Gold ETFs in 2024: Are They Worth It? Analysis of the Top 6 Products in the Market

Why Investors Are Looking Toward Gold ETFs This Year

The precious metal has regained prominence in global portfolios. This is no coincidence. Amid escalating geopolitical tensions in Ukraine, Gaza, and the Asia-Pacific region, plus the prospect of FED interest rate cuts, gold ETFs are emerging as an attractive alternative for those seeking to protect their wealth.

Demand for gold comes from various relatively stable sources: jewelry (581.5 tons in Q4 2023), institutional investment (258.3 tons), central banks (229.4 tons), and the technology sector (80.6 tons). The total global volume has barely fallen below 1,100 tons in the past 14 years, indicating resilient demand.

Although gold ETFs experienced net capital outflows in the first months of 2024 — $2.9 billion in February according to the World Gold Council — the asset price continued to recover since October 2022, supported by sustained central bank purchases and changes in international reserve compositions.

Understanding the Mechanisms: How Do These Instruments Really Work?

Unlike storing physical bars at home, gold ETFs offer access without storage complications or security risks. These exchange-traded funds can be of two types: physically backed by gold (held in vaults of recognized institutions) or synthetic (that replicate the price through derivative contracts).

Physical ETFs hold actual bars, with each share representing a fraction of ownership of the metal. Synthetic ETFs, although potentially offering lower expense ratios, introduce counterparty risk related to the issuer’s solvency.

Their main advantages lie in intraday liquidity — bought and sold throughout the trading session like regular stocks — and lower costs compared to active mutual funds. The main expenses are the annual management fee and broker commissions, generally below 0.5%.

Macro-economic Factors Supporting Investment in Gold

Global debt levels have reached historic highs since the 2008-2009 crisis. The US operates with a debt-to-GDP ratio of 129%, Japan leads at 263.9%, while China and the European Union still maintain manageable but rising levels. These imbalances raise questions about the sustainability of the international financial system.

Jerome Powell, FED Chair, publicly acknowledged that “the United States is on an unsustainable fiscal path. Debt is growing faster than the economy.” This official institution’s diagnosis reinforces the thesis of gold as a hedge against future systemic risks.

Additionally, 71% of 57 central banks surveyed in 2023 plan to increase their gold reserves in the next 12 months (10 percentage points above 2022). This institutional intent underscores the strategic importance of the metal in the global financial architecture, gradually moving away from dependence on the US dollar.

Performance Comparison: The 6 Best Gold ETFs to Invest In

SPDR Gold Shares (NYSE: GLD) - The Undisputed Leader

With $56 billion under management and a daily volume of 8 million shares, GLD is the most traded. It directly tracks the price of bars held by HSBC Bank USA in London. Its fee of 40 basis points (0.40%) is competitive given its size. At $202.11 per share, it has gained 6.0% in 2024. Historically, since 2009, it has delivered a return of 146.76%.

iShares Gold Trust (NYSE: IAU) - Cost Efficiency and Performance

IAU competes directly with its larger counterpart through a lower expense ratio: 25 basis points (0.25% annually). It holds $25.4 billion in assets and trades 6 million shares daily. Physical gold is stored by JP Morgan Chase in London. At $41.27, it shows the best historical performance among the top six, with 151.19% accumulated since 2009. Its 2024 return is also 6.0%.

Aberdeen Physical Gold Shares (NYSE: SGOL) - Affordable Price

With only $2.7 billion in assets but solid volume (2.1 million shares/day), SGOL offers the most competitive price: $20.86. Its fee of 17 basis points (0.17%) is very attractive. Gold is stored in Swiss and British vaults. It has returned 106.61% since inception, with 6.0% in 2024.

Goldman Sachs Physical Gold (NYSE: AAAU) - Institutional Confidence

This ETF, backed by a top-tier financial institution, has JPMorgan Chase as custodian. Its $614 million in net assets operate with 2.7 million shares daily at a minimal cost: 18 basis points (0.18%), well below the commodity average (63 pb). At $21.60, it is the second most affordable option, with a historical return of 79.67% and 6.0% in 2024.

SPDR Gold MiniShares (NYSE: GLDM) - Ultra-Competitive Cost

GLDM is the “lite” version of GLD with a smaller structure. Although managing $6.1 billion and trading 2 million shares daily, it stands out for its very low ratio of just 10 basis points (0.10%). At $43.28, it has generated a 72.38% cumulative return and 6.1% this year.

iShares Gold Trust Micro (NYSE: IAUM) - The Cheapest

With the lowest expense ratio in the market (9 basis points / 0.09%), IAUM manages $1.2 billion while trading 344,000 shares daily. At $21.73 per share, it is ideal for retail investors with limited capital. Although it has the lowest historical performance (22.82% since 2021), its launch year, it remains consistent with the gold cycle.

Outlook: Should I Include Gold in My Portfolio Now?

The decision depends on three pillars: your specific objectives, risk tolerance, and time horizon. Conservative or moderate-risk investors may allocate a significant portion, while aggressive investors will focus on assets with higher return potential.

Concrete benefits:

• Effective diversification that mitigates losses in other assets
• Safe haven during extreme stock market volatility
• Historical hedge against inflation, even at moderate rates

Limitations to consider:

• Gold does not generate income (no dividends or interest)
• Significant short-term volatility (weeks or months)
• Inverse dependence on the strength of the US dollar

In a context where governments maintain structurally unsustainable debt and central banks diversify reserves into gold, these ETFs emerge as legitimate long-term wealth protection tools.

Practical Recommendations for Investing in Gold ETFs

Define your strategy before acting. Clarify objectives and risk tolerance; avoid improvising allocations.

Align with other assets. Gold ETFs work best as a complement to a diversified portfolio rather than as an exclusive investment. Combine with stocks, bonds, and cryptocurrencies according to your profile.

Think in years, not months. Prices may fluctuate, but historically gold appreciates in extended cycles. Avoid short-term speculative trading.

Assess the macroeconomic context. Consider interest rate cycles, geopolitics, debt levels, and market sentiment before executing. There are better and worse times for gold.

Choose according to your budget. If you have limited capital, SGOL, AAAU, or IAUM offer accessible entry points. For maximum liquidity, GLD or IAU are solid options.

The decisive advantage of gold ETFs lies in their democratization: small investors can access precious metals with minimal amounts without handling physical bars. You now know the main options, their cost and performance characteristics. The final question is personal: do you consider it prudent to hedge part of your portfolio against future systemic uncertainty?