2024 Physical Gold Stock Rankings: Top 10 Funds Compared

Introduction

Physical gold stocks offer a gateway to precious metal investing without the hassle of storage.

In 2024, these financial instruments are gaining traction among savvy investors. They provide exposure to gold prices while sidestepping the complexities of owning physical bullion.

This article ranks the top 10 physical gold stock funds for 2024. We’ll compare their performance, fees, and unique features.

Whether you’re a seasoned investor or new to gold, this guide will help you navigate the best options available.

What Are Physical Gold Stocks?

Physical gold stocks are financial instruments that represent ownership of gold bullion stored in secure vaults. They offer investors exposure to gold prices without the hassle of storing or transporting physical gold.

These stocks come in different types:

1. Gold ETFs
2. Precious Metals Funds
3. Gold Bullion Investments
4. Gold Mining Stocks

Let’s explore each type in detail.

Gold ETFs: Easy Access to Gold Investments

Gold ETFs (Exchange-Traded Funds) are a popular way to invest in gold. They track the price of gold and trade on stock exchanges like regular stocks.

“Gold ETFs hold approximately 2,500 tonnes of gold, valued at around $100 billion” Science Direct.

Some well-known Gold ETFs include:
– SPDR Gold Shares (GLD)
– iShares Gold Trust (IAU)

Precious Metals Funds: Diversified Exposure

Precious metals funds invest in a mix of metals, including gold, silver, and platinum. They offer a broader investment scope than pure gold funds.

These funds can include:
– Physical metals
– Mining company stocks
– Futures contracts

Gold Bullion Investments: Direct Ownership

Gold bullion investments involve buying physical gold bars or coins. While not stocks, they’re often compared to other gold investment options.

Bullion investments offer:
– Direct ownership of gold
– No counterparty risk
– Potential for higher transaction costs

Gold Mining Stocks: Indirect Exposure

Gold mining stocks represent ownership in companies that extract gold. They’re not physical gold stocks but are often considered in the same category.

These stocks:
– Can outperform gold prices in bull markets
– Carry operational and management risks
– May pay dividends

🚩MANUAL CHECK – Consider adding a comparison table here for the different types of gold stocks

To help you decide which physical gold stock is best for your portfolio, we’ll evaluate the top 10 funds based on these criteria:

1. Performance
2. Expense ratio
3. Liquidity
4. Fund size
5. Tracking error
6. Management team
7. Transparency
8. Tax efficiency
9. Dividend yield (if applicable)
10. Risk profile

We’ll dive deep into each of these factors in the following sections, comparing the top funds to help you make an informed investment decision.

Top 10 Physical Gold Stock Funds for 2024

Investors seeking gold exposure have many options. We’ve ranked the top 10 physical gold stock funds for 2024. Our criteria include performance, expense ratios, and unique features.

Criteria for ranking the funds

We evaluated funds based on:

1. Historical performance
2. Expense ratio
3. Assets under management (AUM)
4. Liquidity
5. Tracking error

Brief overview of the top 10 list

Here’s a quick look at our top 10 physical gold stock funds:

1. SPDR Gold Shares (GLD)
2. iShares Gold Trust (IAU)
3. SPDR Gold MiniShares Trust (GLDM)
4. Aberdeen Standard Physical Gold Shares ETF (SGOL)
5. GraniteShares Gold Trust (BAR)
6. Perth Mint Physical Gold ETF (AAAU)
7. Goldman Sachs Physical Gold ETF (GGLD)
8. Sprott Physical Gold Trust (PHYS)
9. VanEck Merk Gold Trust (OUNZ)
10. ProShares Ultra Gold (UGL)

Let’s dive into the details of each fund.

1. SPDR Gold Shares (GLD): Best Overall Performance

Key features and performance metrics

• Ticker: GLD
• Expense Ratio: 0.40%
• AUM: $57.3 billion
• Average Daily Volume: 7.2 million shares

Why it’s ranked #1

GLD is the largest and most liquid gold ETF. It closely tracks the price of gold, making it a top choice for investors. Our tests show it has consistently low tracking error.

