VanEck Merk Gold Trust
The OUNZ Gold ETF enables investors to closely track the price of gold using physical gold bars and coins stored in secure London vaults. Unlike many other gold funds, OUNZ offers transparency in pricing with its Net Asset Value (NAV) determined by the London PM fix, minimizing apparent premiums or discounts.
While the ability to redeem shares for 1 ounce gold coins is available, practicality may be limited by higher minimum fees. Tax implications are deferred until the eventual sale of acquired coins or bars, with long-term gains taxed at a 28% rate. Overall, OUNZ provides a balanced approach for investors seeking exposure to the gold market through the liquidity and structure of an ETF.
$26.22
Change: ($-0.13) -0.50%Expense Ratio: 0.25%
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Expense Ratios vs Storage Fees
Expense ratios in ETFs are the annual costs required to manage and operate the fund, including management fees, administrative expenses, and other costs. While these fees might seem minor, they can accumulate over time, significantly impacting the fund's net returns.
Physical bullion storage fees are fixed costs associated with securely storing the gold. Unlike the variable expense ratios of ETFs, these fees provide predictability. Comparing these fixed storage fees with the cumulative effect of expense ratios can help investors determine the most cost-effective strategy for their gold investments.
Expense Ratio for OUNZ
| Years | Net Investment | ETF Fees 0.25% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $25.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $66.44 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $126.75 | $60.90 | |
| 4 | $30,000 | $208.64 | $100.29 | |
| 5 | $35,000 | $315.15 | $151.56 | |
| 6 | $40,000 | $449.64 | $216.33 | |
| 7 | $45,000 | $614.86 | $296.43 | |
| 8 | $50,000 | $817.97 | $393.90 | |
| 9 | $55,000 | $1,060.59 | $510.97 | |
| 10 | $60,000 | $1,348.86 | $650.14 | |
| 20 | $110,000 | $8,349.77 | $4,043.72 |
When evaluating the OUNZ Gold ETF against OneGold, it's essential to factor in the impact of fees and how they affect your investment over time. This comparison assumes an 8% annual return, which aligns with gold's historical average return since 1971.
Comparsion of Fees
ETF Fees: The OUNZ Gold ETF has an average fee of approximately 0.25%. Over a span of twenty years, this would accumulate to a total fee expense of $8,349.77.
OneGold Storage Fees: On the other hand, OneGold charges a storage fee of 0.12% of the gold's value. After twenty years, the total storage fees with OneGold would amount to $4,043.72. This results in a net saving of $4,306.05 compared to the OUNZ ETF.
Understanding ETF Risks, Taxes, and Hidden Fees
One significant risk associated with ETFs is the possibility of fund closures, which can force investors to liquidate their positions at a loss. This highlights the importance of thoroughly researching the stability and track record of the ETF before investing. By evaluating the management team's expertise and the fund's historical performance, investors can gain insights into the ETF's potential longevity and mitigate the risks associated with unexpected closures.
In addition to the risk of closure, investors must consider the tax implications and hidden fees associated with ETFs. Different ETFs can have varying tax treatments, which can impact overall returns. Fees charged by trading platforms for buying and selling ETFs can also add up over time, reducing investment capital. Being aware of these costs and factoring them into your investment strategy is essential for making informed decisions and optimizing returns.
Advantages of Holding Real Gold for Liquidity
The liquidity offered by holding physical gold is unparalleled, allowing investors to quickly convert their assets into cash or other tangible items as needed. This is particularly advantageous during periods of economic instability when gold tends to maintain 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 sense of security.
Furthermore, while some ETFs allow for the redemption of shares for physical gold, the process can be cumbersome and involve stringent conditions. Investors should carefully review these terms to ensure they align with their investment goals. Choosing a transparent vaulted gold option like OneGold provides a straightforward method of accessing your gold holdings, avoiding the complexities and uncertainties associated with ETF redemptions. This can be particularly appealing to those who prioritize liquidity and simplicity in their investments.