In this article, we discuss 10 best gold ETFs to buy now. If you want to skip our discussion on the gold industry, check out 5 Best Gold ETFs To Buy Now.
In late 2023, gold prices experienced a significant surge due to increased central bank buying and growing investor concerns over geopolitical tensions including the Israel–Hamas and Russia–Ukraine conflicts. This rally was further fueled by a weakening US dollar and expectations of interest rate cuts by the Federal Reserve. Gold prices reached a record high of $2,135.39 per ounce in December. After continuous interest rate hikes that brought the Federal Reserve funds rate to its highest level in over 22 years, policymakers have signaled plans for at least three rate cuts in 2024. Natasha Kaneva, Head of Global Commodities Strategy at J.P. Morgan, commented:
“Commodities are unlikely to benefit from core inflation in 2024. Inflation should fall to under 3%, so that, along with properly timing the business cycle, are the two conditions needed to initiate long positions, making the outlook for the sector very tactical in 2024. Across commodities, for the second consecutive year, the only structural bullish call we hold is for gold and silver.”
Reflecting similar market sentiment, Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan, stated:
“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical. At the moment, gold still appears quite rich relative to underlying rates and foreign exchange (FX) fundamentals, and still looks vulnerable to another modest retreat in the near-term, as Fed rate cut expectations are now running earlier than our forecasts.”
In 2023, gold showcased strength despite expectations, outperforming multiple assets including commodities, bonds, and most stock markets. The World Gold Council highlighted that market consensus leans towards a 'soft landing' in the US, historically not favorable for gold returns, although geopolitical tensions and continued central bank buying may provide support. However, the possibility of the Fed achieving a soft landing with interest rates above 5% remains uncertain, with a global recession still possible, prompting investors to consider gold as an effective hedge. While the odds favor a soft landing, historical data shows it has been achieved only twice following nine tightening cycles, indicating potential challenges. The World Gold Council noted that the labor market's status is crucial in determining economic conditions, with potential shifts from a soft to a hard landing. Other possible scenarios include a 'no landing,' characterized by reaccelerated inflation and growth, which could initially challenge gold. Expected policy rate easing may not translate as favorably for gold due to factors like real interest rates and consumer demand constraints. A recession, if it occurs, historically benefits high-quality government bonds and gold, though initially, it might pose challenges for gold. However, if inflation surges, it could lead to a stronger monetary response, reinforcing the case for strategic gold allocations.
Goldman Sachs Research expects gold prices to rise due to increased central bank purchases and robust retail demand in emerging markets. Analysts Nicholas Snowdon and Lavinia Forcellese predict a potential 6% climb in gold prices over the next year to reach $2,175 per troy ounce. While uncertainties surrounding Federal Reserve interest rate policy may lead to short-term fluctuations, the downside risks to gold prices are expected to be limited. Strong central bank purchases, particularly from China and India, have offset outflows from gold exchange-traded funds, driven partly by geopolitical tensions such as the Russia-Ukraine conflict and the COVID pandemic. The recent decrease in ETF purchases is attributed to already high holdings and the influence of real interest rates. Speculative positioning by hedge funds seems more responsive to shifts in long-term yields than ETF holdings. Historically, changes in gold ETF holdings have correlated with major risk-off events and cycles of monetary policy easing. Analysts anticipate a potential increase in ETF holdings once the Fed begins cutting rates, possibly starting in May. Additionally, rising incomes in emerging markets are boosting consumer demand for gold, particularly in jewelry. According to Goldman Sachs analysts:
“The rapidly growing cohort of ‘affluent’ consumers in India … will drive growth in jewelry consumption. Moreover, gold consumption has also been supported by a lack of alternative investments in some countries which saw big policy shifts (Turkey, China) in the past few years.”
Gold and silver are expected to see continued growth in 2024, as UBS forecasts, largely due to anticipated interest rate cuts by the US Federal Reserve. This expectation, coupled with a weaker dollar, is projected to push gold prices upwards, with forecasts suggesting a potential increase to $2,200 per ounce by year-end. Historically, gold tends to rise when interest rates decrease, as it becomes a more attractive investment compared to bonds in a low-rate environment. Additionally, lower interest rates typically lead to a depreciation of the dollar, making gold more affordable for international buyers, thereby boosting demand. Despite uncertainties surrounding the timing and extent of rate cuts, UBS maintains its forecast for Federal Reserve policy easing. The recent surge in gold's appeal as a safe haven asset, particularly amidst geopolitical tensions like Israel's conflict with Hamas, has also contributed to its record-breaking prices. Moreover, optimism extends to silver, often considered gold's "poorer cousin," which is expected to perform well, especially in the event of Federal Reserve easing. While silver has historically underperformed gold, analysts believe it has significant catching up to do, potentially resulting in a dramatic surge.
