A precious metal exchange-traded fund (ETF) is a passive investment vehicle that invests in actual bullion of a certain precious metal to track the price of that precious metal over time. It is not uncommon for these ETFs’ prices to differ from the net asset value, as is the case with other ETFs. Physical bullion of a specific metal, held in trust in the vault of the custodian or sub-custodian, is the principal underlying asset of such an ETF.
Investing in these ETFs allows investors to take part in the precious metal markets without having to take physical delivery of the bullion, and they are listed on stock exchanges throughout the world.
There are now 15 precious metals ETFs available in the United States. Some people have these valuable assets in bank vaults. Others use derivatives such as options or futures contracts, which still offer some direct exposure to metals prices, to make their money work for them. ETFs that focus on owning precious physical metals are the best option since they tend to produce the performance that is pretty close to market values after expenses.
Investment in gold and other precious metals ETFs has surged as investors seek to protect themselves from the escalating crisis caused by Russia’s invasion of Ukraine. Notably, it’s not just gold and silver that have benefited from a robust economy and rising prices. Listed below are some of the best precious metals ETFs to consider.
iShares Silver Trust
This is the largest and perhaps the most popular silver ETF. As part of its approach to investment, it stores silver bars in bank vaults. Investing in silver through an ETF eliminates many of the headaches and hazards associated with traditional silver investments, such as acquiring silver stocks or silver coins. In order to reflect the metal’s actual market price at any one time, it owns silver bullion, and the Trust takes its expenses and obligations into account.
The ETF charges a modest fee ratio of 0.5 percent to investors while also being extremely liquid. It may be worth it to pay the fee, even if it may result in the fund underperforming the price of silver in the long run. Due to a variety of factors, silver stocks sometimes substantially underperform ETFs. You can invest in this ETF using a reliable broker to begin trading in the metal.
Aberdeen Standard Physical Platinum Shares ETF
The Aberdeen Standard Physical Platinum Shares ETF allows investors to directly invest in platinum, a significant product used principally in the production of catalytic converters for the automotive industry. The ETF holds actual bars that it keeps safe in bank vaults. With this fund, you can expect a return equal to the platinum spot price minus management costs.
Platinum ETFs are one of the few alternatives to invest in this metal. There are very few publicly traded mining companies that specialize in the rare industrial metal platinum, but interested investors can buy jewelry or platinum bars. Investors have less of an impact on platinum pricing because these companies primarily mine platinum with other metals. As a result, the fund’s expense ratio of 0.6% appears even more acceptable.
SPDR Gold Shares
In addition to being the largest gold ETF, SPDR Gold Shares has been trading since 2004 and is widely considered the gold standard in terms of gold allocations in the ETF market. Its only assets are gold bullion held in bank vaults, as well as a small amount of money. Investors can buy gold through their brokerage accounts or through their Individual Retirement Accounts.
Investors can gain exposure to the price of gold without having to buy the real metal because the fund is benchmarked against gold bullion. By using this method, investors can profit from an increase in the price of gold without having to hold any real metal themselves. Because of this, insurance and storage costs are reduced, and there is minimal risk of exposure to hazards such as theft or misplacement.
Because of the ETF’s strong liquidity, it is easy to trade. Traders can easily transform their shares into cash by selling them on a major stock exchange. Owners receive all of these advantages for a low ETF expense ratio of 0.4 percent.
Aberdeen Standard Physical Palladium Shares ETF (PALL)
The fun is intended to track the price of palladium, minus the fees, during a given time period. There are several uses for palladium, from electronics to industrial items. Palladium is a precious hard metal to get your hands on because there are no pure palladium miners.
Aside from palladium futures contracts, PALL is the only other alternative for palladium exposure. With the ETF’s 0.6 percent expense ratio, Palladium is an acceptable price to pay for exposure to this particular precious metal. Palladium bullion is the only asset held by the ETF.
Aberdeen Standard Physical Gold Shares ETF (SGOL)
The Aberdeen Standard Gold ETF Trust issues SGOL, which are physical gold bars. SGOL, like other physical gold-backed ETFs, tracks the price of gold bullion minus costs in its investment decisions. The expense ratio for SGOL is 0.17 percent, which is very reasonable. If you’re looking for an easy and inexpensive way to invest in gold, these Shares are for you.
As an alternative to gold investments, the Shares provide investors with an opportunity to participate in the gold market to some extent through the securities market, even if they are not an exact substitute for gold.
In summary
For investors concerned about rising inflation in 2022, metal-based ETFs will stay prominent. Investors can choose from a wide variety of precious metals ETFs. Alternatively, they can gain direct exposure to a certain metal by investing in an ETF that holds a real bar of that precious metal.
In order to obtain exposure to all four major precious metals, investors can either focus on one metal or buy a basket of precious metals ETFs or an ETF holding a basket of precious metals. The list we’ve discussed above is not exhaustive, but the ETFs are among the best performers. Importantly, do your own research to find out what fits you.
