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Before 2009, gold was the hardest monetary good in human history. It was, and still is, commonly used as a store of value to preserve purchasing power during inflationary periods.
Today, you can seamlessly gain portfolio exposure to this hard asset by investing in a gold-backed exchange-traded fund.
Gold ETFs: A Brief Background
The gold ETFs we cover is physically backed by gold bars secured in vaults.
However, none of the shares of these funds are redeemable for gold itself. They offer exposure to the underlying asset.
Each of these gold ETFs trade just like stocks. You can buy, sell, or hold them with a click of a button without the headaches associated with physical ownership.
For some, this defeats the purpose of owning gold entirely. They would prefer outright self-custody of the asset versus paper claims on it.
Fortunately, you can choose which method works best for your investment objectives.
Best Gold ETFs: At A Glance
In no specific order, here are the best gold ETFs on the market:
- SPDR Gold Shares (GLD)
- SPDR Gold MiniShares Trust (GLDM)
- Aberdeen Standard Physical Gold Shares ETF (SGOL)
- GraniteShares Gold Shares (BAR)
- iShares Gold Trust (IAU)
Gold is the only holding in these funds, but they vary on expense ratios, liquidity, and assets under management. Let’s find out which fund is best for you.
#1. SPDR Gold Shares (GLD)
- 1-Year Performance: -1.65%
- Expense Ratio: 0.40%
- Annual Dividend Yield: N/A
- AUM: $57.6 billion
- Number of Holdings: 1
- Inception Date: 2004
The SPDR Gold Shares ETF is one of the most popular funds in the world.
The fund is physically backed by gold bullion stored in secure vaults in London.
First launching in 2004, GLD soaked up tons of capital from investors looking for some form of gold exposure without having to buy, store, and insure the asset themselves.
GLD was the only gold ETF on the market for about three months until the iShares Gold Trust (IAU) launched and began competing for inflows by charging less.
GLD is perhaps the most liquid gold ETF but also the most expensive.
State Street has a second gold ETF similar to GLD but charges 0.18% in fees compared to 0.40%.
#2. SPDR Gold MiniShares Trust (GLDM)
- 1-Year Performance: -1.46%
- Expense Ratio: 0.18%
- Annual Dividend Yield: N/A
- AUM: $4.4 billion
- Number of Holdings: 1
- Inception Date: 2018
State Street launched a cheaper fund of its own to compete with GLD. As previously mentioned, GLDM, or GLD “mini,” is more than 50% cheaper than the original GLD.
They do the same thing. The gold in GLD and GLDM might even be stored in the same vaults – it’s just numbered on a spreadsheet which bar belongs to which trust.
The tradeoff in fees is that GLDM is less liquid than GLD, possibly resulting in more slippage when trades are executed.
This doesn’t matter much if you’re a buy-and-hold investor, which is why we recommend GLDM over GLD if you plan on holding for several years.
However, GLD is more suitable for trading on shorter time horizons.
#3. Aberdeen Standard Physical Gold Shares ETF (SGOL)
- 1-Year Performance: -1.46%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- AUM: $2.5 billion
- Number of Holdings: 1
- Inception Date: 2009
The Aberdeen Standard Physical Gold Shares ETF is a physically-backed commodity fund that tracks the spot price of gold bullion.
SGOL represents gold bars held in secure vaults in Switzerland and London that are audited twice a year.
Additionally, a leading physical commodity auditor known as Inspectorate International inspects the vault twice per year, including once at random.
These audits are available for review on Aberdeen Standard’s website, in addition to a full list of gold bars, each with a unique serial number, that is stored in the vaults.
Aberdeen Standard goes above and beyond when it comes to transparency.
While we trust the parties involved in the SPDR gold funds, these additional efforts from Aberdeen Standard may offer peace of mind that cannot be priced.
#4. GraniteShares Gold Shares (BAR)
- 1-Year Performance: -1.46%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- AUM: $924 million
- Number of Holdings: 1
- Inception Date: 2017
The GraniteShares Gold Shares ETF is very much like SGOL and GLDM; it’s a low-cost, physically-backed ETF that tracks the spot price of gold bullion.
It has a nearly identical auditing protocol as Aberdeen Standard, with bi-annual inspections and a list of gold bars held by the Trust published daily.
BAR trades with less volume than SGOL, but this shouldn’t be of great concern unless you’re actively trading, which if that’s the case, consider the more liquid GLD or a fund that’s designed for that purpose, such as ProShares Ultra Gold (UGL) or ProShares UltraShort Gold (GLL).
#5. iShares Gold Trust (IAU)
- 1-Year Performance: -1.52%
- Expense Ratio: 0.25%
- Annual Dividend Yield:
- AUM: $29.2 billion
- Number of Holdings: 1
- Inception Date: 2005
The iShares Gold Trust (IAU) launched three months after the SPDR Gold Shares (GLD) fund.
It undercut GLD on fees to attract capital that had yet to find a home.
This strategy paid off quite well – IAU has accrued $29.2 billion in assets under management, despite GLD having a substantial head-start.
So, what makes IAU different from other gold ETFs?
We see IAU as a happy medium between GLD and GLDM, SGOL, and BAR crowd in terms of liquidity and fees.
Also, AIU has a mini version of itself, just like GLD – the iShares Gold Trust Micro ETF (IAUM).
IAUM has the lowest expense ratio of any physical gold fund currently on the market, charging a 0.15% sponsor fee.
Gold ETF Alternatives
Gold’s scarcity, inability to easily produce more of it, and shared belief system, are the primary reasons for its value.
These principles exist in other assets, to varying degrees. Essentially, assets with high stock-to-flow ratios are good candidates for wealth storage.
This includes other precious metals, such as silver and platinum, real estate, rare art, and bitcoin.
The value of the asset’s existing stockpile cannot easily be debased because it is difficult, sometimes even impossible, to produce more of the respective asset.
This dynamic enables wealth storage and allows for the preservation of purchasing power.
>> More: Is Bitcoin Better Than Gold?
Best Gold ETF: Frequently Asked Questions
Which is the best gold ETF to buy?
The best gold ETFs to buy, in terms of fees, are the SPDR Gold MiniShares trust (GLDM), the Aberdeen Standard Physical Gold Shares ETF (SGOL), or the iShares Gold Trust Micro ETF (IAUM).
Is a gold ETF a good investment?
A gold ETF is a good investment if you’re looking to track the market price of gold. Shares in a gold ETF are not redeemable for the underlying asset – they are simply a representation of the commodity’s performance.
Bottom Line: Best Gold ETFs
Gold ETFs aren’t for everyone. There’s over $100 billion in aggregate invested in them, but the old-school crowd probably prefers physical ownership, and the new-school probably prefers bitcoin.
It’s nice to have choices.
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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best gold ETFs.
