Best Gold ETFs To Buy In Canada For September 2024

In 2024, gold has seen positive trend in its price. The price of gold has rallied over 20% this year, surpassing returns on stocks. On September 12, gold prices soar to another all-time high above $2,550 after US data reinforced that the US Federal Reserve (Fed) would likely lower interest rates next week.

As the price of gold continues to climb, investors begin to track the popular gold ETFs, resulting in a large amount of money flowing into gold ETFs. Under such favourable circumstance, gold ETFs are expected to bring considerable returns around the world, including Canada. Then, What is gold ETFs? What are the best gold ETFs in Canada for September 2024? In this article, we will explore and analysis the best gold ETFs in Canada for this September.

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Table of Contents

What are Gold ETFs?

Types of Gold ETFs

Gold Price ETFs

Gold Miners ETFs

Inverse Gold ETFs

Leveraged Gold ETFs

Pros and Cons of Investing in Gold ETFs

Pros of Investing in Gold ETFs

Cons of Investing in Gold ETFs

Best Gold ETFs in Canada for September 2024

SPDR Gold Shares (GLD)

iShares Gold Trust (IAU)

VanEck Vectors Gold Miners ETF (GDX)

BMO Junior Gold Index ETF (ZJG)

iShares S&P Global Gold Index ETF (XGD)

How to Choose Best Gold ETFs to Invest?

How to Invest in Gold ETFs in Canada?

How to Buy Gold on BTCC?

Conclusion

What are Gold ETFs?

Gold ETF (exchange-traded fund) refers to an ETF that tracks gold-related indexes, including gold price index, gold mining company stock price index and so on. Gold ETFs allow investors to participate in gold investment in the form of shares without having to directly purchase, store and resell physical gold.

Next, let’s explore the major features of gold ETFs:

• Gold ETF is a model of wealth management, which is established by the fund sponsors, subscribed by investors, and the fund management company is responsible for the specific investment operations.
• Gold ETF, taking gold as the basic target, is issued by fund managers on listed exchanges, and traded by investors through securities trading systems.
• There is no physical delivery requirementfor buying a gold ETF, but rather a pro rata stake in the fund that benefits from changes in the fund’s net worth.
• Gold ETFs do not refer to buyingphysical gold, but hold derivatives of physical gold or gold futures and track gold-related indexes. Even if a gold ETF is redeemed, it is only traded in cash and does not receive physical gold.

Gold ETFs can be said to be a kind of gold investment with the lowest risk. Gold ETFs are kind of investment that is convenient to trade, easy to cash, and the overall transaction cost is not high. This kind of investment is more suitable for the public to manage money.

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Types of Gold ETFs

There are many types of gold ETFs, such as Gold Miners ETF, etc. Next, we will take a close look at the major types of gold ETFs.

Gold Price ETFs

Gold price ETFs are common. These ETFs track the price of gold bars, some ETFs actually buy gold bars, whle others invest in gold futures, but their common goal is to track the gold price and ensure that the net value of the ETFs is in line with the spot gold price.

Although the investor does not actually own the gold bars, since the ETF tracks the “price” of gold, when the price of gold rises, the ETF price rises, and when the price of gold falls, the ETF price falls accordingly.

Therefore, if you want to buy such gold ETFs, you need to pay attention to the price trend of gold in real time and find the low point to buy.

It is important to note that some gold ETFs track the gold market in a specific country or region, which is different from tracking the international gold price.

Gold Miners ETFs

Instead of investing in bullion or gold futures, these ETFs buy shares of gold-mining companies. The price of these gold stocks typically fluctuates with the price of gold, but gold miners ETFs don’t actually hold any gold, so they can’t fully track the performance of gold prices.

In addition, the performance of gold miners can also be affected by their business, development strategy, so the volatility of such gold stocks would be larger and more intense than the gold itself. In general, gold miners ETFs are mostly used for short-term trading instead of long-term holding. Unless you have considerable expertise, it is not recommended to invest in such gold stocks.

Inverse Gold ETFs

Inverse Gold ETFs refers to ETFs that are the opposite of gold, also known as Short Gold ETFs. These ETFs use leverage instruments such as stock index futures, swap contracts, and are designed to provide the opposite multiple of earnings to the target index (e.g. -1, -2, -3).

