Silver and Gold are On the Rise. Should Precious Metals ETF Investors Pick GDX or SIL?

Global X - Silver Miners ETF (NYSEMKT:SIL) and VanEck Gold Miners ETF (NYSEMKT:GDX) both provide targeted access to metals miners, with SIL focused on silver producers and GDX tracking global gold mining stocks. Investors comparing these funds may weigh cost, diversification, and historical risk-adjusted returns, especially given their strong recent performance and sector-specific characteristics.

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.

GDX comes in more affordable with a 0.51% expense ratio, undercutting SIL’s 0.65%, but also pays a lower dividend yield at 0.5% versus SIL’s 1% -- a modest difference for income-focused investors.

Performance & risk comparison

What's inside

GDX delivers exposure to the gold mining sector, holding 56 companies with a strong tilt toward large-cap names. Its largest positions include Agnico Eagle Mines Ltd (NYSE:AEM), Newmont Corp (NYSE:NEM), and Barrick Mining Corp (NYSE:B), and it has operated for nearly 20 years. With 100% of assets in basic materials, GDX offers a diversified basket of global gold miners.

SIL, meanwhile, is a pure play on silver miners, also allocating 100% to basic materials but with a narrower focus. Its top holdings -- Wheaton Precious (NYSE:WPM), Pan American Silver Corp (NYSE:PAAS), and Coeur Mining Inc (NYSE:CDE)-- make up a sizable share of the portfolio, reflecting a more concentrated approach. SIL holds 39 stocks and may appeal to those seeking direct silver exposure rather than broader precious metals diversification.

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What this means for investors

The VanEck Gold Miners ETF stands out for its lower cost, larger size, and broader portfolio, while the Global X - Silver Miners ETF offers pure silver miner exposure with a higher yield. Over the past year, both of these ETFs have trounced the return of the S&P 500.

Precious metals investing can provide many advantages, including a hedge against inflation and portfolio diversification. Silver prices have recently hit an all-time high and gold has been steadily rising as investors take a breather on the artificial intelligence narrative that has boosted the market for the past few years.

Silver tends to be more volatile than gold because of its use as an industrial metal in addition to its allure as a store of value. Gold also has industrial uses, but is more commonly held as a store of value, and it becomes increasingly important during times of economic or political turbulence or as an inflation hedge.

It's also important to note that both of these ETFs are focused on mining companies, which is just one way to invest in precious metals. Mining companies carry risks specific to running the business, like the costs of developing a mine or other financial issues, that can differentiate their stock performances from the precious metals they mine.

Glossary

ETF (Exchange-Traded Fund): A fund traded on stock exchanges that holds a basket of assets, like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Assets under management (AUM): The total market value of all assets managed by a fund or investment company.
Diversification: Spreading investments across various assets to reduce risk.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of an investment's volatility compared to the overall market, often the S&P 500.
Max drawdown: The largest percentage drop from a fund’s peak value to its lowest point over a period.
Large-cap: Companies with a large market capitalization, typically over $10 billion.
Sector: A group of companies operating in the same segment of the economy, such as basic materials.
Pure-play: A company or fund focused exclusively on a single industry or sector.
Risk-adjusted returns: Investment returns evaluated in relation to the amount of risk taken.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.