What are the best gold ETFs to own in Australia?
What are the top gold ETFs if you just want to track the gold price?
In this short guide, I take a quick look at the best gold ETFs in Australia, including the Global X Physical Gold ETF (ASX: GOLD), Perth Mint Gold ETF (ASX: PMGOLD) and BetaShares Physically Backed Gold ETF (Hedged) (ASX: QAU).
Gold price
The chart above tracks the gold price over time. You can change the length of time in the gold price chart to reflect the period you want to analyse. A comparison of gold ETFs to major asset classes is shown below.
Top 3 gold ETFs Australia explained
In this punchy 2-minute video, below, I — Owen Rask — explain the structure and style of Australia’s 3 most popular gold ETFs: GOLD, QAU & PMGOLD. Be warned: all three ETFs are different in ‘what you get’, so be careful. Take your time.
In short:
- The GOLD ETF from Global X is physically backed, unhedged and allocated.
- The QAU ETF from BetaShares is physically backed, hedged into Australian dollars and allocated.
- The PMGOLD ETF from Perth Mint is not physically backed but represents a right to buy gold from the Perth Mint, with a West Australian Government guarantee.
Top gold ETFs performance
Please note, the performance of the top GOLD ETFs in the chart below may be subject to API changes or data discrepancies (e.g. a stock split undertaking by Global X’s GOLD ETF). Please refer to the gold performance table below, which uses data from the ASX.
What about MNRS & GDX?
The VanEck Gold Miners ETF AUD (ASX: GDX) and Betashares Global Gold Miners ETF (Hedged) (ASX: MNRS) are not true gold ETFs — they invest in shares of gold mining companies. For this reason, the MNRS & GDX ETFs are very different to the three core gold ETFs: GOLD, QAU & PMGOLD.
|
ETF |
5-year total return (p.a.) |
|
GOLD |
11.74% |
|
QAU |
7.31% |
|
PMGOLD |
12.10% |
|
MNRS |
10.53% |
|
GDX |
10.83% |
Source: ASX data, time period ending June 30, 2023.
MNRS & GDX ETFs behave more like share ETFs because they don’t invest in gold — they invest in shares of gold mining companies.
View the list of Australian shares ETFs.
Over time, I expect gold ETFs like PMGOLD, QAU and GOLD to have lower volatility and more price stability because investors are not exposing themselves to specific company risks.
For example, if you invest in Newcrest Mining Ltd (ASX: NCM) shares, one of Australia’s largest gold miners, you’re not only being exposed to the price of gold (which is Newcrest’s product) but also the execution of its management team, failures at mine sites, exploration activity (good and bad), and so on.
It’s not saying that investing in gold mining companies or gold mining shares ETFs is wrong. It’s just that it is a very different experience to buying a true gold ETF.
Australian dollar chart
The fluctuation in the Australian dollar to US dollar exchange rate can have a substantial impact on your returns as an investor in gold.
View our Australian dollar (AUDUSD) guide for when to currency hedge the US dollar. This is a really important guide to read if you’re wondering what the currency might — or might not — do, and how to make a decision (hint: it’s based on a very simple but important science).
Lowest fees ‘true gold’ ETFs
|
ETF |
Fee (MER) |
|
GOLD |
0.4% |
|
QAU |
0.59% |
|
PMGOLD |
0.15% |
|
VanEck Gold Bullion ETF (ASX: NUGG) |
0.25% |
As you can see above, most of the top gold ETFs have reasonably low fees, though PMGOLD’s unique structure enables it to have the lowest management fee (MER), according to data from June 2023.
What is the best gold ETF?
The answer to this question is “it depends”. For example, amongst other things, it might depend on the currency.
Gold ETFs for falling USD: GOLD & PMGOLD
The best gold ETF for one investor might not suit another. For example, all else being equal, if you believe the Australian dollar is going to get weaker (i.e., US dollars will be worth more in 12 months), you might choose the GOLD ETF from Global X because then you have your gold priced in US dollars.
Gold ETFs for rising USD: QAU
However, if you have the opposite view, the QAU ETF from Betashares might be better suited. Finally, many investors like the PMGOLD ETF because of its low fees.
By a long way — a factor of ~380% — the Global X GOLD ETF is the largest and most popular gold ETF in Australia.
As of June 30th 2023 it had $2.68 billion invested versus $700 million for PMGOLD, $467 million for QAU and $16 million for NUGG.
Judging by the sheer amount of money invested, the GOLD ETF from Global X ETF is the “top gold ETF” in Australia. But, as I noted it depends on market conditions and each investor’s outlook, so it might not always be the biggest …
My view on gold ETFs
I want to be clear with my opinion because I don’t get asked a lot: I believe you don’t need gold in your portfolio. Mathematically, or ‘statistically’, it makes sense — based on past performance. But owning can gold can be seen (at times) to be ‘irrational’ because it doesn’t pay an income and it only goes up because of the perception that it will keep going up. Well, that and the rise of ETFs are impacting the market (it’s been proven that ETFs are artificially making prices go up!).
All that said, I hold a bit of gold in our model portfolios at Rask because I believe it can be used as a ‘stabiliser’ for short-term market fluctuations — meaning you can hold a little bit of gold and sell it when, say, stocks fall. This allows you to cushion the fall of stocks and buy back in at potentially better prices.
As we look into 2024, the big bet for gold investors is currency. As it stands at the beginning of September 2023, the Australian dollar has been very weak. I don’t know exactly what the future holds — no one does — but right now, I’d be happy to start looking at some currency hedged exposure to gold. Depending on your existing portfolio of gold, it might, for example, have 50-50 (50% hedged gold ETFs and 50% unhedged).
GOLD, NUGG & QAU are my picks of the gold ETFs simply because I prefer holding gold ETFs which actually own the gold. That said, PMGOLD is lower cost — so it should should perform better over time.
I just like my sleep.
