ProShares UltraShort Gold
The ProShares UltraShort Gold (GLL) ETF offers investors a unique opportunity to profit from declines in the price of gold by providing two times the inverse daily performance of the Bloomberg Gold Subindex. This leveraged strategy is designed for short-term trading rather than long-term holding, as it seeks to capitalize on daily price movements. GLL achieves its inverse exposure through financial derivatives, making it a sophisticated tool for investors looking to hedge against falling gold prices or speculate on downward trends. The fund’s performance is reset daily, which can lead to compounding effects over multiple trading sessions.
Investors should be aware of the risks associated with GLL, as the leveraged and inverse nature of the ETF can result in significant losses if the price of gold rises. Additionally, the fund’s high expense ratio reflects the costs associated with its complex strategy.
$16.36
Change: ($0.11) 0.68%Expense Ratio: 0.95%
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Expense Ratios vs Storage Fees
Expense ratios for ETFs encompass the annual costs of managing the fund, covering management fees, administrative expenses, and other operational charges. Although these fees may seem minor, they can add up over time and significantly reduce an investor's returns.
Storage fees for physical bullion are fixed costs associated with securely storing the gold. These fees offer predictability compared to the variable expense ratios of ETFs. Evaluating the long-term impact of these expense ratios against the fixed storage fees can help investors make more informed decisions about their gold investments.
Expense Ratio for GLL
| Years | Net Investment | ETF Fees 0.95% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $95.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $251.80 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $479.16 | $60.90 | |
| 4 | $30,000 | $786.81 | $100.29 | |
| 5 | $35,000 | $1,185.57 | $151.56 | |
| 6 | $40,000 | $1,687.40 | $216.33 | |
| 7 | $45,000 | $2,305.58 | $296.43 | |
| 8 | $50,000 | $3,054.77 | $393.90 | |
| 9 | $55,000 | $3,951.20 | $510.97 | |
| 10 | $60,000 | $5,012.83 | $650.14 | |
| 20 | $110,000 | $30,259.23 | $4,043.72 |
For investors comparing the GLL Gold ETF to OneGold, it's essential to evaluate the associated fees and the net investment over time. This analysis will examine the cost implications over a twenty-year period, assuming an 8% expected return, aligning with gold's approximate annual rate of return since 1971.
Comparsion of Fees
ETF Fees: The GLL Gold ETF has an average fee of about 0.95%, leading to significant cumulative costs over time. By year 20, the total fees paid to the ETF would amount to $30,259.23.
OneGold Storage Fees: In contrast, OneGold imposes lower storage fees of 0.12% of the gold's value. By year 20, the total storage fees paid to OneGold would be $4,043.72, leading to a net savings of $26,215.51 compared to GLL.
Understanding ETF Risks, Taxes, and Hidden Fees
ETF investors must recognize the risk of fund closures, which can force liquidation of assets at unfavorable times, potentially leading to financial losses. Thoroughly researching the stability and management of an ETF before investing is crucial. Evaluating the fund’s historical performance and the management team’s expertise can help mitigate these risks and ensure a more secure investment.
In addition to the risk of closure, tax implications and hidden fees are vital considerations when investing in ETFs. Different ETFs have varying tax treatments, which can significantly impact overall returns. Fees imposed by trading platforms for buying and selling ETFs can also accumulate over time, reducing investment capital. Understanding these costs and incorporating them into your investment strategy is essential for making informed decisions and maximizing returns.
Advantages of Holding Real Gold for Liquidity
Holding physical gold offers exceptional liquidity, allowing investors to quickly convert their assets into cash or other tangible items when necessary. This is particularly advantageous during periods of economic instability, as gold tends to retain its value. Unlike some ETFs that do not provide direct ownership of the underlying gold, holding physical gold ensures immediate access and control over your assets, providing a heightened sense of security.
While some ETFs allow for the redemption of shares for physical gold, the process can be complex and involve strict conditions. Investors should thoroughly review these terms to ensure they align with their investment goals. Opting for a transparent vaulted gold option like OneGold offers a straightforward method of accessing gold holdings, bypassing the complexities and uncertainties associated with ETF redemptions. This approach can be especially appealing to those who prioritize liquidity and simplicity in their investments.