Gold ETF 2024: A Smart Investment Alternative? Analysis of the Top 6 Funds

The Current State of the Gold ETF Market

Demand for instruments that track gold performance has increased significantly in 2024. The reasons are multiple: escalation of geopolitical tensions, expectations of interest rate cuts, and a macroeconomic environment that favors safe-haven assets. To understand why gold ETFs have become an increasingly relevant option, it is necessary to examine the factors driving this trend.

Conflicts in Ukraine and Gaza, along with frictions among global powers, have generated a massive search for defensive assets. At the same time, if the Federal Reserve begins to cut rates, this could weaken the US dollar (the currency in which precious metals are traded), making international access to gold cheaper and boosting its demand.

Capital Dynamics in Gold Funds

According to data from the World Gold Council, during the first nine months of 2024, net capital outflows from gold ETFs were recorded. In February, approximately $2.9 trillion flowed out of these instruments globally, mainly concentrated in North America (2.4 trillion). Europe experienced outflows of $0.7 trillion, while Asia registered modest net inflows.

Paradoxically, these outflows have not halted the recovery of gold prices. Since October 2022, the precious metal has shown a sustained upward trajectory, driven by robust demand and significant central bank purchases. Many investors have likely taken profits to reallocate capital toward higher-growth segments, such as technology or cryptocurrencies.

Central Bank Support for the Precious Metal

A bullish signal comes from the world’s monetary authorities themselves. In a 2023 survey of 57 central banks, 71% indicated they would increase their gold reserves in the next 12 months, a ten-percentage-point jump from 2022.

This trend reflects a reconfiguration of international reserves, with gold gaining relative weight compared to the US dollar. The largest global holders include the United States, Germany, Italy, France, Russia, China, Switzerland, India, and the Netherlands. For private investors, this constitutes an implicit guarantee of future demand for the asset.

Diversity in Gold Demand: A Stability Factor

Global demand for gold comes from four main sources: jewelry, investment, central banks, and technological applications. This multiplicity generates an extraordinarily stable demand profile, even during adverse economic cycles.

For the last quarter of 2023, global demand reached 1,149.8 tons:

• Jewelry: 581.5 tons
• Investment: 258.3 tons
• Central banks: 229.4 tons
• Technology: 80.6 tons

In the past 14 years, demand has rarely fallen below 1,000 tons, while supply (mining and recycling) remains relatively stable. This supply-demand balance sustains the attractiveness of gold ETFs as a vehicle for exposure to the metal.

What Is a Gold ETF and How Does It Work?

A gold ETF is an exchange-traded fund that allows investors to access the gold price without owning physical bars. There are two main modalities:

Physically backed ETFs: They hold gold bars stored in secure vaults maintained by recognized financial institutions. Each share represents a fractional ownership of that tangible gold.

Synthetic ETFs: They use financial derivatives (futures, options) to replicate gold price movements. Although they may offer lower expense ratios, they introduce counterparty risk linked to the issuer’s solvency.

The advantages of this format are notable: access with low initial capital, high liquidity during trading hours, reduced fees compared to active mutual funds, and elimination of physical storage risks.

Operational costs are concentrated in two areas: the expense ratio (expressed in basis points annually) and brokerage commissions charged by your broker.

Evaluation: Is Investing in Gold ETFs Worth It During 2024?

The relevance of a position in gold ETFs fundamentally depends on two personal factors: specific investment objectives and individual risk tolerance.

For conservative investors or those with moderate risk tolerance, gold ETFs offer tangible benefits:

• Portfolio diversification: Adds a layer of protection that mitigates losses when other assets perform negatively.
• Inflation hedge: Historical data confirm that gold maintains its purchasing power during periods of high inflation. Although inflation has moderated, risks of resurgence persist.
• Safe-haven asset: During stock market turbulence, gold tends to appreciate, acting as a volatility buffer.

Limitations to consider:

Gold does not generate passive income (unlike dividends or bonds). Its price can experience significant fluctuations over short horizons. It requires a long-term strategy to realize its defensive benefits.

The Global Debt Context: A Structural Argument

A deeper argument underlies investment in gold ETFs: the fiscal imbalance of major global economies.

Since the 2008-2009 financial crisis, sovereign debt has skyrocketed unprecedentedly. The US maintains a debt-to-GDP ratio of 129%. Japan leads developed nations with 263.9%. China and the European Union are still at relatively manageable levels but are accelerating.

Governments have systematically resorted to debt to stimulate growth, with mediocre results. The consequence: widespread erosion of the purchasing power of global fiat currencies.

Jerome Powell, Federal Reserve Chair, has publicly warned that “the United States is on an unsustainable fiscal path. Debt is growing faster than the economy.” Economists warn of a debt spiral that could trigger a systemic crisis.

In this scenario, gold ETFs would emerge as one of the best defenses for investors concerned about international financial system restructuring.

