GraniteShares Gold Trust
The BAR Gold ETF aims to track the spot price of gold by investing directly in physical gold bars stored in secure London vaults, with custody provided by ICBC Standard Bank. The fund operates as a grantor trust, ensuring that the gold cannot be lent out, thereby protecting investors. The fund’s design ensures that its performance is similar to other established gold ETFs like GLD and IAU, providing investors with a straightforward way to invest in gold.
While BAR offers a transparent and secure method for gold investment, investors should be mindful of the associated costs and tax implications. Like all physical gold funds, BAR is classified as a collectible, meaning long-term gains are subject to a higher tax rate.
$26.82
Change: ($-0.13) -0.49%Expense Ratio: 0.17%
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Expense Ratios vs Storage Fees
Gold ETFs come with expense ratios, which are annual fees charged by the fund to cover management, administrative, and operational costs. These fees, expressed as a percentage of your investment, can erode returns over time, particularly for long-term holdings.
In contrast, investing in physical bullion involves storage fees. These fees are associated with the safe storage of gold, ensuring its security and integrity. Storage fees are usually fixed, offering a stable cost structure compared to the fluctuating expense ratios of ETFs. Evaluating these costs is essential for making an informed decision about whether to invest in gold ETFs or physical bullion.
Expense Ratio for BAR
| Years | Net Investment | ETF Fees 0.17% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $17.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $45.19 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $86.24 | $60.90 | |
| 4 | $30,000 | $142.00 | $100.29 | |
| 5 | $35,000 | $214.55 | $151.56 | |
| 6 | $40,000 | $306.19 | $216.33 | |
| 7 | $45,000 | $419.50 | $296.43 | |
| 8 | $50,000 | $557.33 | $393.90 | |
| 9 | $55,000 | $722.84 | $510.97 | |
| 10 | $60,000 | $919.57 | $650.14 | |
| 20 | $110,000 | $5,709.00 | $4,043.72 |
When evaluating the BAR Gold ETF against OneGold, examining the fees and net returns over an extended period is important. For this analysis, we’ll consider a 20-year horizon with an anticipated return rate of 8% annually, which reflects gold's historical performance since 1971.
Comparsion of Fees
ETF Fees: The BAR Gold ETF charges an average annual fee of 0.17%, leading to significant cumulative costs. Over a 20-year span, the total fees accrued to the ETF would amount to $5,709.00.
OneGold Storage Fees: In contrast, OneGold has lower storage costs at 0.12% of the gold’s value. Over the same 20-year period, the storage fees for OneGold would total $4,043.72. This results in a savings of $1,665.28 compared to the BAR Gold ETF.
Understanding ETF Risks, Taxes, and Hidden Fees
ETFs come with the inherent risk of potential closure, which can force investors to liquidate their holdings at a loss if market conditions are unfavorable. This makes it essential to thoroughly investigate the stability and history of the ETF before investing. Examining the fund’s management and performance over time can provide insights into its reliability and help mitigate the risk of unexpected closures.
Additionally, the tax implications and hidden fees associated with ETFs can significantly impact your investment returns. Different ETFs have varying tax treatments, which can affect the profitability of your investments. Trading platforms may also charge fees for buying and selling ETFs, which can accumulate over time and reduce your overall returns. Being aware of these costs and planning for them in your investment strategy can help you make more informed and profitable decisions.
Advantages of Holding Real Gold for Liquidity
The liquidity of holding physical gold is a key advantage, as it allows investors to quickly convert their assets into cash or other tangible items when needed. This is especially beneficial during times of economic instability when gold tends to hold its value. Unlike some ETFs that do not provide direct ownership of the underlying gold, physical gold gives investors immediate control over their assets, offering a sense of security in volatile markets.
Moreover, while some ETFs offer the option to redeem shares for physical gold, the process can be complicated and involve strict requirements. Investors should thoroughly review the terms of such ETFs to ensure they align with their investment objectives. Opting for a vaulted gold option like OneGold provides a transparent and straightforward way to access your gold holdings, avoiding the complexities and uncertainties associated with ETF redemptions. This can be particularly appealing to investors who prioritize liquidity and simplicity in their investments.