Precious metals ETFs can serve as a useful inflation hedge. These funds usually give investors exposure to precious metals or the mining companies that extract precious metals from the Earth. These raw materials are essential for everyday products, which typically allow them to rise with inflation.
However, some precious metals and mining companies are better than others. ETFs give you exposure to a basket of options, but you don’t want to get stuck with a dud. These are some of the top precious metals ETFs to consider.
GraniteShares Platinum Trust (PLTM)
The GraniteShares Platinum Trust (NYSEARCA:PLTM) gives investors exposure to the price movements of platinum. If platinum goes up by 1%, PLTM also goes up by 1%. Platinum derives most of its demand from the automobile industry and industrial use.
Platinum tends to do well in a good economy, and it’s certainly performed well lately. PLTM shares have an annualized 9.7% return over the past five years and a 14.0% annualized return over the past three years. However, the big story is a significant reduction in the supply of platinum that resulted in the biggest 1-month gain in nearly 40 years. Some people are using it as a replacement for gold jewelry as well to save money. Platinum has rallied by roughly 40% since the start of May.
PLTM has a 0.50% expense ratio and $85 million in total assets. The fund does not offer a yield, which is common for ETFs that give you exposure to the daily price movements of a precious metal.
VanEck Merk Gold ETF (OUNZ)
The VanEck Merk Gold ETF (NYSEARCA:OUNZ) is the equivalent of buying and holding gold through an ETF instead of storing it in your house. The fund makes gold more accessible to investors and has delivered some solid results over the years.
OUNZ has an annualized 12.9% return over the past five years and is up by 42.0% over the past year. The fund has a 0.25% expense ratio, which is low for precious metals ETFs. It also has $1.7 billion in total assets.
Gold has a few catalysts, such as its industrial demand, unit of exchange, and jewelry. The precious metal can also get a boost when the Federal Reserve finally follows through on lowering interest rates. The fund has been around since May 16, 2014.
Sprott Active Gold & Silver Miners ETF (GBUG)
The Sprott Active Gold & Silver Miners ETF (NASDAQ:GBUG) is the most diversified precious metals ETF on this list. It holds 34 stocks and allocates 43% of its capital across its top 10 holdings. Most of the mining stocks in this ETF count as growth stocks.
The fund has a 0.89% expense ratio and a little more than $45 million in total assets. It’s a new fund that has delivered a 16.7% return over the past three months. Mining ETFs also benefit when gold and silver gain value, but these ETFs also have financial risk.
Some mining companies produce bad financial results even when precious metals are performing well. However, if these same mining companies produce strong financial results amid precious metals rallies, these funds can outperform the precious metals that they sell.
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