Some of the best gold stocks to buy include Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Franco-Nevada Corporation (NYSE:FNV). However, we discuss the best gold ETFs in this article.
Our Methodology
We curated our list of the best gold ETFs by choosing consensus picks from multiple credible websites. We have mentioned the 5-year share price performance of each ETF as of March 18, 2024, ranking the list in ascending order of the share price.
A close-up of a hand placing a block of gold into a safe.
10. iShares Gold Trust Micro (NYSE:IAUM)
5-Year Share Price Performance as of March 18: 20.53%
iShares Gold Trust Micro (NYSE:IAUM) is an exchange traded fund designed to track the price of gold bullion, using the LBMA Gold Price as its benchmark. It was established on June 15, 2021, and as of March 15, 2024, it holds $1 billion in net assets. The fund incurs a sponsor fee of 0.09%. It is one of the best gold ETFs to buy.
In addition to gold ETFs, Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Franco-Nevada Corporation (NYSE:FNV) are some of the best stocks to buy for exposure to the gold industry.
9. U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU)
5-Year Share Price Performance as of March 18: 25.09%
U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU) offers exposure to companies involved in producing precious metals, either through active mining or passive ownership of royalties or production streams. Its benchmark is the U.S. Global GO GOLD and Precious Metal Miners Index. Established on June 27, 2017, the ETF currently holds net assets worth $85.2 million, with an expense ratio of 0.60% as of March 15, 2024. U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU) is one of the best gold ETFs to invest in.
8. VanEck Gold Miners ETF (NYSE:GDX)
5-Year Share Price Performance as of March 18: 30.55%
VanEck Gold Miners ETF (NYSE:GDX) ranks 8th on our list of the best gold ETFs. VanEck Gold Miners ETF (NYSE:GDX) aims to closely replicate the price and yield performance of the NYSE Arca Gold Miners Index, which tracks companies in the gold mining industry. VanEck Gold Miners ETF (NYSE:GDX) holds $12.77 billion in net assets as of March 15, 2024, with an expense ratio of 0.51%. The fund was established on May 16, 2006.
7. iShares MSCI Global Gold Miners ETF (NASDAQ:RING)
5-Year Share Price Performance as of March 18: 33.84%
iShares MSCI Global Gold Miners ETF (NASDAQ:RING) aims to mirror the performance of the MSCI ACWI Select Gold Miners Investable Market Index, comprising global equities of companies primarily involved in gold mining. The ETF holds net assets worth $420.3 million as of March 15, 2024, with an expense ratio of 0.39%. Its portfolio consists of 36 stocks. iShares MSCI Global Gold Miners ETF (NASDAQ:RING) was established on January 31, 2012 and it ranks 7th on our list of the best gold ETFs to buy.
Newmont Corporation (NYSE:NEM) is the largest holding of the iShares MSCI Global Gold Miners ETF (NASDAQ:RING). The company is involved in the production and exploration of gold, as well as other metals like copper, silver, zinc, and lead. On February 22, Newmont announced a Q4 non-GAAP EPS of $0.50 and a revenue of $4 billion, up 24% on a year-over-year basis.
According to Insider Monkey’s fourth quarter database, 53 hedge funds were long Newmont Corporation (NYSE:NEM), compared to 49 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the leading stakeholder of the company, with 23.75 million shares worth $983.2 million.
Here is what First Eagle Investments Global Fund has to say about Newmont Corporation (NYSE:NEM) in its Q2 2022 investor letter:
“Shares of Colorado-based Newmont, the largest gold miner in the world, experienced weakness in the quarter as falling gold bullion prices and cost inflation hurt miners in general. More idiosyncratically, the company reported slightly disappointing earnings and production results for its most recent quarter due to pandemic-related disruptions, ongoing supply-chain constraints, and labor shortages.
It also warned that operating costs for 2022 were likely to come in at the upper end of previous guidance. We remain constructive on the stock, which offers steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet, and proven management.”
6. SPDR Gold Shares (NYSE:GLD)
5-Year Share Price Performance as of March 18: 61.29%
SPDR Gold Shares (NYSE:GLD) provides a cost-efficient and secure way for investors to access the gold market without the need for physical delivery. The ETF represents fractional ownership interests in a Trust holding gold bullion and cash. SPDR Gold Shares (NYSE:GLD) aims to lower barriers to investing in gold, such as access, custody, and transaction costs. It currently holds 831.84 tonnes of gold. The fund was listed on NYSE in November 2004. It is one of the best gold ETFs to consider.
In addition to ETFs like SPDR Gold Shares (NYSE:GLD), investors can pick up shares of Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Franco-Nevada Corporation (NYSE:FNV) for exposure to the gold industry.
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Disclosure: None.10 Best Gold ETFs To Buy Nowis originally published on Insider Monkey.
