In an uncertain world and changing markets, investors who want to own gold and silver stocks may find these precious metals ETFs the best choice.
Precious metals like gold and silver stocks dropped, along with stock markets, in March 2020 as the pandemic forced a global shutdown. They then quickly reversed themselves to soar for investors.
For many investors, gold and silver represent “safe harbours” in turbulent times and it’s why we expect further price jumps for these precious metals even as inflation further eases. The following ETFs let you tap that growth through top-quality global miners.
How do gold and silver stock prices correlate with the actual price of the metals?
Gold and silver mining stocks typically provide leveraged exposure to metal price movements, often amplifying gains during bull markets and losses during downturns due to operating costs, production levels, management decisions, and company-specific factors that can cause them to outperform or underperform the underlying metals.
What are the risks associated with investing in gold and silver mining companies?
Mining companies face operational risks from accidents and equipment failures, commodity price volatility, geopolitical risks in host countries, environmental liabilities, high capital expenditure requirements, exploration uncertainty, and potential resource nationalization.
How can I invest in gold and silver stocks through my RRSP or TFSA?
You can invest in gold and silver stocks through your RRSP or TFSA by purchasing individual mining company shares or ETFs focused on precious metals producers through your brokerage account, ensuring they trade on designated exchanges like the TSX, NYSE, or NASDAQ to maintain eligibility.
What are the best Canadian gold and silver mining companies to invest in?
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 44 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, 17.8%; Barrick Gold, 13.0%; Agnico Eagle Mines, 12.3%; Franco-Nevada Corp., 10.4%; Wheaton Precious Metals, 9.3%; Gold Fields Ltd., 5.7%; AngloGold, 3.9%; and Royal Gold, 3.4%.
The ETF cuts risk for investors by focusing on politically stable mining jurisdictions: Canadian firms comprise 63.4% of the fund’s assets, followed by the U.S. (21.7%) and South Africa (11.3%).
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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 34 international firms that mine, refine or explore for silver.
The fund has 65.6% of its assets in Canada. That’s ahead of the U.S. (9.7%), the U.K. (6.8%), Peru (6.5%), South Korea (5.6%) and Mexico (4.9%). Investors in the 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 22.8% of total assets; Pan American Silver, 12.9%; Buenaventura, 9.4%; Korea Zinc, 7.9%; Industrias Penoles, 5.6%; Hecla Mining, 4.1%; First Majestic, 4.1%; and Fresnillo plc, 3.6%.
Recommendation in Canadian Wealth Advisor: Global X Silver Miners ETF and iShares S&P/TSX Global Gold Index ETF are buys for aggressive investors.
Are you investing in gold and silver stocks?
For our views on making the best choices among ETFs, read How to find the best ETFs for maximum portfolio gains.
For our recent report on a new ETF inspired by the changing legal status of marijuana, read The growth of marijuana inspires a new ETF.
This article was originally published in 2017 and is regularly updated.