The price of Inverse Gold ETFs moves in the opposite direction to the gold market price. For example, if you invest $100 in a Inverse Gold ETF, when the gold price falls 5%, the value of your ETF will increase by about 5%, to $105.

Leveraged Gold ETFs

Leveraged Gold ETFs are a kind of gold ETF that uses leverage to primarily amplify the volatility of gold prices. For example, if a gold ETF with 2x leverage goes up 1%, you will gain 2% return.

Leveraged gold ETFs are characterized by large gains, which can amplify the opportunity for profit and loss, but also magnify trading costs. Therefore, before using leveraged gold ETFs, you need to carefully consider the risks and have the corresponding trading knowledge.

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Pros and Cons of Investing in Gold ETFs

With the surge of gold prices, a large number of investors poured into the gold ETF market, so what are the benefits of investing in gold ETFs? What about the limitations of investing in gold ETFs.

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Best Gold ETFs in Canada for September 2024

Next, we will list the top three gold ETFs to invest in Canada for September 2024.

SPDR Gold Shares (GLD)

SPDR Gold Shares (GLD) is the world’s largest gold ETF managed by State Street Global Advisors. The fund was founded on November 18, 2004, and is listed on the High Growth Board of New York Stock Exchange under the symbol GLD.

The net worth of SPDR Gold Shares, the world’s largest gold ETF, has been trending in line with international gold prices. In terms of performance, SPDR Gold Shares typically outperform its peers. In addition, the ETF’s holdings also occupy a significant position in the global market, and its size ranks among the largest ETFs in the world.

Investors can indirectly invest in the Gold market by buying SPDR Gold Shares, without having to buy and store physical gold directly. This kind of investment method is not only convenient, but also can reduce the investment threshold and storage costs.

iShares Gold Trust (IAU)

iShares Gold Trust (IAU) is an Exchange-Traded Fund (ETF) designed to provide investment returns similar to the price of gold. The ETF is issued by iShares Corporation and is traded on the New York Stock Exchange.

As an ETF, IAU enables investors to indirectly invest in the gold market by buying ETF shares with a smaller capital investment, without having to directly buy and store physical gold. Investing in IAU has a lot of benefits.Firstly, it offers portfolio diversification.Secondly, IAU is liquid and flexible. Shares can be bought or sold easily with a brokerage account, making it convenient for those wanting to actively manage investments or adjust positions. Plus, investing in IAU has transparency and peace of mind.

VanEck Vectors Gold Miners ETF (GDX)

The VanEck Vectors Gold Miners ETF (GDX) is an exchange-traded fund (ETF) focused on gold mining companies. GDX (the VanEck Vectors Gold Miners ETF) offers Canadian investors exposure to the gold mining industry. This ETF is managed by VanEck Associates Corporation, aiming to provide investors with access to the stocks of gold miners around the world.

GDX’s portfolio primarily consists of large and mid-sized gold miners around the world, which typically have stable profitability and good market prospects. By investing in these companies, GDX provides investors with an indirect way to gain exposure to the gold market while diversifying the risk of holding gold directly.

GDX’s performance is often closely linked to the price of gold and the overall performance of gold miners. When the price of gold rises, the profitability of gold miners usually strengthens, which drives up the net value of GDX. In addition, because GDX invests in multiple gold mining companies, its performance is generally more stable and has lower volatility than a single company.

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BMO Junior Gold Index ETF (ZJG)

BMO Junior Gold Index ETF is an Exchange-Traded Fund (ETF) launched and managed by BMO Asset Management Inc. The fund is focused on the smaller industry players and seeks to replicate, net of expenses, the Dow Jones North American Select Junior Gold Index. The Index contains junior gold exploration, development and mining stocks. The long-term performance of the BMO Junior Gold Index ETF can be influenced by the price of gold, the performance of the underlying companies, and the overall state of the market.  Investors can assess their potential risks and returns by analyzing historical data.

BMO Junior Gold Index ETF has an MER ratio of 0.61% . The fund has 39 holdings, 80%+ of which are Canadian-listed junior minors. As we witnessed with the soaring price of gold in 2020, BMO Junior Gold Index ETF dominated because of its junior miner exposure. Before deciding to invest in BMO Junior Gold Index ETF, investors should fully understand their investment objectives, strategies, risks and fees, and consider them in combination with their own risk tolerance and investment objectives.

iShares S&P Global Gold Index ETF (XGD)

The iShares S&P/TSX Global Gold Index ETF (TSX:XGD) is an exchange-traded fund focused on investments in gold and related securities, designed to provide investors with globally diversified gold investment opportunities. By replicating the performance of the S&P/TSX Global Gold Index, this ETF provides investors with a convenient, low-cost way to invest in gold and its underlying securities. Notably, iShares S&P/TSX Global Gold Index ETF  is one of Canada’s most liquid gold ETFs with $1 Billion in assets and a current price of around $18 per unit. The fund also yields a small distribution of 1.8% and pays on a quarterly basis.

