Is it a good time to buy gold ETFs?
Gold can be seen as a good investment all-year round, whether the financial markets are in a bullish or bearish phase. This is because the metal tends to perform well even throughout global recessions, rarely losing its value. As the price of the metal increases, this is usually reflected in the price of gold stocks and exchange-traded funds (although not always, which we will explore later on). These can also help to protect against inflation when the price may start to increase.
For further detail, read our article on how to invest in gold and silver.
What are the two types?
There are two different types of exchange-traded funds in the gold market:
Physical gold ETFs seek to replicate the performance and price of bullion. These can be calculated in different ways depending on the fund but differ from exchange-traded commodities (ETC).
Stock or company ETFs seek to replicate the performance of an index containing gold-related company stocks, whether these relate to mining, extraction, or production of the metal.
We explore some of the best-performing gold ETFs in the market right now below.
Physical gold ETFs
The following data is taken from ETF Database and is up to date as of January 2022. Please remember that past performance is not a reliable indicator of future results.
1. Aberdeen Standard Physical Gold Shares ETF [SGOL]
This product issued by Aberdeen Standard is one of the best-performing gold ETFs in the UK. It aims to reflect the performance of bullion bars, which are stored in secure vaults in both London and Zurich, Switzerland. Although it’s a UK-based exchange-traded fund, the base currency is in US dollars. According to Bloomberg, it has a ten-year correlation of 0.0110 for the benchmark vs the S&P 500 index, meaning that when the blue-chip index decreases in value, SGOL moves in the opposite direction and could be valuable for diversification and protection against stock market volatility.