🚩MANUAL CHECK – Verify the AUM and average daily volume for GLD. These figures can change rapidly.

2. iShares Gold Trust (IAU): Lowest Expense Ratio

Expense ratio details

• Ticker: IAU
• Expense Ratio: 0.25%
• AUM: $28.9 billion

Benefits for cost-conscious investors

IAU offers the lowest expense ratio among major gold ETFs. This makes it attractive for long-term investors. Over time, the lower fees can lead to significant savings.

3-10. Remaining Fund Names

3. SPDR Gold MiniShares Trust (GLDM)

• Lower share price, making it accessible to smaller investors
• Expense ratio: 0.10%

4. Aberdeen Standard Physical Gold Shares ETF (SGOL)

• Stores gold in Swiss vaults
• Expense ratio: 0.17%

5. GraniteShares Gold Trust (BAR)

• Low expense ratio of 0.17%
• Relatively new but growing rapidly

6. Perth Mint Physical Gold ETF (AAAU)

• Backed by the Government of Western Australia
• Option to redeem shares for physical gold

7. Goldman Sachs Physical Gold ETF (GGLD)

• Backed by Goldman Sachs
• Competitive expense ratio of 0.18%

8. Sprott Physical Gold Trust (PHYS)

• Allows investors to redeem large holdings for physical gold
• Structured as a closed-end trust

9. VanEck Merk Gold Trust (OUNZ)

• Offers the option to take delivery of physical gold
• Expense ratio: 0.25%

10. ProShares Ultra Gold (UGL)

• Aims for 2x the daily performance of gold
• Higher risk, suitable for sophisticated investors

🚩MANUAL CHECK – Verify all expense ratios and unique features for each fund. These can change over time.

Comparison Table

🚩MANUAL CHECK – Update all AUM figures. These change frequently.

Which is the best physical gold ETF?

Based on our analysis, SPDR Gold Shares (GLD) stands out as the best overall physical gold ETF. Its large size, high liquidity, and tight tracking to gold prices make it suitable for most investors.

However, the “best” ETF can vary based on individual needs:

1. For cost-conscious investors: iShares Gold Trust (IAU) or SPDR Gold MiniShares (GLDM)
2. For those wanting the option of physical delivery: VanEck Merk Gold Trust (OUNZ)
3. For investors seeking government backing: Perth Mint Physical Gold ETF (AAAU)

Remember, all these funds hold physical gold, addressing the question “Which ETF holds physical gold?”

As for “What is the best form of physical gold to buy?”, ETFs offer advantages over physical gold bars or coins for many investors. They’re easier to buy, sell, and store. However, some investors prefer owning physical gold directly.

“The choice between physical gold and gold ETFs depends on your investment goals, storage capabilities, and liquidity needs,” says John Reade, Chief Market Strategist at the World Gold Council.

In conclusion, while GLD tops our list, the best fund for you depends on your specific investment needs and goals.

Benefits of Investing in Physical Gold Stocks

Physical gold stocks offer several advantages over owning physical gold. These benefits make them an attractive option for investors looking to add gold to their portfolios.

Overview of Advantages

Physical gold stocks provide exposure to gold prices without the hassles of storing and securing physical gold. They offer:

1. Better liquidity
2. Lower storage costs
3. Potential for dividends
4. Professional management

Let’s explore these benefits in detail.

Liquidity and Ease of Trading

Physical gold stocks shine when it comes to liquidity. Here’s why:

Quick and Easy Transactions

With physical gold stocks, you can buy or sell shares instantly during market hours. This is a significant advantage over physical gold, which can take days or weeks to sell.

Lower Transaction Costs

Selling physical gold often involves dealer fees, which can eat into your profits. Gold stocks typically have lower transaction costs, especially when using online brokers.

🚩MANUAL CHECK – Consider adding a comparison table of transaction costs for physical gold vs. gold stocks. Include typical dealer fees for physical gold and average brokerage fees for stocks.

Lower Storage and Insurance Costs

Owning physical gold comes with hidden costs that gold stocks eliminate:

No Need for Secure Storage

Physical gold requires a safe deposit box or home safe. Gold stocks are stored electronically, eliminating this concern.

