Top Canadian Gold ETFs Poised to Outshine the Sprott Physical Gold Trust

Gold Investment Strategies: Experts Favor Canadian ETFs Over Traditional Funds

Toronto,ON – As Gold prices surge to unprecedented levels fueled by central bank demand,particularly from China,and growing anxieties surrounding the U.S. dollar’s stability, investors are increasingly turning to the precious metal as a safe haven. Though, financial experts are now advising caution against traditional investment vehicles like closed-end funds, highlighting more efficient alternatives available to Canadian investors.

Recent market activity demonstrates a significant shift in investor sentiment, with Gold reaching new All-Time Highs. This is attributed to factors including geopolitical instability and concerns over escalating government debt in Western nations. Despite this bullish outlook, many financial professionals suggest that the method of Gold investment is just as crucial as the timing.

The Case Against Closed-End Funds

Analysts are expressing concerns regarding the continued popularity of closed-end funds (CEFs) for gold exposure. These funds are often criticized for being overpriced,lacking clarity,and eroding investor value through excessive distribution fees. The Sprott Physical Gold Trust (PHYS), despite managing over $15 billion in assets, is facing scrutiny due to its 0.39% expense ratio and potential for trading at a discount to its net asset value-currently around -2.63% as of late 2025.

“While Sprott offers valuable products in other areas, PHYS doesn’t represent the most efficient way to gain Gold exposure,” says a leading financial strategist. “Investors are better served by exploring lower-cost, more obvious options.”

Canadian ETFs: A Superior Choice

For Canadian investors, two Exchange Traded Funds (ETFs) are gaining prominence as compelling alternatives: The BMO Gold Bullion ETF (ZGLD) and the Purpose Gold Bullion Fund (KILO). Both funds prioritize direct physical Gold holdings, minimizing risks associated with derivatives and counterparty exposure.

BMO Gold bullion ETF (ZGLD)

Launched in March 2024, the BMO Gold Bullion ETF (TSX: ZGLD) has rapidly amassed over $1 billion in assets under management. It directly holds physical Gold bullion in BMO vaults, avoiding the complexities of futures contracts. Every Gold bar held by the fund adheres to industry standards, weighing 400 troy ounces.

Did you Know? A troy ounce is approximately 31.1 grams, slightly heavier than a standard ounce (28.3 grams).

ZGLD is denominated in Canadian dollars but remains unhedged against fluctuations in the CAD/USD exchange rate. BMO also offers hedged (ZGLH) and U.S. dollar-denominated (ZGLD.U) versions for investors seeking to manage currency risk. With an expense ratio of only 0.23%, ZGLD presents a cost-effective solution, saving investors approximately $16 annually per $10,000 investment compared to PHYS.

Purpose Gold Bullion Fund (KILO)

The Purpose Gold Bullion Fund (TSX: KILO), established in October 2018, currently manages over $1.1 billion in assets.It mirrors ZGLD by holding physical Gold bullion, but differentiates itself by utilizing one-kilogram Gold bars stored at the Royal Canadian Mint, renowned for its rigorous security measures.

Pro Tip: Investors holding one kilogram or more of KILO can request physical delivery of their Gold, a unique feature shared only with the Royal Canadian Mint – Canadian Gold Reserves (TSX:XGR), an Exchange-Traded Receipt.

KILO’s management expense ratio (MER) stands at 0.28%, still significantly lower than many closed-end funds. Purpose Investments also offers unhedged (KILO.B) and U.S. dollar-denominated (KILO.U) units to cater to diverse investor preferences.

Fund	Expense Ratio	Physical gold Holding	Storage Location	Unique Feature
BMO Gold Bullion ETF (ZGLD)	0.23%	400 troy ounce bars	BMO Vaults	CAD-hedged & USD options available
Purpose Gold Bullion Fund (KILO)	0.28%	1 kilogram bars	Royal Canadian Mint	Physical Gold delivery option
Sprott Physical gold Trust (PHYS)	0.39%	Physical Gold Bullion	Various	High AUM, but higher fees

the increasing appeal of Gold as a portfolio diversifier is undeniable. By carefully selecting investment vehicles, Canadian investors can maximize their returns and mitigate potential risks.

Understanding Gold as an Investment

Gold has long been considered a store of value, particularly during times of economic uncertainty. This is due to its intrinsic scarcity and its historical role as a hedge against inflation and currency devaluation. Though, investing in Gold isn’t without its complexities.

Factors influencing gold prices include global economic conditions, geopolitical events, interest rates, and currency fluctuations.Investors should conduct thorough research and consider their risk tolerance before allocating capital to Gold.

