Gold and silver ETFs (exchange-traded funds) are a fantastic way to expose your portfolio to the precious metals asset class. Undoubtedly, gold has been on a hot run in recent years but has recently pulled back. Of course, it’s tough to tell if the recent bout of weakness is the start of a sell-off that’s far worse. And given precious metals don’t have intrinsic value or any way to “value” them at any given time, it’s really tough to tell for sure when one is getting a good deal at the current price of gold or silver.
Indeed, it’s a rather strange asset that will not pay you anything for your patience. Still, gold is viewed as a nice hedge against macroeconomic shocks and inflation. Given the potential for both to rock markets in 2025, I’d argue that gold is a great asset if things sour unexpectedly.
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The benefits of diversifying into gold and silver
Additionally, silver is a precious metal worth looking into if you’re looking for lowly-correlated gains and better portfolio diversification. Given the recent sell-off in silver has been that much worse, an argument could be made that silver is a better deal than gold.
Of course, silver has industrial applications, making it more sensitive to the state of the economy than an asset like gold. Either way, the gold-to-silver ratio, which describes how much silver it takes to purchase just one ounce of gold, may be viewed to gauge each precious metal’s relative value.
Right now, silver looks to be a relative bargain compared to gold. Given gold and silver are vastly different metals that trade in different patterns, though, I’m not so sure the ratio can be depended on as a means of valuing a metal. Either way, I think there’s value in adding gold and silver to one’s portfolio. And in this piece, we’ll look at two ways to get it done simply via ETFs!
Sprott Physical Gold Trust
Sprott Physical Gold Trust (TSX: PHYS) is one of my favourite TSX-traded close-ended funds (CEFs) to bet on the price of gold. Indeed, the ETF is unhedged, so any further depreciation in the loonie could act as a jolt for the share price. What makes the trusted ETF so attractive is its competitive management expense ratio (MER), which currently sits at 0.41%. Further, the CEF trades at a nice 2% discount to net asset value (NAV).
With exposure to real gold stored at The Royal Canadian Mint, you’re getting top-tier exposure to gold from the fund, which, I believe, could continue to fare well in 2025.
Sprott Physical Gold and Silver Trust
If you’re looking for gold and silver exposure with one CEF, Sprott Physical Gold and Silver Trust (TSX: CEF) is worth checking out.
Around 67.6% of the CEF is allocated to gold, while 32.5% goes to silver. Indeed, you’re gaining more gold exposure than silver, but if the ratio sounds good to you, I do think the fund is worth picking up while its discount to NAV is close to 5%. That’s hefty.
And with a 0.49% MER, you’re also getting a pretty low price of admission. Like with the PHYS, the metals are securely stored at The Royal Canadian Mint, making CEF a premier way to bet on physical gold and silver.