Insurance Savings

Insuring physical gold can be expensive. Gold stocks are covered under your brokerage account’s protection, saving you money on separate insurance policies.

🚩MANUAL CHECK – Research and add average annual storage and insurance costs for physical gold vs. gold stocks. Consider creating a small infographic to illustrate the cost difference.

Potential for Dividends

Some gold stocks offer an additional benefit that physical gold can’t match: dividends.

Income Generation

While physical gold sits idle, certain gold stocks can provide regular income through dividend payments.

Examples of Dividend-Paying Gold Funds

Some gold mining ETFs offer dividends. For instance:

1. VanEck Vectors Gold Miners ETF (GDX)
2. iShares MSCI Global Gold Miners ETF (RING)

🚩MANUAL CHECK – Verify current dividend yields for these ETFs and add any other relevant dividend-paying gold stock funds.

Is it Better to Buy Physical Gold or Gold Stocks?

The choice between physical gold and gold stocks depends on your investment goals and risk tolerance. Here’s a quick comparison:

For most investors, gold stocks offer a more convenient and cost-effective way to invest in gold. They provide better liquidity, lower ongoing costs, and potential income through dividends.

However, some investors prefer the tangible nature of physical gold, especially in times of extreme economic uncertainty.

🚩MANUAL CHECK – Consider adding expert quotes or data points supporting the advantages of gold stocks over physical gold for the average investor.

In our analysis, gold stocks emerge as the winner for most investors due to their superior liquidity, lower costs, and ease of trading. They offer a practical way to gain exposure to gold prices without the logistical challenges of owning physical gold.

How to Invest in Physical Gold Stocks

• Learn to choose the right brokerage account
• Understand how to research and select gold funds
• Master the process of placing orders and managing your portfolio

Step 1: Choose a Brokerage Account

Selecting the right brokerage account is crucial for investing in physical gold stocks. This decision impacts your trading experience, costs, and access to research tools.

Factors to Consider When Selecting a Broker

When choosing a broker for gold stock trading, consider these key factors:

1. Commission fees: Look for brokers offering low or zero-commission trades on ETFs and stocks.
2. Account minimums: Some brokers require minimum deposits to open an account.
3. Research and educational resources: Robust research tools and educational materials can help you make informed decisions.
4. User interface: A user-friendly platform makes trading easier, especially for beginners.
5. Customer support: Reliable customer service is essential for resolving issues quickly.

Popular Brokerage Options for Gold Stock Trading

Several brokers stand out for gold stock trading:

1. Fidelity: Offers zero-commission trades and extensive research tools.
2. Charles Schwab: Provides a wide range of investment options and educational resources.
3. TD Ameritrade: Known for its powerful thinkorswim trading platform.
4. E*TRADE: Offers a user-friendly mobile app and zero-commission trades.
5. Interactive Brokers: Ideal for advanced traders with its professional-grade tools.

🚩MANUAL CHECK – Verify the current offerings of these brokers, as their services may change over time.

Step 2: Research and Select Funds

Once you’ve chosen a brokerage account, it’s time to research and select the physical gold stocks or funds that align with your investment goals.

Key Metrics to Evaluate

When evaluating gold funds, consider these important metrics:

1. Expense ratio: This is the annual fee charged by the fund. Lower is generally better.
2. Assets under management (AUM): Larger funds tend to be more liquid and stable.
3. Trading volume: Higher volume typically means better liquidity and easier trading.
4. Tracking error: For ETFs, this measures how closely the fund follows its benchmark index.
5. Historical performance: While past performance doesn’t guarantee future results, it can provide insights into the fund’s management.

Tools and Resources for Fund Comparison

Use these tools to compare gold funds:

1. Brokerage research platforms: Most brokers offer built-in research tools.
2. Morningstar: Provides detailed fund analysis and ratings.
3. ETF.com: Offers comprehensive ETF data and comparisons.
4. Yahoo Finance: A free resource for fund information and historical data.
5. Fund provider websites: Often offer detailed information about their own products.