The iShares S&P/TSX Global Gold Index ETF  holds shares of some of the world’s best-known gold producers and related product companies. The top 10 holdings account for 75% of assets, and the three largest positions include Newmont Corp (TSX:NEM), Barrick Gold (TSX:ABX) and Franco-Nevada Corp (TSX:FNV). As an ETF focused on producers, this is the best ETF to own if you want high exposure to the major producers and streamers in the industry.

How to Choose Best Gold ETFs to Invest?

When choosing the best gold ETF for investment, a number of factors need to be considered to ensure the rationality of the investment decision. Here are some key steps and considerations:

Determine investment objectives and risk tolerance

• Define your investment goals: First, determine whether you are looking for stable long-term gains or short-term trading opportunities.
• Assessing risk tolerance: Although gold ETFs are relatively robust, there are still market risks and liquidity risks. Investors need to choose the right gold ETF based on their risk tolerance.

Research and compare gold ETFs

• Issuer and asset size: Choose a gold ETF launched by a reputable and stable issuer. At the same time, gold ETFs with larger assets are generally more liquid and easier to trade.
• Tracking error: An ideal gold ETF should be able to closely track the price of gold. Gold etfs with smaller tracking errors can better reflect the actual movement of gold prices, providing investors with accurate investment returns.
• Trading volume and liquidity: Choose gold ETFs with high trading volume and good liquidity, so that it is easier to find counterparties when buying and selling, reducing trading costs. More liquid ETFs are also generally more stable, with less price volatility.
• Fees and costs: Compare the expense ratio and transaction costs of different gold ETFs. Gold ETFs with lower fee  can reduce overhead and increase net income.
• Historical performance: Although past performance is not indicative of the future, it can be used as a reference to understand the performance of different gold ETFs in different market environments.

Consider market conditions and macroeconomic factors

• Market expectations: Focus on the market’s expectations for the future price of gold, as well as macroeconomic factors that may affect the price of gold, such as inflation, monetary policy, geopolitics, etc.
• Safe-haven demand: In a market environment of higher uncertainty, gold may be favored as a safe haven asset. Therefore, the allocation ratio of gold ETFs can be adjusted according to the market environment and individual needs.

Diversification and risk management

• Diversification: Instead of putting all your money into a gold ETF, you should use it as part of your overall asset allocation, along with other types of assets (such as stocks, bonds, etc.) to form a portfolio to spread your risk.
• Risk management: Risk management measures such as setting stop loss points and avoiding excessive concentration of investment are also necessary. In addition, regular review and adjustment of the investment portfolio is also key to maintaining the effectiveness of the investment strategy.

How to Invest in Gold ETFs in Canada?

In Canada, it is easy to invest in gold ETFs. Here’s how to buy shares in a gold ETF:

Step 1: Find a gold ETF

You can typically find gold ETFs by searching for them on your broker’s website.

Step 2: Analyze the ETF

It’s important to research ETFs before buying, just as you’d research stocks. There are many important metrics that you can analyze. Among them the most significant two data you need to know its the ETF’s five-year returns and expense ration.

Step 3: Buy the gold ETF

Investors can buy ETFs just like buying a stock, through an online broker. A good approach is to buy them regularly to take advantage of dollar-cost averaging.

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Conclusion

As gold ETFs offer exposure to the price of gold without the need for physical ownership or storage, more and more Canadians are considering investing in gold ETFs. The best gold ETFs for Canadians to invest in September  2024 include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), VanEck Vectors Gold Miners ETF (GDX), BMO Junior Gold Index ETF (ZJG) and iShares S&P Global Gold Index ETF (XGD).

However, investors still need to be aware of factors such as market risk and price volatility when investing in gold ETFs. It is recommended that all investors should fully understand the investment strategies, fee structure, historical performance and other information of the relative ETF before investing, and make decisions based on their investment objectives and risk tolerance.

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