Topic: ETFs

ETF Stocks: Precious metal ETFs to hold

precious metal etfs

Precious metal ETFs have largely centered on gold stocks. We continue to see the outlook for that precious metal as positive, and for aggressive investors who want to hold precious metal ETFs, including a silver ETF, we have two of them below.

Most precious-metal stocks dropped, along with stock markets, in March 2020. They then quickly reversed that trend to climb for investors. In fact, gold recently soared to over $2,000 U.S. an ounce for the first time ever–and gold stocks jumped as well.

Rising gold and silver prices reflect investor fears about many things, including stock market volatility because of COVID-19 and the length and depth of the resulting economic slowdown. For many investors, gold and silver represents a “safe harbour” in these turbulent times.

We expect gold and silver-loving markets in Asia and other emerging markets to rebound after the coronavirus. That should further spur gold and silver purchases, taking precious-metal stocks even higher.

What’s more, if inflation rises over the next few years as a result of the trillions of dollar that governments have spent to counter the impact of COVID-19, these stocks will attract new interest.

We think top gold and silver stocks have much more growth to offer savvy investors. The following ETFs let you tap that growth through top-quality global miners.

 


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ISHARES S&P/TSX GLOBAL GOLD INDEX ETF (symbol XGD on Toronto; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index; it’s made up of 40 gold stocks from Canada and around the world. The ETF began trading on March 23, 2001. Investors are charged an acceptable 0.61% MER.

The fund’s top holdings include Newmont Corp. at 17.5% of its assets; Barrick Gold, 17.4%; Franco-Nevada Corp., 9.5%; Wheaton Precious Metals, 7.9%; Agnico-Eagle Mines, 6.5%; Kirkland Lake Gold, 4.5%; AngloGold Ashanti, 4.0%; and Gold Fields Ltd., 3.8%.

The ETF cuts risk for investors by focusing on politically stable mining jurisdictions: Canadian firms comprise 66.5% of the fund’s assets, followed by the U.S. (21.3%) and South Africa (11.1%).

ETFs: Here’s what silver investors should consider buying

GLOBAL X SILVER MINERS ETF (New York symbol SIL; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

Set up in April 2010, the ETF follows 27 international firms that mine, refine or explore for silver. The fund has 56.0% of its assets in Canada. That’s ahead of Russia (13.1%), the U.S. (11.5%), the U.K. (7.0%), Peru (5.3%), Mexico (4.0%) and South Korea (3.0%). Investors in the Global X Silver Miners ETF face an acceptable MER charge of 0.66%.

The quality of the fund’s top holdings should drive your future gains: Wheaton Precious Metals represents 21.2% of total assets; Polymetal International, 14.0%; Pan American Silver, 8.6%; Hecla Mining, 6.5%; Buenaventura, 5.3%; Fresnillo plc, 5.2%; First Majestic, 4.6%; Industrias Penoles, 4.3%; Coeur Mining, 4.0%; and SSR Mining, 3.7%.

Recommendation in Canadian Wealth Advisor: iShares S&P/TSX Global Gold Index and Global X Silver Miners ETF are buys.

For our view on how to make the best selection in individual gold stocks, read 9 ways to spot the best gold stocks with the lowest risk.

For a recent report on how to judge whether an ETF is right for you, read When an ETF investment is the right choice.

How attractive are precious metal ETFs as an investment compared to individual gold or silver stocks?

This post was originally published in 2014 and is updated regularly.

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