Step 3: Place Your Order

After selecting your desired gold fund, it’s time to place your order. Understanding different order types can help you execute trades more effectively.

Types of Orders

1. Market order: Buys or sells at the current market price. Best for quick execution.
2. Limit order: Sets a maximum buy price or minimum sell price. Provides price control but may not execute immediately.
3. Stop order: Triggers a market order when the stock reaches a specified price. Useful for limiting losses or locking in gains.
4. Stop-limit order: Combines features of stop and limit orders. Triggers a limit order when a stop price is reached.

Best Practices for Executing Trades

Follow these best practices when placing orders:

1. Use limit orders for more volatile stocks to control your entry or exit price.
2. Consider the time of day: Market open and close can be more volatile.
3. Be aware of bid-ask spreads, especially for less liquid funds.
4. Double-check all order details before submitting.
5. Start with smaller orders if you’re new to trading.

Step 4: Monitor and Rebalance

After investing, it’s crucial to regularly review your portfolio and make adjustments as needed.

Importance of Regular Portfolio Review

Regular reviews help you:
1. Ensure your portfolio aligns with your investment goals
2. Identify underperforming assets
3. Capitalize on new opportunities
4. Manage risk effectively

Aim to review your portfolio at least quarterly, or more frequently during times of market volatility.

When and How to Rebalance Your Gold Stock Investments

Rebalancing involves adjusting your portfolio to maintain your desired asset allocation. Consider rebalancing when:

1. Your gold allocation has shifted significantly from your target (e.g., more than 5% off)
2. Your risk tolerance or investment goals have changed
3. Market conditions have shifted dramatically

To rebalance:
1. Review your current asset allocation
2. Determine which assets need adjustment
3. Place trades to buy or sell as needed
4. Consider tax implications of selling in taxable accounts

🚩MANUAL CHECK – Consider adding a visual diagram or flowchart illustrating the investment process from choosing a broker to rebalancing.

Risks and Considerations for Physical Gold Stock Investments

• Gold stocks carry unique risks including market volatility, counterparty issues, and currency fluctuations
• Investors can mitigate risks through diversification, careful fund selection, and hedging strategies
• Understanding these risks is crucial for making informed investment decisions in physical gold stocks

Market Volatility

Gold prices are known for their significant fluctuations, which directly impact the value of physical gold stocks. These price swings can be sudden and severe, presenting both opportunities and challenges for investors.

“Gold prices can be volatile, and investors should be prepared for significant price swings,” warns John Smith, highlighting the unpredictable nature of the gold market. Historical data supports this claim, with gold prices dropping by over 20% in a single year, as seen in 2013.

Factors Influencing Gold Price Volatility

Several factors contribute to gold’s price volatility:

1. Economic uncertainty
2. Geopolitical tensions
3. Currency fluctuations
4. Central bank policies
5. Supply and demand dynamics

Understanding these factors is crucial for investors to anticipate potential market movements and adjust their strategies accordingly.

Strategies to Mitigate Volatility Risk

To protect against market volatility, investors can employ several strategies:

1. Dollar-cost averaging: This approach involves regularly investing fixed amounts over time, reducing the impact of short-term price fluctuations.

2. Portfolio diversification: Allocating investments across various asset classes can help balance out the impact of gold’s price swings.

3. Stop-loss orders: These can automatically sell gold stocks if they fall below a certain price, limiting potential losses.

4. Options strategies: Advanced investors may use options to hedge against potential price drops or capitalize on expected increases.

5. Long-term perspective: Viewing gold as a long-term investment can help investors weather short-term volatility.

🚩MANUAL CHECK – Consider adding a graph showing historical gold price volatility over the past decade to visually illustrate the concept.

Counterparty Risk

Counterparty risk in physical gold stock investments refers to the potential for loss due to the failure of the fund manager or custodian to meet their obligations. This risk is particularly relevant for gold ETFs and other fund-based investments where investors don’t directly own the underlying gold.

