Looking to Gold to diversify out of stocks at all-time highs?

The relationship between the price of gold and the stock market can vary based on several factors, including investor sentiment, economic conditions, and geopolitical events.

Frequently gold increases when the stock market decreases and vice versa.

ETFs that include companies that mine and produce gold have not done as well as ETFs that are more focused on the price of gold.

Gold bullion-based ETFs such as GLD and IAU have done well and have recently broken above highs set in July 2020.

GLD and IAU are both popular exchange-traded funds (ETFs) that track the price of gold. Here are the main differences between the two:

Sponsorship: GLD, the SPDR Gold Trust, is sponsored by State Street Global Advisors, while IAU, the iShares Gold Trust, is sponsored by BlackRock.

Expense Ratio: IAU typically has a lower expense ratio compared to GLD. The expense ratio refers to the annual fee charged by the ETF issuer to cover operating expenses. Generally, lower expense ratios can lead to higher returns for investors.

Share Price: GLD generally has a higher share price compared to IAU. This difference in share price does not impact the value of the investment, as it is proportional to the amount of gold held by each ETF.

Liquidity: GLD tends to have higher trading volume and liquidity compared to IAU. Higher liquidity can result in narrower bid-ask spreads and better execution prices for investors.

Size of Gold Holdings: Both GLD and IAU hold physical gold bullion to back their shares. However, the total amount of gold held by each ETF may vary slightly due to differences in the creation and redemption process.

Tax Treatment: Both GLD and IAU are taxed similarly as collectibles for federal tax purposes in the United States. Investors should consult with a tax advisor to understand the tax implications of investing in these ETFs.

While both GLD and IAU provide investors with exposure to the price of gold, there are differences in sponsorship, expense ratio, liquidity, and other factors that investors should consider when choosing between the two ETFs.

It’s essential to assess your investment objectives, risk tolerance, preferences, and your financial advisor(s) before deciding if gold is suitable for your portfolio.

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