Topic: ETFs

ETF Stocks: Precious metal ETFs to buy

precious metal etfs

Precious metal ETFs have largely centred 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.

Gold prices have since drifted down to $1,804 as pandemic fears have lessened.

Still, for many investors, gold and silver will continue to represent that safe harbour in turbulent times.

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We also expect gold- and silver-loving markets in Asia and elsewhere to rebound after the pandemic. That should spur gold and silver purchases, taking precious-metal stocks even higher. What’s more, if inflation rises over the next few years—driven by the trillions of dollar that governments have spent to counter the impact of COVID-19—these stocks will attract even more 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. We see both funds as buys.

ISHARES S&P/TSX GLOBAL GOLD INDEX ETF, is a buy for aggressive investors. The fund (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index; it’s made up of 51 gold stocks from Canada and around the world. The ETF began trading on March 23, 2001. It charges investors an acceptable 0.61% MER.

The fund’s top holdings include Newmont, 20.4%; Barrick Gold, 14.8%; Franco-Nevada Corp., 11.3%; Wheaton Precious Metals, 8.1%; Agnico-Eagle Mines, 6.0%; Kirkland Lake Gold, 4.2%; and Gold Fields Ltd., 3.3%.

The ETF cuts risk for investors by focusing on politi-cally stable mining jurisdictions: Canadian firms comprise 67.3% of the fund’s assets, followed by the U.S. (24.4%) and South Africa (7.5%)

ETFs: Here’s what silver investors should consider buying

GLOBAL X SILVER MINERS ETF, is a buy for aggressive investors. The fund (New York symbol SIL; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

Set up in April 2010, the ETF gives you exposure to 41 international firms that mine, refine or explore for silver. The fund has 59.0% of its assets in Canada. That’s ahead of Russia (12.2%), the U.S. (11.1%), the U.K. (5.2%), South Korea (4.9%), and Peru (4.2%). Investors in the Global X Silver Miners ETF face an acceptable MER of 0.65%.

The quality of the fund’s top holdings should drive your future gains: Wheaton Precious Metals represents 24.0% of total assets; Polymetal International, 12.3%; Pan American Silver, 9.5%; Hecla Mining, 5.6%; Korea Zinc, 4.8%; SSR Mining, 4.7%; First Majestic, 4.5%; Buenaventura, 3.6%; Fresnillo plc, 3.5%; and Coeur Mining, 3.3%.

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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