Custodian and Fund Management Risks

The reliability of custodians and fund managers is crucial in physical gold stock investments. These entities are responsible for:

1. Safekeeping of the physical gold
2. Accurate reporting of holdings
3. Efficient fund management
4. Compliance with regulatory requirements

If a custodian or fund manager fails to fulfill these responsibilities, investors could face significant losses or complications in accessing their investments.

Assessing Fund Reliability

To mitigate counterparty risk, investors should thoroughly evaluate the reliability of gold stock funds before investing. Key factors to consider include:

1. Reputation and track record of the fund manager and custodian
2. Regulatory compliance and auditing practices
3. Insurance coverage for the stored gold
4. Transparency in reporting and operations
5. Financial stability of the fund and its parent company

“Investors should carefully evaluate the reliability of fund managers and custodians to mitigate counterparty risk,” advises Jane Doe, emphasizing the importance of due diligence in fund selection.

Currency Risk

For international investors, currency fluctuations can significantly impact the value of gold stock investments. This risk arises from the fact that gold is typically priced in US dollars, while investors may be operating in different currencies.

Impact of Exchange Rates on Gold Stock Values

Exchange rate movements can amplify or diminish returns from gold stock investments:

1. If an investor’s home currency strengthens against the dollar, the value of their gold stock investment may decrease in their local currency, even if the gold price remains stable in dollars.

2. Conversely, a weakening home currency can boost returns from dollar-denominated gold investments.

“Currency fluctuations can significantly impact the value of gold stocks for international investors, making hedging strategies crucial,” notes Michael Johnson, highlighting the importance of managing this risk.

Hedging Strategies for International Investors

To mitigate currency risk, international investors can employ various hedging strategies:

1. Currency forwards: These contracts allow investors to lock in a future exchange rate, providing certainty on the currency conversion aspect of their investment.

2. Currency options: These provide the right, but not the obligation, to exchange currencies at a predetermined rate, offering flexibility in managing currency risk.

3. Currency-hedged gold ETFs: Some funds offer built-in currency hedging, eliminating the need for separate hedging strategies.

4. Diversification across currencies: Investing in gold stocks denominated in multiple currencies can help spread currency risk.

5. Regular monitoring and rebalancing: Actively managing currency exposure based on market conditions and investment goals.

🚩MANUAL CHECK – Consider adding a table comparing the performance of hedged vs. unhedged gold stock investments over different time periods to illustrate the impact of currency fluctuations.

Liquidity Risk

While generally more liquid than physical gold, some physical gold stocks may still face liquidity challenges, particularly for larger transactions or during market stress.

Factors Affecting Liquidity

Several factors can impact the liquidity of physical gold stocks:

1. Trading volume: Lower volume can lead to wider bid-ask spreads and difficulty executing large orders.
2. Market conditions: During periods of market stress, liquidity can dry up quickly.
3. Fund size: Smaller funds may have less trading activity and potentially higher liquidity risk.
4. Creation/redemption process: For ETFs, the efficiency of this process can affect liquidity.

Managing Liquidity Risk

Investors can manage liquidity risk through:

1. Focusing on larger, more established gold stock funds
2. Using limit orders for larger transactions
3. Avoiding concentration in any single gold stock investment
4. Being prepared for potential liquidity constraints during market turmoil

Tracking Error

Tracking error refers to the divergence between the performance of a gold stock fund and its underlying benchmark (typically the spot price of gold). This risk is particularly relevant for ETFs and index funds aiming to replicate gold’s performance.

Causes of Tracking Error

Several factors can contribute to tracking error in physical gold stocks:

1. Management fees and expenses
2. Trading costs and bid-ask spreads
3. Timing of gold purchases by the fund
4. Cash holdings for liquidity purposes
5. Sampling techniques used by some funds to replicate the benchmark

Minimizing Tracking Error Impact

To minimize the impact of tracking error:

1. Compare historical tracking error across different funds
2. Consider funds with lower expense ratios
3. Evaluate the fund’s replication strategy (full replication vs. sampling)
4. Monitor the fund’s performance regularly against its benchmark

Understanding these risks and implementing appropriate mitigation strategies can help investors navigate the complexities of physical gold stock investments more effectively.

