GLD Offers Smoother Ride Than SLV Over Five Years

The iShares Silver Trust (NYSEMKT:SLV) and SPDR Gold Shares (NYSEMKT:GLD) stand apart on recent performance, volatility, and cost—with SLV surging over the past year but GLD offering a smoother, lower-risk ride and a marginally lower fee.

Both SLV and GLD are designed for investors looking to track the price of physical precious metals—silver and gold, respectively—without owning the metals directly. While each is a go-to choice for commodity exposure, this comparison highlights how their cost structures, risk profiles, and historical returns set them apart for different portfolio needs.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

GLD is marginally more affordable on fees than SLV, with a 0.40% expense ratio versus SLV's 0.50%. Yield is not a factor in this comparison as neither fund distributes income.

Performance & risk comparison

What's inside

GLD is a physically backed gold fund from SPDR, with over $174 billion in assets under management and a track record spanning more than 21 years. It provides direct exposure to gold bullion, classified 100% under Basic Materials. GLD does not hold a basket of stocks; instead, it mirrors the price of gold itself, with no sector or company tilts, and no notable quirks or dividend distributions.

SLV, by contrast, is structured to reflect the price of silver and is classified as 100% Real Estate, though in practice it is a pure play on silver bullion. Like GLD, SLV does not hold equities or generate yield. Both funds exist purely to track their respective metals, so investors are exposed to the unique supply-demand and volatility profiles of silver or gold rather than any underlying company performance.

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What this means for investors

Both GLD and SLV reflect the historical volatility found in gold and silver, respectively. Of the two, gold is the less plentiful metal and the one most often used for wealth preservation, though jewelry is another popular use of the metal.

In contrast, silver is more plentiful, and thus, less valuable. While some use it to preserve wealth, silver also has numerous industrial applications, meaning it more often gets consumed. It is also lower-priced, which can make it more susceptible to speculation.

Thus, as falling interest rates and an increasingly tense geopolitical environment drove investors to precious metals, both GLD and SLV moved higher. However, that heightened interest led to more volatility, particularly in SLV. This culminated in a rally in silver, particularly in January.

Moreover, that volatility turned the other direction on January 30, leading SLV to fall by over 30% in one day. In contrast, GLD dropped by 10% on the same day, again confirming the higher volatility in SLV.

Investors should keep that stock price behavior in mind when investing in either precious metal ETF. SLV may be more suitable (and possibly more profitable) for more risk-tolerant investors. Nonetheless, that also means that more risk-averse investors should probably gravitate toward GLD.

Will Healy has positions in SPDR Gold Shares. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.