These investment vehicles have become increasingly popular as people look for ways to diversify their portfolios and protect against market uncertainty. To maintain our free service for consumers, LendEDU sometimes receives compensation when readers click to, apply for, or purchase products featured on the site. Compensation may impact where & how companies appear on the site. Additionally, our editors do not always review every single company in every industry.

• Furthermore, RING has a more attractive 0.91% 30-day SEC yield.
• However, they also carry more downside risk during market downturns.
• Gold ETFs represent paper claims on gold rather than actual ownership of physical bullion.
• What truly sets RING apart is the sheer volume of institutional demand behind it.

Add in a 1.23% semi-annual dividend, and you’ve got a supercharged, income-sweetened play on gold’s next leg higher. Unlike many other gold exchange-traded products, IAUM is structured as a true ETF (as opposed to a commodity pool or grantor trust). It trades on the NYSE Arca and also uses the LBMA Gold Price as a benchmark. IAUM can be used to diversify a portfolio of securities and to protect against inflation. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

What to know before investing in gold ETFs

The fund holds physical gold bullion stored in secure vaults. When investors buy shares, they gain exposure to gold price movements without handling physical gold. Mining is a very cyclical business that regularly fluctuates from boom to bust, so it can be very volatile. After a rocky winter marked by steady outflows, the narrative flipped in March. Inflows picked up pace, with multiple $5M+ surges and a standout $9M spike in early September as price broke to new highs.

• Bank failures pose real risks to ETF investors, with 553 U.S. banks failing since 2000.
• It requires a lot of energy to dig up, refine and store gold.
• The amounts vary based on the performance of underlying mining companies.
• Using an ETF to buy gold mining stocks decreases some of the company risk involved in trying to pick individual mining stocks.
• Gold ETFs provide accessible protection against these risks.

What are the benefits and drawbacks of investing in Fidelity gold ETFs?

The market cap of the largest mining company on this list tops $65 billion, while the smallest is more than $30 billion. The fund offers this exposure to the top gold mining stocks at a reasonable cost (0.51% expense ratio). Some ETFs hold physical gold bullion, while others invest in gold mining companies that can potentially deliver higher returns but come with additional risks. ETFs, or exchange-traded funds, are baskets of assets, such as stocks or commodities, that you can buy and sell like regular stocks. Gold ETFs give you exposure to gold without needing to own the physical metal. Some gold ETFs strictly follow the price of gold, while other gold ETFs accumulate shares in gold mining companies.

Physical vs. Paper Gold Risks

Gold ETFs carry unique risks that differ from physical gold ownership, including counterparty risk from multiple institutions and price volatility that can impact short-term returns. Investors also face different tax treatment compared to physical bullion and must understand the fundamental differences between paper and physical gold ownership. VanEck Vectors Gold Miners ETF can outperform or underperform gold prices based on company performance. Physical gold funds typically have lower fees than mining stocks funds. This happens because physical gold requires less active management than stock selection. The most important factors when choosing gold ETFs include expense ratios, assets under management size, tracking accuracy, and fund management approach.

This dramatic rise helped investors maintain wealth as other assets declined. Gold ETFs provide instant diversification without storing physical metal. Investors can buy and sell ETF shares instantly during market hours. Gold ETFs issue shares that represent fractional ownership of the fund’s underlying assets.

Are there any gold ETFs that are physically backed by gold?

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Greater clarity around the post-liberation day tariff regime is approaching. These could calm some of the tensions that have seen gold prices rise. Since 2022, elevated geopolitical instability has prompted central banks to lift the rate at which they buy gold, boosting demand and raising gold prices. Gold is a popular investment for those looking to hedge against stock market uncertainty and inflation. And so far in 2025, investors have flocked to gold with gusto — the asset has hit several new all-time highs in the last few months. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

High liquidity prevents gold ETFs from trading at significant premiums to their net asset value. This protects investors from paying inflated prices during volatile periods. The Sprott Gold Miners ETF (SGDM) takes a more focused approach. It tracks companies with the highest revenue growth and free cash flow yield while maintaining the lowest debt-to-equity ratios. IAU provides the same direct gold exposure without the hassle of physical storage. IAU charges a 0.25% expense ratio, making it more cost-effective than GLD.

Chris Hutchison helped best gold etf build NerdWallet’s editorial operation and has directed coverage across banking, investing, taxes and insurance. Before joining NerdWallet, he was an editor and programmer at ESPN and an editor at the San Jose Mercury News. However, the higher reward potential comes with more risk because they lack the scale of their larger rivals. A misstep, such as cost overruns on a mine development, could be costlier to investors.

You can buy ETFs through an online broker just like you’d buy a stock. One approach is to buy them regularly to take advantage of dollar-cost averaging.

That makes gold ETFs one of the easiest ways for individual investors to invest in gold, or at least gain exposure to its price movements. Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. However, it’s still relatively cheaper than shipping, insuring, and storing gold bars and coins, especially when you factor in its liquidity. Its large size makes it a favorite of institutional investors, such as pension funds that use it to hedge against inflation and other risk factors.