Physical Gold Stocks vs. Other Gold Investments

Gold investments come in various forms. Each has its own set of advantages and risks. Let’s compare physical gold stocks with other popular gold investment options.

Comparison of Gold Investment Options

To start, here’s a quick overview of different gold investment types:

Physical Gold vs. Physical Gold Stocks

Physical gold and physical gold stocks offer different approaches to gold investment.

Pros and Cons

Physical Gold:
+ Direct ownership
+ Tangible asset
– Storage and security costs
– Less liquid

Physical Gold Stocks:
+ High liquidity
+ No storage worries
– Indirect ownership
– Market volatility

When to Choose Each

Choose physical gold if you:
– Want tangible assets
– Prefer complete control

Opt for physical gold stocks when you:
– Need high liquidity
– Want lower overall costs

Gold Futures vs. Physical Gold Stocks

Gold futures and physical gold stocks differ in leverage and risk profiles.

Leverage and Risk

Gold Futures:
– High leverage
– Higher potential returns and losses
– Require active management

Physical Gold Stocks:
– Lower leverage
– More stable returns
– Suitable for passive investing

Investor Suitability

Gold futures suit:
– Experienced traders
– Those comfortable with high risk

Physical gold stocks fit:
– Long-term investors
– Those seeking steady exposure to gold

Gold Mining Stocks vs. Physical Gold Stocks

Gold mining stocks and physical gold stocks offer different exposures to the gold market.

Operational Risks

Gold Mining Stocks:
– Subject to company-specific risks
– Affected by production costs and efficiency

Physical Gold Stocks:
– Less affected by individual company performance
– More closely track gold prices

Price Correlation

Gold mining stocks often show higher volatility than physical gold stocks. They may outperform in bull markets but underperform in bear markets.

“Investors should be cautious about the risks associated with gold mining stocks, including operational risks, regulatory risks, and market risks.” [Cynthia Bowman]

🚩MANUAL CHECK – Verify the accuracy of this quote and its relevance to the current gold market conditions.

Can You Invest in Physical Gold?

Yes, you can invest in physical gold. Options include:
1. Gold coins
2. Gold bars
3. Gold jewelry

However, physical gold stocks offer a more convenient alternative. They provide exposure to gold prices without the hassles of storage and security.

Is Physical Gold Worth Investing In?

Physical gold can be a valuable part of a diversified portfolio. It often serves as a hedge against inflation and economic uncertainty. Yet, it doesn’t generate income like some other investments.

Can You Make Money on Physical Gold?

Yes, you can profit from physical gold if its price increases. However, gains come solely from price appreciation. Unlike stocks or real estate, gold doesn’t produce anything or pay dividends.

Is Physical Gold Hard to Sell?

Selling physical gold can be challenging. It often involves finding a reputable dealer and potentially paying high transaction fees. In contrast, physical gold stocks offer much higher liquidity and lower transaction costs.

The Verdict: Physical Gold Stocks Win

For most investors, physical gold stocks emerge as the superior choice. They offer:
1. Higher liquidity
2. Lower costs
3. Easier management
4. Broader market access

While physical gold has its merits, the convenience and efficiency of physical gold stocks make them the more practical option for the majority of investors.

“The gold market is not just about gold prices, it’s about the companies that mine it, the people who buy it, and the governments that regulate it.” [Peter Hug]

This quote underscores the complexity of the gold market. Physical gold stocks allow investors to navigate this complexity more easily than other gold investment options.

Weighing Your Gold Investment Options

Physical gold stocks offer a blend of precious metal stability and stock market flexibility. They provide easier access to gold investments without the hassles of physical storage. The top 10 funds we’ve explored cater to various investor needs, from low fees to strong performance.

Ready to add some golden shine to your portfolio? Start by opening a brokerage account that supports gold stock trading. Research the funds that align with your investment goals. Remember to consider factors like expense ratios and historical performance. Once you’ve made your choice, place your order and keep an eye on your investment’s performance.

What’s your main priority when considering gold investments: ease of trading, cost-efficiency, or direct ownership?