Topic: ETFs

ETF Stocks: Precious metal ETFs to hold

precious metal etfs

Precious metal ETFs have largely centred on gold stocks. While we continue to see the outlook for that precious metal as uncertain, for aggressive investors who want to hold precious metal ETFs, we have two of them below.

 In 2011, precious metal ETFS shot up along with gold. It rose to a high of $1,950 U.S. an ounce, while silver reached a peak of $48.58.

Gold prices then fell steadily, dropping to $1,050 an ounce in December 2015 for the first time since early 2010. That month, silver also declined to a five-year low of $13.65 an ounce.

Gold now trades at $1,238 and silver at $18.28. That reflects higher commodity prices. It also reflects the belief that slow global economic growth will keep interest rates low and raise the possibility of high inflation. Globally, political uncertainty also increases the appeal of gold for investors.

However, an improving U.S. economy could eventually push interest rates higher. In that event, gold and silver would likely drop.

Still, if you want to hold gold or silver stocks, these two precious metal ETFs offer top-quality global miners.

Less likely to harbour hidden risks

“Here’s a good general rule to follow when choosing investments: Simple is better. The easier an investment is to explain and understand, the less likely it is to harbour hidden risks and costs that can only work against you. As the old investor saying goes, “Stick with plain vanilla.”
Pat McKeough explains why in this special report and recommends 11 ETFs for a stronger portfolio.


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ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $12.06 (Toronto symbol XGD; buy or sell through brokers; aims to mirror the performance of the S&P/TSX Global Gold Index; it’s made up of 35 gold stocks from Canada and around the world. The ETF began trading on March 23, 2001. Its MER is 0.61%.

The top holdings for the fund are Barrick Gold at 13.4%; Newmont Mining, 12.6%; Franco-Nevada Corp., 9.3%; Goldcorp, 8.2%; Agnico-Eagle Mines, 7.6%; Randgold Resources (ADR), 6.0%; Kinross Gold, 3.7%; Royal Gold, 3.6%; AngloGold Ashanti (ADR), 3.1%; and B2Gold, 2.0%.

Canadian companies comprise 69.1% of the fund’s holdings, but it also holds miners in the U.S. (16.7%) and South Africa (6.8%).

iShares S&P/TSX Global Gold Index is a hold.

GLOBAL X SILVER MINERS ETF $33.19 (New York symbol SIL; buy or sell through brokers; tracks the Solactive Global Silver Miners Index. That index began trading in April 2010 and includes 21 international firms that mine, refine or explore for silver. It was developed by Germany’s Structured Solutions AG.

Canadian firms make up 48.5% of the fund’s holdings, ahead of Mexico (22.1%) and the U.S. (21.3%). Its MER is 0.65%. The ETF’s top holdings are Fresnillo plc at 13.5%; Wheaton Precious Metals, 12.1%; Polymetal International, 11.3%; Industrias Penoles, 10.0%; Tahoe Resources, 5.1%; Pan American Silver, 4.9%; Hecla Mining, 4.8%; Coeur Mining, 4.6%; and Alamos Gold, 4.4%.

Global X Silver Miners ETF is a hold.

NEW GOLD INC., $1.43, symbol NGD on Toronto, is up over 40% since the last week on the improved 2018 fourth-quarter performance of its troubled Rainy River mine.

The company lowered the expected production for the western Ontario mine by about 100,000 ounces mid-way through last year. Rainy River, which started production in 2017, had been plagued by cost overruns for construction as well as grade and recovery issues for its operations.

However, New Gold revealed this week that gold production for the mine jumped 39% in the latest quarter to 77,202 ounces. Production at its New Afton mine in B.C. was largely steady at just under 19,000 ounces.

Overall production for the year—primarily for those two mines, plus the now-shut Cerro San Pedro mine—totalled 315,483 ounces. The company announced the sale of its Mesquite gold mine in California for $158 million U.S. in September 2018.

OUR RECOMMENDATION: New Gold is still a buy, but only for aggressive inves

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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