Worried about tariffs? Consider allocating to the ultimate risk-off asset – precious metals.
Gold and silver tend to rally when stocks face uncertainty, as investors flock to safe-haven assets that hold their value when markets are volatile. Historically, both metals have performed well during periods of geopolitical instability, recessions, and inflationary shocks.
The challenge, however, is buying and storing physical metals. If you buy gold or silver in person, you can get eaten alive by dealer spreads, storage costs, insurance fees, and security concerns. It’s inconvenient and expensive.
That’s why I prefer exchange-traded funds (ETFs) for precious metals exposure. But today, I’m making a case for three closed-end funds (CEFs) instead. While there are slight structural differences between ETFs and CEFs, for the sake of this discussion, consider them equivalent.
Here are three CEF options – one for gold, one for silver, and one that combines both metals.
Gold exposure
For pure gold exposure, one of the best options is the Sprott Physical Gold Trust (TSX:PHYS). This closed-end fund holds $9.8 billion worth of gold, representing 3,340,284 ounces.
What makes PHYS stand out is that it holds fully allocated gold, meaning each ounce is physically stored and accounted for, rather than just being backed by paper claims.
Even more unique, PHYS is redeemable for actual gold, giving investors direct access to the metal – something most gold ETFs can’t offer.
This structure makes PHYS a stronger alternative to some traditional gold ETFs, which may rely on unallocated gold or financial instruments rather than physical bullion in a vault.
The management expense ratio (MER) for PHYS is 0.41%, making it a cost-effective way to gain exposure to gold without dealing with storage, insurance, or security risks.
Silver exposure
For silver exposure, the Sprott Physical Silver Trust (TSX:PSLV) is a top choice. This closed-end fund holds $6 billion, representing 180,613,426 ounces of silver.
Like PHYS, PSLV’s silver is fully allocated, meaning every ounce is physically stored and accounted for. Investors also have the option to redeem shares for actual silver, something that most silver ETFs don’t offer.
While PSLV provides a more direct and secure way to invest in silver, it does come at a slightly higher cost. The management expense ratio (MER) is 0.59%, reflecting the additional costs of storing and insuring large quantities of physical silver.
Gold and silver exposure
Can’t decide between gold and silver? Consider a third option – and my personal favourite – the Sprott Physical Gold and Silver Trust (TSX:CEF).
This closed-end fund holds $5.5 billion in assets, with a mix of 1,276,617 ounces of gold and 53,231,966 ounces of silver. That breaks down to 68.2% gold and 31.7% silver, giving you diversified exposure to both metals in one investment.
Like PHYS and PSLV, CEF is fully allocated, meaning the metals are physically stored and accounted for. It’s also redeemable for actual gold and silver, something that most traditional ETFs can’t offer.
The management expense ratio (MER) is 0.49%, making it a cost-effective way to hold both precious metals without dealing with the hassle of storage and security.
