Not All Physical Gold ETFs Built The Same

December 18, 2012

 

IAU

IAU is the obvious choice for the buy-and-hold retail gold investor. The round-trip retail cost for IAU is the cheapest in the segment, making it a no-brainer for anyone unconcerned about the location of the gold held by the fund. As far as that goes, IAU’s gold is vaulted around the world.

SGOL And AGOL

These two ETF Securities portfolios are for the discerning gold investors who want the peace of mind of knowing that their gold is held in a specific place.

Both funds charge 1 basis point less than GLD, but are nowhere near as liquid. SGOL is much more popular and liquid than AGOL, which has yet to fully catch on with investors.

Institutions may use either fund to establish long-term positions, but trading either fund actively is like throwing money away, considering the fact that GLD is one of the most liquid ETFs in existence, let alone one tracking physical gold.

AGOL vaults its gold in Singapore, one of the most trusted and transparent financial markets in the world. SGOL, on the other hand, vaults its gold in Zurich, one of the few countries still viewed as a “safe haven.” To that end, the value to investors is not just peace of mind, but transparency: The ETFs guarantee the location and segregation of your gold at all times.

The four funds appeal to different investors, and for a commodity strategy that holds a fully fungible, highly liquid commodity, that’s not necessarily an easy thing to accomplish.


At the time this article was written, the author held no positions in the securities mentioned. Contact Paul Baiocchi at [email protected].

 

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