How to Get the Best Returns on Gold Investing

GLD and IAU performance is virtually identical. Everything about these is virtually identical outside of the fee level. Because IAU has the lower expense ratio, over the long term, that's going to come out a few basis points ahead. Between those two, there's probably a slight advantage there.

If you look at GDX over the last 10 years, it's about 50% greater return. If you look at the physical gold ETFs, they've made about 14% a year over the last 10 years. GDX is around 20 to 21% a year. Most of that obviously has come in the last year or so.

Again, it gets back to this point of risk-adjusted returns. With the gold miners, you would have gotten a 50% greater return, but you're also taking about 150% more risk to get it. So, is that worth it? It depends on what you're looking for. Some people just prefer absolute returns instead of risk-adjusted returns, so they're okay with that. It really depends on what you're looking for.

This is a case where I would probably give it a split decision between all three of them because I think as far as physical gold and gold miners, you can really use them both together. You can get physical gold for kind of the hedge, and you can get GDX as sort of the gold-correlated outperformance potential, I guess you could say. That would potentially give you a little more juice in your returns. Because you're investing in stocks versus gold, there's really a big difference between what you're investing in.

I guess I'll call it a split between all three of them just because I think you can really use physical gold and gold miner stocks together in your portfolio.