Why does 2024 become a critical year to protect your portfolio with gold? Complete guide to ETFs and strategies

The Global Financial Architecture Faces Its Biggest Challenge in Decades

When Jerome Powell, the Chairman of the U.S. Federal Reserve, publicly acknowledges that “the United States is on an unsustainable fiscal path” and warns that “debt is growing faster than the economy,” it is not merely a technical statement. It is a wake-up call resonating across global markets.

The numbers are undeniable: the U.S. maintains a public debt-to-GDP ratio of 129%, while Japan leads the world with 263.9%. The European Union and China still maintain relatively controlled levels, but the upward trend is unmistakable. Since the 2008-2009 financial crisis, governments have excessively relied on debt as a strategy to boost economic growth, with disappointing results. The consequences are tangible: the purchasing power of money has systematically eroded everywhere on the planet.

In this context of profound economic uncertainty and increasing geopolitical tensions, gold emerges as a stability anchor. It is no coincidence that global central banks have significantly increased their purchases in recent years, nor that sophisticated investors are diversifying their portfolios into safe-haven assets.

What Are Gold ETFs and Why Have They Become Essential?

A gold exchange-traded fund (ETF) acts as an intermediary between the investor and the precious metal market. Unlike owning physical bars at home (with security risks involved), these instruments offer hassle-free access.

There are essentially two categories: those backed by genuine physical gold stored in vaults of trusted institutions, and synthetic ones that use financial derivatives to replicate price behavior. The first offers greater psychological security; the second, lower costs but with some counterparty risk associated with the issuer’s solvency.

The advantages of this investment vehicle are substantial. First, they provide absolute liquidity: you can buy or sell throughout the trading session with just a click. Second, management fees are significantly lower than traditional mutual funds. Third, the entry price is accessible even for retail investors. And fourth, they allow building significant positions in the metal without facing storage and insurance costs associated with physical custody.

Market Signals in 2024: Rally or Correction?

The renewed interest in these instruments during 2024 responds to very specific factors. Escalating tensions in Ukraine and Gaza, combined with strategic rivalry between the United States and the China-Russia-Iran axis, have reactivated demand for defensive assets. The possibility of significant political changes in Washington adds further uncertainty to the investment horizon.

From an interest rate perspective, there is a well-established inverse relationship between the price of gold and the US dollar (the currency in which ounces are quoted in international markets). When the Federal Reserve begins to cut its benchmark rates, the dollar tends to depreciate, making the metal cheaper in real terms for global buyers. This mechanism is expected to act as a significant catalyst to increase demand even with moderate inflation.

Additionally, lower rates diminish the appeal of traditional fixed-income instruments, channeling capital toward alternatives like gold, cryptocurrencies, and growth stocks.

The Paradox: Capital Outflows That Do Not Break the Rally

Data from the World Gold Council reveal an intriguing phenomenon: despite gold-focused funds experiencing sustained net outflows over the past nine months (reaching $2.9 trillion in February 2024 alone, with North America leading disinvestments), the metal’s price continues to recover since October 2022.

This apparent contradiction is explained by two converging factors. First, many investors have taken profits to reposition into higher-yielding and more volatile assets, such as technology and Bitcoin. Second, and more significantly, institutional demand from central banks has more than offset these outflows.

According to surveys by the World Gold Council, 71% of the 57 central banks surveyed in 2023 anticipated increasing their gold reserves over the next 12 months, marking a ten-percentage-point increase compared to 2022. This trend aligns with the gradual decline of the US dollar’s dominance in international reserve portfolios, reflecting a slow but persistent reorganization of the global monetary architecture.

Gold Demand: A Stable and Diversified Consumption Profile

One of the fundamental reasons supporting the long-term viability of these instruments is the robust underlying demand structure. Gold consumption comes from four interconnected sources that evolve with macroeconomic cycles.

In the fourth quarter of 2023, global demand totaled 1,149.8 tons, distributed as follows: jewelry (581.5 tons), investment mainly through physical gold in ETFs (258.3 tons), central banks (229.4 tons), and technological applications (80.6 tons). Over the past fourteen years, this demand has rarely fallen below the 1,000-ton threshold, indicating an almost inelastic consumption base.

Supply, on the other hand, primarily rests on mining extraction and recycling of previously circulated gold, factors that cannot be radically transformed over short horizons. This combination of resilient demand and structurally inelastic supply creates conditions for sustainable asset valuation.

When Does It Make Sense to Position in Gold? Decision Criteria

The opportunity to invest in these funds depends not on a single factor but on the intersection of your personal investment goals and your psychological capacity to tolerate volatility.

For low- or moderate-risk investors, defensive hedging is especially valuable in uncertain contexts like the current one. Gold has historically maintained its purchasing power during periods of high inflation and has experimentally provided gains when stock markets face turbulence. Although current inflation is moderate, there is a risk of rebound if monetary authorities make calibration errors in their rate reduction cycles.

