With the advent of Canadian exchange-traded funds (ETFs), passive investing in Canada has become simple. These days you don't need to learn how to buy individual stocks. You can instead deploy a more passive approach with ETFs.

ETFs are also an excellent way to gain exposure to particular industries without having to pick individual stocks.

A piece of investment advice we often give (an investment strategy use at your own discretion of course) is that every portfolio should have some sort of exposure to gold. Gold has long been considered a defensive investment and helps insulate your portfolio against a variety of market conditions, potential bear markets, or market volatility.

There are some investors who buy bonds, or even Canadian bond ETFs for stability, which isn't a bad decision either. But in a rocky market in terms of interest rates, bonds will be more volatile.

With that being said, stocks that rely on a commodity, like oil, gold, or even other precious metals like cobalt, pose more risk. And our stock exchange here in Canada, the TSX, is loaded with these types of stocks.

The economic downfall from COVID-19 has presented investors with a huge opportunity with gold stocks

Prior to the COVID-19 pandemic, gold had fallen out of favor, trading in a 5+ year bear market with prices hovering anywhere from $1000-1200 USD an ounce. Now? The pandemic has caused a surge in the popularity of gold, and prices now sit in the $1700-1900 USD range. This is ultimately a tailwind for gold producers.

So where should one invest? Investing in individual gold producers can be difficult, risky, and not suggested for those with a low risk tolerance. Yet purchasing physical gold has been somewhat underwhelming in terms of returns for some time now. There are a plethora of small, mid, and large-sized gold stocks and it’s not easy picking the winners.

As we’ve seen in the past, investors who buy the wrong gold producer or explorer can lead to big losses. Gold companies that are set up for long-term success are a rarity, and most investors end up losing money when they get into precious metals or the companies that mine them.

Investing in a Canadian gold ETF is a great way to increase your exposure to the precious metal while minimizing your risk.

Ultimately, the performance of these ETFs will be dependent on the price of gold, but for investors looking for lower risk, an ETF inherently won’t be as volatile as buying individual stocks on the stock market.

Keep in mind, however, that with any ETF, you should be looking for a blend of low cost and high returns. Mediocre ETFs with high expense fees can eat into returns over the long term and cause you to significantly underperform the market.

So what is the best gold ETF in Canada moving forward in 2022?

• iShares Gold Bullion ETF (TSE:CGL)
• iShares S&P Global Gold Index ETF (TSE:XGD)
• BMO Junior Gold Index ETF (TSX:ZJG)
• Horizons Gold Yield ETF (TSX:HGY)

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