an asset. The most common precious metals are gold, silver, platinum and palladium.
Some precious metals ETFs hold bullion, which is a precious metal in its physical form. Other ETFs hold futures contracts (legally binding agreements for the delivery of precious metal at a set time). Like most other investments, shares of these ETFs can be bought and sold on the stock exchange.
As with other exchange-traded funds, the value per share of precious metals ETFs fluctuates with the value of the precious metal in question. For instance, if you have shares in a silver ETF and the price of silver shoots up 15%, the value of your shares should go up by about 15% as well.
More specifically, each precious metal ETF tracks a specific index or a benchmark that gives investors an idea of how a specific commodity is doing. For example, iShares Silver Trust (SLV) tracks the LBMA Silver Price.
No type of investment is perfect, but precious metals ETFs have a lot to recommend them. For instance:
- Low fees: Broker commissions for ETF investments are generally much lower than transaction costs for buying physical precious metals.
- Convenience: When you invest in precious metal ETFs, you don’t have any of the hassles of purchasing and storing the physical metal.
- Portfolio diversity: Precious metals’ performance on the market isn’t tied to the performance of other asset classes, so investing in them can help spread out investment risk.
- Liquidity: Unlike physical metals, shares in precious metals ETFs can be liquidated quickly.
- Safety: The value of precious metals tends to remain fairly stable, even in recessions. In some cases, value even goes up during an economic downturn.
Precious metals ETFs can be an outstanding addition to your investment portfolio, but they probably shouldn’t be your only investment. That’s because, unlike stocks, the values of precious metals fluctuate based on factors that are much harder to predict.
Speculation, inflation and general market sentiment can have a powerful effect on values. For newer investors in particular, it can be nearly impossible to see these factors coming.
Each person’s financial and investment situation is different. A financial adviser can help you decide whether precious metals ETFs are the right investment for you.
Invest with Confidence
Precious metals ETFs are safe, relatively stable investments for new and seasoned investors alike. But as you saw above, not all ETFs are created equal.
To make sure you get the best deal possible, it’s worth taking the time to seek out a qualified ETF broker to help you make the right choice. You can see Benzinga’s top picks for ETF brokers below.
Frequently Asked Questions
Q
Is there an ETF for rare metals?
A
Yes — VanEck’s Rare Earth/Strategic Metals ETF. This fund closely follows the MVIS Global Rare Earth/Strategic Metals Index. The rare metals this index tracks include neodymium, cerium, lanthanum and gadolinium.
Q
Is there a gold and silver ETF?
A
Most precious metals ETFs focus on a single precious metal. But some, like abrdn Physical Precious Metals Basket Shares ETF (NYSEARCA: GLTR), have gold, silver, platinum and palladium holdings.
Q
Is it better to buy gold bullion or an ETF?
A
In most cases, it’s better to invest in a gold ETF than to purchase gold bullion. Investing in an ETF is more convenient and cost-effective than purchasing actual metal. ETF holdings also are much easier to liquidate.
The ETFs listed above were selected based on the following criteria:
- Longevity: To be considered, funds had to have at least a one-year trading history.
- Size: Each fund has at least $100 million in assets under management
- Expense ratio: Funds with lower expense ratios were prioritized.
- Tracking: The selected ETFs follow their respective indexes with few errors.
- Diversification: Funds spread out over a variety of holdings are generally more stable, so they received priority.
Essentially, the selected criteria were meant to ensure that selected funds had strong track records, incurred fewer expenses for investors and were at least somewhat protected from market volatility.