For growth-oriented investors, including gold in controlled doses (typically 5-10% of the portfolio) functions as a return buffer without sacrificing medium-term appreciation potential. With the tech rally showing signs of exhaustion, this balance becomes even more relevant.

A critical point: gold itself does not generate cash flow, unlike stocks that pay dividends. However, this feature is precisely its strength in crisis scenarios, where capital preservation matters more than generating incremental returns.

Comparison of the Six Main Available Instruments

Choosing the right ETF depends on specific needs regarding costs, trading volume, and backing philosophy (physical versus synthetic). Here are the main candidates for 2024:

GLD (SPDR Gold Shares ETF): The Market Standard

This fund leads the segment with $56 billion in assets under management and an exceptional daily volume of 8 million shares. It directly tracks the price of bars deposited in London under custody of HSBC Bank USA. Its annual fee of 40 basis points (0.40%) is competitive given its scale. Currently trading at $202.11 per share, reflecting a 6.0% appreciation since the start of 2024. It is the preferred choice for investors prioritizing absolute liquidity and proven track record since its inception in 2004.

IAU (iShares Gold Trust ETF): The Low-Cost Rival

With $25.4 billion in assets and an annual fee of just 25 basis points (0.25%), IAU provides physical gold exposure stored by JPMorgan Chase Bank in London. It trades an average of 6 million shares daily, ensuring instant order execution. Its current price of $41.27 shows the same annualized return of 6.0%. The key difference with GLD lies in lower costs without sacrificing security or liquidity, making it a favorite for cost-conscious investors.

SGOL (Aberdeen Physical Gold Shares ETF): Swiss-Backed Accessibility

This fund manages $2.7 billion and stores gold in vaults in Switzerland and the UK, jurisdictions with impeccable reputation. Its annual fee of 0.17% is among the most competitive in the market. The entry price of $20.86 per share makes it the most economical among the main competitors, facilitating access for small investors. It trades 2.1 million shares daily with a 6.0% increase in 2024.

AAAU (Goldman Sachs Physical Gold ETF): Backed by Institutional Banking

Although with a smaller asset base ($614 millions), this ETF offers the reassurance of a top-tier financial institution as custodian. JPMorgan Chase Bank holds the gold in UK vaults, providing institutional-grade security. Its fee of 18 basis points (0.18%) is particularly attractive compared to the industry average of 63 basis points for commodities. Trading at $21.60 with a daily volume of 2.7 million shares, it is the second most accessible option in terms of entry price.

GLDM (SPDR Gold MiniShares ETF): Ultra-Low Costs

This fund simplifies the original GLD concept while maintaining State Street’s management structure but dramatically reducing fees to just 10 basis points annually (0.10%). With $6.1 billion in assets and an average daily volume of 2 million shares, it offers cost-efficient access. Trading at $43.28 with a 6.1% appreciation in 2024. It is an ideal choice for investors prioritizing maximizing net returns after fees.

IAUM (iShares Gold Trust Micro ETF): Maximum Cost Efficiency

Represents the most extreme point in fee optimization, with just 9 basis points annually (0.09%), making it the most economical in the global market. Despite a smaller asset base ($1.2 billion) and more modest volume (344,000 shares daily), it has demonstrated operational robustness since its launch in 2021. Trading at $21.73 with a 6.0% return in the year. Particularly attractive for multi-year horizon investors seeking to minimize erosion from fees.

Performance Analysis: Returns Since 2009

The historical perspective reveals informative patterns. From early 2009 to today, spot gold has yielded 162.31%. Among the six funds:

• IAU (iShares) leads with 151.19% total return
• GLD (SPDR) follows with 146.76%
• SGOL (Aberdeen) has generated 106.61%
• AAAU (Goldman Sachs) accumulates 79.67%
• GLDM (SPDR MiniShares) achieves 72.38%
• IAUM (iShares Micro), since its 2021 launch, reports 22.82%

Variations mainly respond to accumulated fees and launch dates, confirming that lower costs over the long term produce significant compound advantages.

Practical Recommendations for 2024 and Beyond

Before committing capital, follow these decision steps:

Clarify your specific goal. Are you seeking protection against currency devaluation? Hedging against stock market declines? A store of value forever? The answer determines the size and permanence of your position.

Build genuine diversification. Do not concentrate everything in gold but include it as a defensive component (5-15% typically) within a portfolio that also includes stocks, bonds, cryptocurrencies, and cash. The goal is not to maximize returns but to stabilize overall volatility.

Adopt an extended time horizon. Gold experiences significant oscillations over months or quarters. ETFs work best as multi-year value deposits, not as speculative trading instruments.

Align with macroeconomic context. Timing matters. Although gold is inherently defensive, optimal accumulation cycles exist (like the current one, with high geopolitical risks and unsustainable debt) versus periods of lower opportunity. Stay alert to central bank decisions, international tensions, and debt metrics.

The reality is that small investors today have access to institutional-class instruments at minimal costs. The question is no longer whether you can invest in gold via ETFs but whether your long-term strategy justifies a defensive position amid the systemic uncertainty characterizing 2024 and the near future.