Yahoo Finance 9 Precious Metal ETFs for a Risk Market
Precious metals diversify your portfolio.
The stock market has been extremely volatile in 2018, starting with a deep decline at the end of January and into early February, followed by smaller moves as the market struggles to get back to prior highs. While some traders are optimistic, others worry the economic recovery and steady appreciation can't go on forever. If you're in this latter camp, or if you're a bullish investor looking to hedge your bets, then precious metals offer a good way to diversify. These hard assets are largely uncorrelated to the stock market and can frequently be safe-haven investments in times of trouble. Here are nine ETF options to consider.
SPDR Gold Trust (GLD)
The first place to start if you're a precious metals investor is this 800-pound gorilla gold exchange-traded fund, with a massive $35 billion in assets under management. This fund is a direct play on bullion prices akin to buying gold bars, but without the hassle. Entering public markets way back in 2005, the GLD is (pardon the pun) the gold standard for using an ETF to buy a physical stake in precious metals. And while gold prices have softened a bit since January, the prospect of higher inflation as well as global uncertainty could lift gold going forward given its safe-haven status.
VanEck Merk Gold Trust (OUNZ)
Many gold investors are philosophically connected to the precious metal as a store of value, and the idea of gold assets in an online brokerage account on a paper statement isn't compelling. OUNZ buys physical gold and largely tracks the movement of it the same way as the previously mentioned GLD fund. However, OUNZ has a unique feature that allows investors to redeem shares for physical gold and take delivery of the gold upon exit. Using that option incurs additional charges, but has the low minimum of redeeming just a single ounce at a time for those who want to get their hands on this hard asset.
VanEck Vectors Gold Miners ETF (GDX)
What if you're interested in gold, but from the producer perspective instead of a direct investment on the ups and downs of the metal itself? Then consider this VanEck Gold Miners ETF, which holds a position in 50 of the largest gold companies on Wall Street, including Newmont Mining Corp. (NEM) and Barrick Gold Corp. (ABX). The fund has a few quirks worth noting, such as an emphasis on Canadian companies. Also, the top 10 holdings represent more than 60 percent of the portfolio. But, for a pure play on gold extraction, this fund is worth a look.
Sprott Junior Gold Miners ETF (SGDJ)
If you'd prefer to steer away from the big guys, either because you want a less top-heavy ETF or because the more aggressive nature of small companies has more appeal, then give SGDJ a look. This fund aims to invest in a few dozen "junior" gold stocks with market capitalizations between $250 million and $2 billion. Excluding the big guys can have benefits, because the smaller companies are more agile and better profit generators when gold moves in their favor, but obviously comes with bigger risk, too. If you're really bullish on gold prices and miners in the coming months, then this is a precious metals ETF worth consideration.
X-Links Gold Shares Covered Call ETN (GLDI)
A unique way to buy gold and get income is to sell options contracts against your holdings. GLDI sells rights to buy that gold at a fixed price in the future. Let's say you own 100 ounces and current pricing is $1,300 an ounce. Someone pays you $100 for the right to purchase your gold at $1,300 one month into the future -- regardless of what the market price is in 30 days. If gold soars you leave potential profit on the table. But if prices stay flat or drop, you pocket the money. This lower-risk proposition is attractive to investors looking for a guaranteed payday.
iShares Silver Trust (SLV)
Gold isn't the only precious metal in town. Structured as a play on silver bullion, SLV is tied directly to the ups and downs of silver. Many investors find great appeal in silver either because it is cheaper at less than $20 an ounce instead of more than $1,300 an ounce for gold, or because silver has a more populist appeal with uses ranging from dinnerware to industry. And with more than $5 billion in assets, this iShare silver fund is one of the most popular ways to invest in this precious metal.
iShares MSCI Global Silver Miners ETF (SLVP)
As with gold, silver investors can target production. The catch is silver miners tend to be diversified, extracting gold as well as less valuable metals like copper and zinc from their mines. That's because silver is commonly found as a byproduct of these other ores. SLVP's smaller list of components (just 31 total positions) coupled with a market-cap weighting means a few companies represent the lion's share of this fund. The top three stocks -- Wheaton Precious Metals Corp., Fresnillo and Peruvian miner Minas Buenaventura (BVN) -- represent almost 40 percent of the portfolio.
Sprott Physical Gold and Silver Trust (CEF)
Having a difficult time deciding between silver and gold? Then CEF has you covered with a one-stop fund investment. Its allocation is roughly 60 percent gold bullion and 40 percent silver bullion. Adding to the appeal for hard-asset investors is that, like OUNZ mentioned previously, CEF allows its investors to take physical delivery of their silver and gold investments. That makes this an attractive fund for investors who want a direct play on precious metals and want to possess hard assets.
ETFS Physical Platinum Shares (PPLT)
Not everyone is enticed by the glitter of gold and silver, and some investors are looking outside the box to insulate their portfolio from the ups and downs of the market. That's where PPLT comes in. This ETF invests only in physical platinum, giving you as pure a play as you can on the metal that is worth nearly $1,000 at present -- within spitting distance of gold on a per-ounce basis. Despite trading for that big premium, this precious metal also shares a real-world utility with metals like silver. Platinum is one of the least reactive metals and highly resistant to corrosion, making it a key industrial product.
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