Gold ETF Investment Guide: Which Options Deserve Your Portfolio Allocation in 2025?

Why Gold ETFs Are Gaining Traction Among Investors

Gold exchange-traded funds have become increasingly popular as a streamlined way to gain precious metals exposure without the hassle of physical storage and insurance. Unlike traditional stock investments, gold ETFs function similarly to mutual funds but with a key advantage: they trade on exchanges during market hours like regular stocks, offering superior liquidity and accessibility.

The appeal is straightforward. Physical gold ownership requires secure vaults, insurance premiums, and authentication challenges. Gold ETFs eliminate these friction points while preserving your exposure to gold’s price movements. This accessibility has transformed how retail and institutional investors approach precious metals allocation.

For portfolio diversification, gold ETFs serve a critical function. Historically, gold prices rise when the US dollar weakens, creating a natural hedge against currency depreciation and economic uncertainty. When equities face headwinds or geopolitical tensions escalate, gold typically maintains or increases its value—making it a portfolio stabilizer.

Two Distinct Gold ETF Categories: Price Tracking vs. Mining Exposure

The gold ETF landscape splits into two primary categories, each serving different investment objectives.

Spot Price-Tracking Gold ETFs hold physical gold bullion or gold futures contracts, allowing investors to profit directly from gold price appreciation without owning actual bars or coins. The critical caveat: most physically-backed gold ETFs cannot be redeemed for actual gold, though exceptions exist. Additionally, US investors should note that physical gold ETFs face collectibles tax treatment, applying a higher maximum capital gains tax rate—relevant for high-income earners.

Gold Mining Stock ETFs provide exposure to gold producers, junior exploration companies, and precious metals royalty firms. This approach offers leverage to gold prices while introducing equity market variables. Mining company performance depends not only on bullion costs but also operational efficiency, geopolitical risks, and management execution.

The Five Largest Physical Gold ETF Options

GLD: Market-Leading Gold Exposure

SPDR Gold Shares (ARCA:GLD) commands the largest gold ETF asset base at $139.14 billion under management, with shares trading at $380.58. Its dominance stems from a streamlined structure: the fund holds 100% physical gold bullion sourced from 24-hour over-the-counter markets, the benchmark for global gold pricing. The expense ratio of 0.4% reflects industry-standard costs for this scale of operation.

IAU: The Cost-Conscious Alternative

iShares Gold Trust (ARCA:IAU) holds $64.22 billion in assets with unit prices at $79.04, offering a leaner expense ratio at 0.25%. Like GLD, it maintains 100% physical bullion backing, but with storage facilities spanning New York, Toronto, and London. The lower fee structure makes IAU particularly attractive for long-term holders minimizing drag.

GLDM: Ultra-Low Expense Structure

SPDR Gold MiniShares Trust (ARCA:GLDM) manages $23.33 billion with one of the market’s lowest expense ratios at just 0.1% for a physically-backed US-listed gold ETF. Trading at $81.89 per share, GLDM provides fractional ownership in physical gold bullion, making it ideal for cost-conscious investors.

SGOL: London-Stored Physical Backing

Abrdn Physical Gold Shares ETF (ARCA:SGOL) oversees $6.95 billion with unit prices at $39.43 and charges 0.17% in expenses. The fund’s gold exclusively consists of London Good Delivery bars stored in secure UK vaults, appealing to investors prioritizing settlement standards and geographic diversification of holdings.

IAUM: The Ultra-Lean Option

iShares Gold Trust Micro (ARCA:IAUM) claims the lowest expense ratio available for physically-backed gold products at 0.09%, managing $5.52 billion. With shares priced at $41.84, IAUM delivers day-to-day gold price movement exposure while minimizing fee erosion—the most efficient choice for buy-and-hold strategies.

Mining-Focused Gold ETFs: Leverage Play on Gold Equities

GDX: Major Gold Producer Exposure

VanEck Gold Miners ETF (ARCA:GDX) is the sector’s largest mining-focused product, managing $23.89 billion with shares at $79.18. Holdings concentrate on established producers and royalty companies, with 90% of positions maintaining market capitalizations exceeding $5 billion. Top holdings include Agnico Eagle (7.9%), Newmont (7.15%), and AngloGold Ashanti (5.71%). The 0.51% expense ratio reflects active management and quarterly rebalancing.

GDXJ: Junior Miner Focus with Higher Risk-Reward

VanEck Junior Gold Miners ETF (ARCA:GDXJ) manages $8.66 billion and targets smaller mining companies and exploration plays with market caps as low as $150 million. Trading at $101.24, this $8.66 billion fund carries identical 0.51% expenses but delivers substantially higher volatility. Positions like Pan American Silver (6.45%), Equinox Gold (6.39%), and Alamos Gold (5.75%) showcase the riskier, potentially higher-return profile.

RING: Global Diversification via MSCI Index

iShares MSCI Global Gold Miners ETF (Nasdaq:RING) provides geographically diversified mining exposure through the Morgan Stanley Capital International framework, managing $2.63 billion at $67.87 per share. The 0.39% expense ratio supports a globally-focused portfolio with Newmont dominating at 15.85%, followed by Agnico Eagle at 13.33%.

SGDM: Canadian and US Exchange Focus

Sprott Gold Miners ETF (ARCA:SGDM) targets $611.45 million in assets, tracking the Solactive Gold Miners Custom Factors Index with quarterly rebalancing and a 0.5% expense ratio. Top holdings—Agnico Eagle (12.41%), Newmont (8.92%), and Wheaton Precious Metals (7.83%)—emphasize North American production capacity.

SDGJ: Mid-Sized Junior Exploration Play

Sprott Junior Gold Miners ETF (ARCA:SDGJ) manages $280.97 million and focuses exclusively on junior miners with market capitalizations between $200 million and $3 billion. Trading at $76.56, it provides semi-annual rebalancing and charges 0.5% in management fees. Holdings like Bellevue Gold (5.04%) and Novagold Resources (5.03%) reflect the speculative positioning.

Final Considerations for Gold ETF Investors

Gold ETF selection depends on your risk tolerance and time horizon. Physical gold ETFs suit conservative investors seeking inflation protection and currency hedge characteristics, while mining-focused products appeal to those seeking equity leverage combined with precious metals exposure. The expense ratio differential matters over extended holding periods—choosing between GLDM (0.1%) and GLD (0.4%) saves 30 basis points annually on identical underlying exposure.