Best precious metals ETF?

[XyloFrank]

Hi,

Can anyone suggest some good gold or silver ETFs?

What criteria should I use to evaluate and choose the best gold or silver ETFs?

Also, what are the risks of investing in these ETFs? Most articles online mention general market risks, but I’m also concerned about issuer risk. For example, would a gold ETF from a large institution like "Goldman Sachs Physical Gold ETF" be safer than one from a smaller, less-known issuer?

I’d appreciate your thoughts and recommendations. Thanks!

 

[MortPlug]

For silver, SLV is a solid option.

For gold, you can look at GLD or GLDM.

If you’re interested in a mix of both gold and silver, CEF might be a good choice.

These funds are backed by physical gold and silver bars, and they’re independently audited for transparency. However, you’re absolutely right—precious metals markets are relatively small and can be highly volatile, so keep that in mind when investing.

 

[KrogMellow]

I think Gold and Silver ETFs are pretty useless, almost like buttons on a dishrag.

Gold and silver aren’t really investments—they don’t generate any returns. Real estate brings in rent, stocks pay dividends, and bonds give coupon payments, but gold and silver don’t produce anything. They're not investments.

What gold and silver truly are is hard money. They maintain their purchasing power over time, unlike fiat money. When adding gold and silver to a portfolio, it’s more accurate to think of them as money rather than investments.

Also, when gold and silver are held in an ETF, it takes away from their value as hard money. An ETF is just a security that can only be traded for dollars or another currency through a broker. The real value of gold and silver comes from holding them outside the financial system. So, a gold or silver ETF is like a spork—it’s neither a good fork nor a good spoon. You get the drawbacks of an ETF without any of the advantages of holding actual gold or silver.

 

[PingFong62]

Also, what are the risks of investing in these ETFs?

There's a risk of making incorrect assumptions about fully understanding these financial instruments and their future tax implications.

TL;DR: Before purchasing, I recommend reviewing the tax guides provided by the fund so you know exactly what you're getting into. For example, here is the 2023 taxable information for the Goldman Sachs Physical Gold (AAAU) ETF (which is technically a trust) mentioned in the original post: https://www.gsam.com/content/dam/gs...ATION OF THE TRUST,to U.S. federal income tax

More details below:

When dealing with precious metal funds, it's often assumed that ETFs are involved, but you might actually be buying into a trust (often classified as a grantor trust). Brokerages typically don’t ask, “Are you sure you want to buy a complicated tax situation?” before you click "buy." That’s because you’ve likely agreed to their terms, acknowledging that you’re experienced in trading and responsible for understanding the tax implications of these funds.

The real tax challenges can arise years later when you realize the tax nuances of holding these funds. This might come as a surprise and cause some frustration, especially if you’ve held these investments long-term without understanding their tax treatment. This is because the trust's activity, such as purchases, sales, and expenses, flows to your personal tax return. Even if you don’t sell during the year, you still need to account for this activity. And when you sell, it might not show up in the usual reportable sale sections on your 1099-B form. This is due to a Treasury regulation that exempts the trust and brokers from reporting gross proceeds on these sales (as highlighted in the AAAU tax treatment above). So, it will likely be up to you to track and report these transactions, which can be more complicated than just tracking your purchase and sale prices.

If you’re dealing with a foreign trust, like the Sprott trusts, there are additional tax considerations, such as the PFIC rules, that may require special reporting and optimization in the year of purchase.

I'm not a lawyer or tax expert, but some believe that holding these instruments in retirement accounts can simplify things. In the past, there have been online calculators to help with the tax treatment of these trusts.

 

[YibboX]

There's a risk of making incorrect assumptions about fully understanding these financial instruments and their future tax implications.

TL;DR: Before purchasing, I recommend reviewing the tax guides provided by the fund so you know exactly what you're getting into. For example, here is the 2023 taxable information for the Goldman Sachs Physical Gold (AAAU) ETF (which is technically a trust) mentioned in the original post: https://www.gsam.com/content/dam/gsam/pdfs/us/en/tax-information/2023/2023_AAAU_Grantor_Trust_Tax_Statement.pdf?sa=n&rd=n#:~:text=fixed investment trust."-,TAXATION OF THE TRUST,to U.S. federal income tax

You're right about the potential tax issues with foreign trusts like CEF. However, it seems that if you follow all the proper steps, you might be able to get regular (non-collectible) capital gains treatment on those trusts, which is a big advantage if you can manage it.

I’m not a tax expert or lawyer, and the situation seemed unclear the last time I checked, so I recommend doing your own research on this.

 

[XyloFrank]

I think Gold and Silver ETFs are pretty useless, almost like buttons on a dishrag.

Gold and silver aren’t really investments—they don’t generate any returns. Real estate brings in rent, stocks pay dividends, and bonds give coupon payments, but gold and silver don’t produce anything. They're not investments.

What gold and silver truly are is hard money. They maintain their purchasing power over time, unlike fiat money. When adding gold and silver to a portfolio, it’s more accurate to think of them as money rather than investments.

Also, when gold and silver are held in an ETF, it takes away from their value as hard money. An ETF is just a security that can only be traded for dollars or another currency through a broker. The real value of gold and silver comes from holding them outside the financial system. So, a gold or silver ETF is like a spork—it’s neither a good fork nor a good spoon. You get the drawbacks of an ETF without any of the advantages of holding actual gold or silver.

I want to buy spot gold/sliver. But InteractiveBrokers tell me that China tax resident cannot buy based on law. My only options are gold/sliver futures and ETFs. But I want to keep gold/sliver for long term, while futures always has a time limit. So my only option is ETFs.