10 Best Gold ETFs in Canada for June 2023: Hedge Your Portfolio

Do you want to invest in gold but don’t want to keep gold bars under your bed or in storage?

Gold ETFs are a great and easy way to add exposure to the precious metal throughout your investment accounts.

Buying gold through an ETF removes the risk of buying low-purity bars, as 99.5% purity is the standard for gold ETFs.

We’ll cover the best gold ETFs in Canada below and discuss some of their features in more detail.

Pros and Cons of Investing in Gold ETFs

Gold ETFs have their advantages and disadvantages, similar to all investments, so be aware before investing. 

10 Best Gold ETFs in Canada

1. CI Gold Bullion Fund

CI offers a fairly standard gold bullion fund through both currency-hedged and currency-unhedged ETFs.

VALT comes with a very short performance track record and is a small ETF by assets under management. It comes with one of the lowest gold ETF MERs in Canada. The ETF holds underlying gold bullion and aims to return physical gold’s price performance less any fees.

Despite the short track record and small size, VALT is an excellent choice to consider because of its low fees and physical gold backing.

2. Purpose Gold Bullion Fund

Another gold bullion ETF to consider is KILO, offered by Purpose Investments. It is available both in currency-hedged and unhedged options.

The ETF comes with a short performance track record and is a large ETF by assets under management. It comes with a very low MER for a gold ETF. The fund invests primarily in gold bullion but may also have minor exposure to gold certificates.

Although not the absolute most inexpensive option on our list, KILO is a great choice for adding gold bullion exposure to your portfolio.

3. iShares S&P/TSX Global Gold Index ETF

iShares’s XGD is a global gold miner stock ETF in Canada. It is also a passive strategy that follows the S&P/TSX Global Gold Index.

By investing in global gold mining companies, the ETF is riskier than investing in gold bullion but less risky than investing in junior miners. Gold miner performance is closely tied to the price of gold as well as their own underlying fundamentals and future prospects.

XGD has a very long performance track record and is a massive ETF by AUM. The ETF has a relatively high MER when compared to gold bullion ETFs. 

If you are looking for exposure to global gold miners as opposed to just gold bullion, XGD is a great option to consider for your portfolio.

4. Horizons Gold ETF

Horizons offers a gold futures fund in Canada through its HUG ETF. HUG invests in gold futures (not physical gold) and is currency hedged to the Canadian dollar.

HUG tracks the performance of the Solactive Gold Front Month MD Rolling Futures Index ER.

The ETF comes with a very long performance track record and is a very small ETF by assets under management. It comes with a low MER for a gold ETF. Since the ETF invests in futures, it does not hold physical gold bullion in a vault.

If physical backing is not important to you when investing in gold, HUG is a great option to consider.

5. iShares Gold Bullion ETF

Blackrock’s iShares lineup offers Canadian both a hedged and unhedged version of its gold bullion ETF.

CGL has a very long performance track record and is a massive gold ETF by assets under management. It comes with a relatively high MER for a gold bullion ETF. The ETF holds underlying gold bullion and aims to return physical gold’s price performance less any fees.

With a long track record and large asset size, CGL is a good option to consider for adding exposure to gold bullion to your accounts.

6. BMO Equal Weight Global Gold Index ETF

ZGD is a global gold miner stock ETF offered by BMO on the ETF shelf here in Canada. It is a passive strategy that follows the Solactive Equal Weight Global Gold Index.

Since the ETF invests in gold mining companies, the risk profile of this fund is higher than most gold bullion ETFs. This is because mining stocks typically amplify both your gains and losses when there is a movement in the price of gold.

ZGD comes with a long performance track record and is a very small ETF by assets under management. It comes with a relatively high MER for a gold ETF. 

If you are looking for higher-risk exposure to gold prices, a gold miner ETF like BMO’s ZGD may be a great option to consider.

7. BMO Junior Gold Index ETF

One of the highest risk options when investing in gold is to purchase shares in junior mining companies. These companies are usually less established and provide investors with much higher volatility that is usually tied to the price of gold.

ZJG tracks the Dow Jones North America Select Junior Gold Index.

BMO’s ZJG ETF has a long performance track record and is a small ETF by assets under management. It comes with a relatively high MER for a gold ETF. The fund invests in junior gold miners in North America.

