Beyond GLD: 5 Golden ETF Alternatives

English: Crystaline Gold (Photo credit: Wikipedia)

Chicago, Oct.24, stock investing .- The introduction of the SPDR Gold Trust (GLD) in 2004 forever changed the world of gold investing. The physically-backed ETF cracked the precious metals world wide open, as it now became possible for the average Joe to add gold exposure to a basket of holdings. Since debuting, GLD has amassed nearly $75 billion in total assets and is by far the most popular commodity ETF in the world. But for all of the attention this juggernaut attracts, investors often forget to look for alternative ways to gain the same exposure, especially given the controversy surrounding this product.

Below, we outline five ETF alternatives for anyone looking to make a play on this precious metal without using GLD.

1. iShares COMEX Gold Trust (IAU): This physically-backed ETF makes for an enticing alternative to GLD for two big reasons. The first, IAU comes in at 15 basis points cheaper than its larger competitor, meaning that investors will pay less, and IAU will generally outperform by a slight margin. Second, IAU features 100% allocated gold, meaning that if there was ever a dispute between the trust and the custodian of the fund, investors would not be subject to any losses (something GLD cannot say). Investors may also want to take a look at AGOL and SGOL, two physically-backed products that store their gold in Singapore and Switzerland respectively.
2. Market Vectors TR Gold Miners Fund (GDX): This product takes a different approach to gold exposure, as it invests in the companies that mine the metal. As such, GDX will usually be a more volatile play on the metal given the high betas that mining firms often exhibit. The fund holds about 85% of its assets abroad, with Canada accounting for the largest single country allocation. GDX is just shy of $10 billion in assets under management and trades more than 12 million times per day compared to GLD’s average volume of 8.7 million.
3. DB Gold Fund (DGL): For those who prefer futures-based exposure, DGL is the most popular ETF out there. This product invests in front-month gold futures and has over $460 million in assets. Note that the front-month roll of DGL make it a liability if futures are contangoed, as the fund will be forced to sell low and buy high each month. Investors should also be aware that DGL will issue a K-1 each year, which can be a headache come tax season. ... Read more.

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