Choosing the Right Physical Gold ETF: A Comparison of 2024's Top Performers

For investors seeking exposure to precious metals, physical gold ETFs have become an increasingly popular choice. These investment vehicles allow market participants to gain access to gold without the complexities of purchasing, storing, and insuring physical bars or coins. Unlike mutual funds, gold ETFs trade continuously throughout the day on stock exchanges, offering superior liquidity and accessibility compared to traditional investment methods.

Understanding Gold ETF Structures and Investment Approaches

Gold exchange-traded funds operate in two distinct categories. The first category comprises physical gold ETFs that directly hold gold bullion or futures contracts, giving investors price exposure without requiring them to manage actual precious metals. The second type invests in companies engaged in gold mining, development, and exploration activities, along with gold royalty firms, offering sector-wide diversification rather than commodity price tracking.

An important consideration for US investors is the tax treatment of physical gold holdings within ETFs. Gold ETFs backed by actual bullion are classified as collectibles for tax purposes, resulting in a higher maximum capital gains tax rate that may impact investors in elevated tax brackets. Additionally, while most physical gold ETFs track the spot price of gold bullion, shareholders cannot typically redeem their shares for physical gold bars, with only rare exceptions.

Why Gold ETFs Matter for Portfolio Strategy

Physical gold ETF investments serve multiple strategic purposes. Gold traditionally acts as a hedge during economic and political uncertainty, and maintaining exposure through an ETF eliminates storage and insurance hassles. Since gold prices often move inversely to the US dollar’s strength, gold ETFs can provide portfolio balance when currency fluctuations threaten other holdings.

For those seeking company exposure rather than commodity price movements, gold mining ETFs deliver diversification across multiple firms without the risks of individual stock selection. Professional management by precious metals specialists further reduces execution risk compared to self-directed investing.

The Five Largest Physical Gold ETFs by Assets (August 2024)

1. SPDR Gold Shares (ARCA: GLD)

Total Assets: US$68.6 billion

This is the dominant physical gold ETF in the market, tracking the spot price of gold through a portfolio composed entirely of physical bullion. With an expense ratio of 0.4 percent, it provides straightforward gold price exposure. The underlying gold reflects 24-hour over-the-counter market pricing, ensuring investors receive current valuation data.

2. iShares Gold Trust (ARCA: IAU)

Total Assets: US$29.1 billion

The iShares offering mirrors gold bullion performance with greater cost efficiency, charging only 0.25 percent annually. Physical gold holdings are stored in secure vaults across New York, Toronto, London, and additional international locations. Shares trade throughout the business day via standard brokerage accounts, making it accessible to retail investors seeking physical gold ETF exposure.

3. SPDR Gold MiniShares Trust (ARCA: GLDM)

Total Assets: US$8.3 billion

This option targets cost-conscious investors with one of the lowest expense ratios available at just 0.1 percent. The fund holds fractional ownership interests in underlying physical bullion and occasional cash positions, delivering efficient precious metals access.

4. Abrdn Physical Gold Shares ETF (ARCA: SGOL)

Total Assets: US$3.5 billion

Abrdn’s offering maintains a 0.17 percent expense ratio while holding 100 percent physical gold bars stored in Zurich per London Bullion Market Association standards. This structure ensures high purity standards and international compliance for stored bullion.

5. iShares Gold Trust Micro (ARCA: IAUM)

Total Assets: US$1.3 billion

At 0.09 percent, this represents the most cost-effective physical gold ETF currently available. Despite smaller total assets, it delivers identical daily gold price exposure through professionally managed vault storage systems.

Exploring Gold Mining Stock Alternatives

Beyond physical bullion-backed funds, investors can gain sector exposure through:

• VanEck Gold Miners ETF (ARCA: GDX): Focuses on large-cap mining companies and precious metals royalty firms
• VanEck Junior Gold Miners ETF (ARCA: GDXJ): Targets smaller and mid-sized gold and silver mining enterprises

These options suit investors prioritizing company performance over commodity price tracking, removing storage concerns entirely while maintaining mining sector exposure.

Making Your Selection

The choice between these physical gold ETFs depends on individual priorities. Cost-conscious investors might prefer IAUM or GLDM, while those prioritizing liquidity and established track records often favor GLD or IAU. Regardless of selection, all these options eliminate the practical burdens of holding physical precious metals while maintaining portfolio exposure to gold’s historical safe-haven qualities.