If you are looking for a high-risk, high-reward approach to investing in gold, ZJG is a great ETF to consider for your portfolio.

8. Harvest Global Gold Giants Index ETF

Harvest Portfolios Group is another investment firm that offers a gold ETF in Canada. The strategy is passively managed and invests in large global gold miner stocks.

HGGG passively tracks the Solactive Global Gold Giants Index TR.

The ETF comes with a short performance track record and is a tiny ETF by assets under management. Due to its small size, HGGG is at risk of closing down early in the future if it isn’t able to attract more capital from investors.

HGGG comes with a relatively higher MER than gold bullion ETFs in Canada. 

If you are looking to invest in mature global gold companies, this ETF is a great strategy to keep an eye on going forward, especially if it attracts more capital. 

9. CI Gold+ Giants Covered Call ETF

Although gold does not pay interest for holding it, a covered call strategy added to a gold fund can provide a steady stream of high income. CI’s CGXF ETF invests in North American gold miner stocks while also implementing covered calls for income.

The ETF comes with a long performance track record and is a fairly large ETF by assets under management. It comes with a high MER for a gold ETF, but it is actively managed over time. 

CGXF pays distributions to investors on a quarterly basis and has an annualized distribution yield of over 9%. Although the yield is incredibly high, the covered call strategy limits upside potential over time.

If you are looking to add gold exposure to your portfolio while also valuing a high-income stream, CGXF is a great ETF to consider.

10. Horizons Gold Producer Equity Covered Call ETF

Horizons offers a covered call gold ETF in Canada designed to provide investors with a high-income stream. GLCC invests in North American gold miner stocks.

The ETF comes with a long performance track record and is a fairly large ETF by assets under management. It comes with the highest MER on our list of gold ETFs available in Canada. 

GLCC pays distributions on a monthly basis and has an astronomical yield of just under 10%. The covered call strategy does limit the growth potential of the fund over time.

If you are looking for a high monthly income stream from your gold investment, GLCC is a great choice.

Are Gold ETFs a Good Idea?

Gold ETFs are a great idea if you are looking to invest a sizable amount of money into the precious metal. The ETFs can save investors a lot of headaches with regard to storage costs and liquidity. You also don’t have to worry about verifying the purity of your gold.

From the image below, there is a big discrepancy between pure gold (23 Karat and above) and lower purity bars (22 Karat and below), but to the untrained eye, it might look the same.

How to Choose a Gold ETF

Choosing a great gold ETF requires considering a few elements, some of which apply to most other ETFs in general as well. 

1. Make sure that the ETF is backed by physical gold, which is especially important if severe global catastrophes occur.
2. Determine whether the ETF invests in gold bullion or gold mining companies
3. Choose a gold ETF with a long performance track record and compare its performance to the performance of spot gold.
4. Look for an ETF with a large AUM and good liquidity. Trading into a wide bid-ask spread will likely impact your returns over time.
5. Find an ETF that is offered at a low MER, especially if it is passively managed (most gold ETFs are).
6. Research the ETF’s underlying benchmark as well as other key pieces of information like potential gold storage costs.

Which is Better, a Gold Fund or a Gold ETF?

Mutual funds and ETFs both have their pros and cons. On average, ETFs do have lower fees than mutual funds, which should help to boost returns relatively over time.

What is the Safest Gold ETF in Canada?

The safest gold ETFs in Canada are those investing directly in gold bullion. Gold ETFs targeting miners or junior miners tend to be more volatile than movements in the price of gold.

How to Buy the Best Gold ETFs in Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

To learn more, check out my full breakdown of the best trading platforms in Canada.

Conclusion

Investing in gold does not have to be difficult or require stockpiling a mountain of gold bars in a safe box. ETFs allow for an easy and liquid way to add gold exposure throughout your investment accounts. Here’s the ultimate list of the best ETFs in Canada.

Especially if you have room in accounts such as RRSPs or TFSAs, you could see significant tax benefits from investing in a gold ETF as opposed to buying physical gold.

The ETF shelf in Canada for gold strategies is diverse and comes with numerous great options.

Buying gold ETFs is just one way to access gold – make sure you are aware of all of your other options when it comes to investing in precious metal. You can also buy gold stocks individually instead if you like to be more hands-on in your investing.