Global X Gold Explorers ETF
The GOEX Gold ETF tracks a market-cap-weighted index comprising global stocks in the gold mining industry, focusing on companies involved in exploration and development stages. Originally designed to provide exposure solely to early-stage gold production companies, GOEX underwent a significant evolution in May 2017. The ETF transitioned from tracking the Solactive Global Gold Explorers Total Return Index to the Solactive Global Gold Explorers & Developers Total Return Index. This update broadened the fund's scope by including companies engaged not only in exploration but also in development activities within the gold mining sector.
Under the new index methodology, companies are selected based on market capitalization rather than liquidity, aiming to reduce concentration risk and enhance diversification. The index undergoes semiannual adjustments, beginning each April, with specific caps in place to manage exposure. Companies producing more than 300,000 ounces of gold in at least two of the last three years are capped at 4%, while others are capped at 7%. Additionally, the total weight of the seven largest firms is limited to 45%, further ensuring balanced representation within the index.
$31.65
Change: ($-0.03) -0.09%Expense Ratio: 0.65%
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Expense Ratios vs Storage Fees
Investing in gold ETFs involves understanding the expense ratio, an annual fee that covers the fund's management and operational costs. These fees, while often small, can compound over time and affect the overall performance of your investment.
Physical bullion requires storage fees, which are costs associated with keeping your gold in a secure environment. These fees are generally fixed, providing a predictable cost structure compared to the variable expense ratios of ETFs. When deciding between gold ETFs and physical bullion, it's important to consider the cumulative effect of these fees on your investment returns.
Expense Ratio for GOEX
| Years | Net Investment | ETF Fees 0.65% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $65.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $172.48 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $328.57 | $60.90 | |
| 4 | $30,000 | $540.11 | $100.29 | |
| 5 | $35,000 | $814.69 | $151.56 | |
| 6 | $40,000 | $1,160.74 | $216.33 | |
| 7 | $45,000 | $1,587.62 | $296.43 | |
| 8 | $50,000 | $2,105.70 | $393.90 | |
| 9 | $55,000 | $2,726.47 | $510.97 | |
| 10 | $60,000 | $3,462.64 | $650.14 | |
| 20 | $110,000 | $21,126.75 | $4,043.72 |
When evaluating the GOEX Gold ETF against OneGold, it's crucial to assess the impact of fees and investment returns over the long term. We'll examine these financial aspects over a twenty-year horizon, with an anticipated return of 8% annually, reflecting gold's historical performance.
Comparsion of Fees
ETF Fees: The GOEX Gold ETF has an average fee of approximately 0.65%. Over a span of 20 years, the total fees for the ETF would accumulate to $21,126.75.
OneGold Storage Fees: In contrast, OneGold charges a storage fee of 0.12% of the gold's value. After 20 years, the storage fees would total $4,043.72, which results in a net savings of $17,083.03 compared to the GOEX ETF.
Understanding ETF Risks, Taxes, and Hidden Fees
It is crucial to understand that different ETFs are subject to various tax rates, which can affect your total returns. Depending on the ETF’s structure and underlying assets, tax implications can differ, influencing your investment outcomes. Additionally, some trading platforms impose fees for purchasing ETFs, which can erode your investment capital if not properly accounted for.
The risk of ETFs shutting down is another factor investors should be aware of. In such scenarios, investors might have to liquidate their holdings at unfavorable times, potentially leading to losses. This emphasizes the importance of thoroughly researching the stability and track record of the ETFs in which you invest. Conducting research into the management and historical performance of an ETF can help mitigate these risks.
Advantages of Holding Real Gold for Liquidity
Real gold provides unmatched liquidity, enabling investors to quickly convert their assets into currency or other valuable items. Unlike some ETFs that do not offer direct ownership of the underlying gold, holding physical gold ensures tangible ownership and immediate access to your assets. This can be particularly beneficial during periods of economic uncertainty or market volatility, as gold tends to maintain its value.
While some ETFs offer the option to redeem shares for physical gold, this process often comes with strict requirements and hidden terms. Investors should carefully examine these conditions to ensure they align with their objectives. Choosing a transparent vaulted gold option, such as OneGold, provides a straightforward approach to accessing your assets, avoiding the complexities often associated with certain ETFs.