For those looking to invest in gold and silver without the hassle of storing physical metals, exchange traded funds (ETFs) are an excellent option.
Instead of storing (and paying to store) your actual bullion, these ETFs do the heavy lifting (literally) in managing gold and silver investments. They also provide returns which directly mirror the metals themselves.
Two stand-out choices for Australian investors are the ETFS Physical Silver (ASX: ETPMAG) and ETFS Physical Gold (ASX: GOLD) ETFs. Both offer a straightforward, cost-effective way to invest in these precious metals.
Let's dive in and take a look at each name.
Why use ETFs to invest in gold and silver?
The precious metals market saw significant growth in 2024. Gold is up 40% over the year, recently surpassing US$3,000 per ounce. Meanwhile, silver has climbed 34%, now trading at US$33 per ounce.
According to Trading Economics, gold's rise has been driven by "safe-haven demand amid economic and geopolitical uncertainties, as well as expectations of U.S. Federal Reserve rate cuts". Those wanting to invest in gold have done so at record pace.
Tavi Costa, portfolio manager at Crescat Capital, sees this accumulation of gold continuing into the foreseeable future. The fundie has been bullish on gold and silver for some time. In an interview to Goldbroker, the expert said:
I believe a policy shift toward gold accumulation is imminent. Various indicators support this notion, particularly the surge in Swiss gold exports to the United States. This trend may signal the initial stages of increased interest from retail investors, high-net-worth individuals, and potentially even institutions, who are positioning themselves in anticipation of such changes.
Costa's comments come at a time when precious metals are heavily in vogue.
All of these are great for the price of gold and silver. But unlike with shares, we run into a unique problem when investing in precious metals. That is, where, and how to store them.
Obviously not everyone is keen on the complexities of owning physical metals. We don't want to store gold bars under the mattress. Not everyone likes paying to store, and insure their metals either. How is that set and forget?
That's where ETFs come in. They allow you to invest in gold and silver without the need for storage or security concerns.
ETFs to consider
If you're looking to invest in gold, ETFS Physical Gold is one of the most popular options on the ASX. And as we recently reported, it isn't the only one. The Vaneck Gold Bullion ETF (ASX: NUGG) is out there too.
The Physical Gold ETF is backed by physical gold bullion. The gold itself is stored in custody in a secure London vault. When you invest in this ETF, you're effectively buying a share of that gold.
As such, it mirrors the price of gold.
For those interested in silver, the ETFS Physical Silver is the only ASX-listed ETF offering pure exposure to the metal.
Much like the Physical Gold ETF, this fund is backed by physical silver bullion.
So you can invest in the ETF and own a share of that silver, without the need to buy or store physical bars and coins.
Foolish takeaway
For those wanting to invest in gold and silver, ETFs provide a low-cost, liquid option. These 2 ETFs track the price performance of the metals themselves.
If you're someone looking for precious metal exposure without the complexities of storage, these ETFs are worth considering.
