These 3 Under-The-Radar Gold ETFs Are Much Better Than GLD

The SPDR Gold Trust (NYSEARCA:GLD) is the most popular option on the market, and if you’re invested in gold, you likely own it. The gold rally is having a pause right now, and you can use this opportunity to rebalance your portfolio for the next leg up with VanEck Gold Miners ETF (NYSEARCA:GDX), iShares Gold Trust Micro ETF (NYSEARCA:IAUM), and Global X Gold Explorers ETF (NYSEARCA:GOEX).

GLD is far from being the best ETF if you plan to buy and hold gold for the long run. These are other ETFs that are more well-positioned to squeeze the most out of a future rally and have consistently done better than GLD. Let’s take a look at why.

VanEck Gold Miners ETF (GDX)

If you want to make the most out of gold, own the ones extracting it in the first place. Gold miners have been making a killing after a lull, and they’re well-positioned to keep doing so. Gold was treading water two years ago, and gold mining companies were depressed as inflation outpaced gold prices, meaning labor costs made gold mining less and less profitable.

The opposite is happening now as gold prices have exploded and are continuing to rally, whereas labor costs haven’t increased significantly. Profits are rising sharply across the industry, and they’re using this to explore for even more gold.

GDX has surged 89% over the past year, and it’ll likely surge even more if this gold rally continues. You do have to take on more risk since gold miners have a higher beta and will fall more if gold prices fall. I don’t see a significant fall in gold prices in this environment, so GDX looks solid.

GDX carries a 0.51% expense ratio.

iShares Gold Trust Micro ETF (IAUM)

IAUM is the same as GLD, but you pay a lot less to own it. GLD carries a 0.4% expense ratio. This is very steep for an ETF that just has one job, which is to track the price of gold. IAUM does the same job for just 0.07% a year, or $7 per $10,000. It’s not a trivial amount whatsoever if you’re going to hold for the long run. Each dollar you pay less in expenses will go towards gold and compound year after year.

IAUM beats GLD on every return metric, consistently, every single year. That’s not a coincidence or luck. It’s entirely explained by the 0.31% annual fee gap. Both funds hold gold.

There is a slight catch, and that is GLD’s higher liquidity. This only matters if you are constantly buying and selling gold, but it is not worth paying extra for this liquidity if you plan to buy and hold for a long time.

IAUM is the cheapest physically-backed gold ETF you can buy today.

Global X Gold Explorers ETF (GOEX)

GOEX tracks the Solactive Global Gold Explorers & Developers Total Return Index. This is a market-cap-weighted basket of dozens of small and mid-cap companies that go out looking for gold. You’ve likely never heard of these gold companies unless you read mining trade journals, and the fund is tiny by ETF standards.

Small companies live and die on whether their projects are economically sensible. A deposit that wasn’t worth mining at $1,800 gold is suddenly a gusher at $4,500 gold. Projects get financed. M&A happens because the big boys, like Newmont (NYSE:NEM), Agnico Eagle (NYSE:AEM), and Barrick (NYSE:B), get tempted to go on a spending spree and acquire smaller gold projects.

All of this leads to some of the highest returns you can get during a gold rally without leverage. GOEX is up 114% in the past year and has the legs to move up another triple digits if this gold rally continues. The rally has been so rapid that mining companies are yet to fully finish their projects. Exploration takes years, and it’ll take time for GOEX to start reaping the benefits. I believe this ETF will surprise many investors who are yet to take that into consideration.

The expense ratio is 0.65%, but you get a nifty 1.87% yield on top.