Frequently Asked Questions About Gold Investment

• What is the best way to invest in Gold? Investing in Gold ETFs, such as ZGLD and KILO, is often considered a cost-effective and convenient option for Canadian investors.
• Are closed-end Gold funds a good investment? Experts generally advise against closed-end Gold funds due to their higher fees and potential for trading at a discount.
• What are the benefits of physically-backed gold ETFs? Physically-backed etfs directly hold Gold bullion, minimizing counterparty risk and providing greater transparency.
• How does currency exchange rate impact Gold investments? For unhedged Gold ETFs, fluctuations in the CAD/USD exchange rate can affect returns.
• Can I physically redeem my Gold holdings from KILO? Yes, investors holding one kilogram or more of KILO can request physical delivery of their Gold.
• what is a troy ounce? A troy ounce is a unit of measurement used for precious metals, slightly heavier than a standard ounce.
• what is the difference between ZGLD and KILO? ZGLD holds 400 troy ounce bars in BMO vaults, while KILO holds one-kilogram bars at the royal Canadian Mint.

What are your thoughts on the future of Gold as an investment? Share your comments below and join the conversation!

What are the primary drawbacks of the Sprott Physical Gold Trust (SPU) compared to other Canadian Gold ETFs?

While the Sprott Physical Gold Trust (SPU) remains a popular choice for gold exposure, a new wave of canadian Gold ETFs are demonstrating potential for superior returns and strategic advantages. This article dives into the top contenders, analyzing their performance, fees, and underlying strategies to help investors make informed decisions. we’ll focus on ETFs listed on the Toronto Stock Exchange (TSX) for Canadian investors.

Understanding the Landscape: Gold ETFs & SPU

Before comparing alternatives, it’s crucial to understand what the Sprott Physical Gold Trust offers. SPU holds physical gold bullion, aiming to reflect the spot price of gold. Its appeal lies in direct gold ownership without storage concerns. Though, SPU isn’t without drawbacks:

* Higher Management Fees: Compared to some other ETFs, SPU’s MER (Management Expense Ratio) can be relatively high.

* Premium/Discount to NAV: The trust structure can sometimes trade at a premium or discount to its Net Asset Value (NAV).

* Liquidity Concerns: While generally liquid, large redemptions can occasionally impact the share price.

These factors are driving investors to explore alternative Canadian gold ETFs.

Top canadian Gold ETF Contenders

Here’s a breakdown of leading canadian Gold ETFs challenging SPU’s dominance,categorized by their investment approach:

1. iShares Gold Bullion ETF (XGB)

XGB is a widely held, low-cost option tracking the spot price of gold. It’s physically backed, similar to SPU, but generally boasts a lower MER.

* MER: Typically around 0.10% – 0.15%

* Liquidity: Highly liquid with substantial trading volume on the TSX.

* Tracking Error: Generally exhibits a low tracking error, closely mirroring gold’s price movements.

* Suitability: Ideal for investors seeking simple, cost-effective gold exposure.

2. BMO Gold Bullion ETF (ZGL)

ZGL offers another low-cost, physically backed gold bullion investment.It’s a strong competitor to XGB, often with comparable performance and liquidity.

* MER: Around 0.10% – 0.15%

* Trading Volume: consistently high trading volume on the TSX.

* Tax Efficiency: Considered tax-efficient for Canadian investors holding in non-registered accounts.

* Suitability: A solid choice for long-term gold investors prioritizing low fees.

3. Purpose Gold Bullion ETF (PGB)

PGB distinguishes itself with a unique feature: it’s fully backed by unencumbered gold bullion.This means the gold isn’t subject to lending or other activities that could perhaps impact ownership.

* MER: Around 0.15% – 0.20%

* Unencumbered Gold: Provides an extra layer of security for some investors.

* Transparency: offers greater transparency regarding gold holdings.

* Suitability: Appealing to investors prioritizing absolute gold ownership and transparency.

4.VanEck Gold Miners ETF (GDX) & VanEck Junior Gold Miners ETF (JDG)

These ETFs offer a different approach – investing in the companies involved in gold mining, rather than the metal itself.

* GDX (Gold Miners): Focuses on established, large-cap gold mining companies. Offers potential for higher returns but also carries company-specific risk.

* JDG (junior gold Miners): Invests in smaller, more speculative junior gold mining companies. Higher risk, higher potential reward.

* MER (GDX): Around 0.50% – 0.55%

* MER (JDG): Around 0.55% – 0.60%

* suitability: Suitable for investors with a higher risk tolerance and a belief in the long-term prospects of the gold mining industry.

Fee Comparison: A Critical Factor

The difference in MERs can significantly impact long-term returns. Let’s illustrate with an example:

Assume a $10,000 investment with an average annual gold return of 8%.

* SPU (MER 0.40%): annual fee of $40. Net return: 7.60%

* XGB/ZGL (MER 0.12%): Annual fee of $12. Net return: 7.88%

Over 10 years, this seemingly small difference can translate into hundreds of dollars in saved fees and increased returns.

Performance Analysis (2023-2024)

While past performance isn’t indicative of future results, examining recent performance provides valuable insights. (Data as of October 26, 2025 – Note: actual performance data would be inserted here based on market conditions).

ETF

1-Year return

3-Year Return (Annualized)

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