The Top Six Gold ETFs in 2024: Detailed Comparison

1. SPDR Gold Shares ETF (NYSE: GLD)

The largest in its category, GLD offers unparalleled liquidity in the gold ETF market. It directly tracks the price of bars stored by HSBC Bank USA in London.

Key features:

• Assets under management: $56 billion
• Average daily volume: 8 million shares
• Annual expense ratio: 40 basis points (0.40%)
• Price per share (current): $202.11
• 2024 performance: +6.0%

Its impeccable price tracking history makes it a market benchmark for trading and institutional hedging.

2. iShares Gold Trust ETF (NYSE: IAU)

The second most popular option, IAU combines low cost with solid historical performance. It maintains exposure to daily gold movements backed by physical custody held by JP Morgan Chase in London.

Key features:

• Assets under management: $25.4 billion
• Average daily volume: 6 million shares
• Annual expense ratio: 25 basis points (0.25%)
• Price per share (current): $41.27
• 2024 performance: +6.0%

Its lower operating cost compared to GLD positions it as an efficient alternative for fee-sensitive investors.

3. Aberdeen Physical Gold Shares ETF (NYSE: SGOL)

Diversified offering with physical backing stored in multiple secure vaults in Switzerland and the UK, reducing custodial risk concentration.

Key features:

• Assets under management: $2.7 billion
• Average daily volume: 2.1 million shares
• Annual expense ratio: 17 basis points (0.17%)
• Price per share (current): $20.86
• 2024 performance: +6.0%

Its lower price per share makes it an accessible option for retail investors with limited capital.

4. Goldman Sachs Physical Gold ETF (NYSE: AAAU)

Backed by a top-tier financial institution, with custody at JPMorgan Chase and vaults in the UK.

Key features:

• Assets under management: $614 million
• Average daily volume: 2.7 million shares
• Annual expense ratio: 18 basis points (0.18%)
• Price per share (current): $21.60
• 2024 performance: +6.0%

Significantly lower cost than the industry average of 63 basis points for commodity ETFs, offering a favorable value-for-money ratio.

5. SPDR Gold MiniShares ETF (NYSE: GLDM)

A simplified version of the giant GLD, designed for investors seeking maximum cost efficiency without sacrificing physical backing.

Key features:

• Assets under management: $6.1 billion
• Average daily volume: 2 million shares
• Annual expense ratio: 10 basis points (0.10%)
• Price per share (current): $43.28
• 2024 performance: +6.1%

Its lowest fee among physically backed options makes it a preferred choice for cost-conscious investors.

6. iShares Gold Trust Micro ETF (NYSE: IAUM)

The lowest-cost gold ETF globally, with an expense ratio of just 0.09%, specifically aimed at retail investors.

Key features:

• Assets under management: $1.2 billion
• Average daily volume: 344,000 shares
• Annual expense ratio: 9 basis points (0.09%)
• Price per share (current): $21.73
• 2024 performance: +6.0%

Its price accessibility and extremely low operating cost make it ideal for small initial investors.

Performance Comparison: 2009-2024

Since early 2009, the performance landscape shows significant variations depending on the instrument:

• Spot gold price: +162.31%
• iShares Gold Trust ETF (IAU): +151.19%
• SPDR Gold Shares ETF (GLD): +146.76%
• Aberdeen Physical Gold Shares ETF (SGOL): +106.61%
• Goldman Sachs Physical Gold ETF (AAAU): +79.67%
• SPDR Gold MiniShares ETF (GLDM): +72.38%
• iShares Gold Trust Micro ETF (IAUM): +22.82% (since launch in 2021)

The variations mainly reflect differences in launch dates, operational structures, and periods of asset accumulation.

Practical Strategy: How to Position in Gold ETFs

Step 1: Clearly define your objectives

Are you seeking defensive diversification or bullish speculation? What is your time horizon? These answers determine which gold ETF and what position size are appropriate.

Step 2: Assess your risk profile

Conservative investors should limit gold ETF exposure to 10-15% of their portfolio. Moderate profiles might consider 15-25%. Only highly aggressive investors with exceptional capital tolerance should hold larger positions.

Step 3: Consider macroeconomic timing

Gold responds to specific cycles: monetary tightening (negative), easing (positive), inflation (very positive), tense geopolitics (positive). Although a safe-haven, there are optimal entry moments.

Step 4: Diversify within the segment

Instead of concentrating on a single gold ETF, consider rotating among two or three options based on changes in operating costs, liquidity, or custody approach.

Step 5: Adopt a long-term horizon

Intraday fluctuations can reach 2-3%. To realize the defensive potential of gold ETFs, hold positions for at least 2-3 years.

Final Reflection: Is It the Moment?

Small investors now access gold ETFs with minimal investments unthinkable a decade ago. You now know the six main competitors, their cost structures, liquidity, and performance histories.

The question is not whether gold is good (it is, historically), but whether the current moment—with sovereign debt at highs, tense geopolitics, and potential financial restructuring—justifies a defensive position in your personal portfolio. The answer will depend on your individual analysis.