Choosing Your Gold ETF: Why AAAU Offers Lower Costs While GLD Dominates in Scale

Why Gold ETFs Matter in Today’s Market

The surge in gold prices throughout 2025 has sparked renewed interest in accessible investment vehicles. For investors seeking the best gold ETF without the complications of physical ownership, two standout options emerge: the Goldman Sachs Physical Gold ETF (NYSEMKT: AAAU) and the SPDR Gold Shares (NYSEMKT: GLD). Both track physical bullion directly, yet they serve different investor profiles based on cost structure, liquidity needs, and portfolio size.

Gold has appreciated significantly in 2025, with prices climbing nearly 65% and reaching record levels above $4,380 per ounce in October. This rally reflects multiple tailwinds: geopolitical uncertainty bolstering safe-haven demand, declining interest rates improving gold’s attractiveness relative to bonds, and substantial central bank purchases from emerging markets diversifying away from dollar holdings. Within this environment, ETFs provide a cleaner alternative to direct bullion ownership or individual mining stocks.

Cost Efficiency: Where AAAU Leads

The most striking difference between these two funds lies in their fee structure. AAAU charges a 0.18% expense ratio, while GLD levies 0.40% annually. For long-term investors, this distinction compounds significantly.

On a $1,000 investment, AAAU costs $1.80 per year versus $4.00 for GLD—a 55% savings differential. Over decades, this gap expands considerably. Cost-conscious investors and those building wealth through dollar-cost averaging typically favor the lower-cost option, as expense ratios directly reduce net returns regardless of market performance.

Scale and Liquidity: GLD’s Institutional Advantage

GLD operates at an entirely different scale. With $146.7 billion in assets under management as of late December 2025, compared to AAAU’s $2.5 billion, GLD’s dominance reflects over two decades of market presence as the oldest and largest gold ETF.

This size advantage translates into operational benefits. Larger trading volumes mean tighter bid-ask spreads, critical for traders executing substantial positions. Institutional investors and those moving capital in meaningful amounts experience lower transaction costs on GLD due to its superior liquidity. For retail investors trading smaller positions, this advantage matters less.

Performance: Nearly Identical Returns

Both funds delivered comparable results over the trailing twelve months, with AAAU posting 66.8% total return and GLD at 66.5%—a negligible 0.3% difference. Over a five-year horizon, a $1,000 investment grew to $2,287 in AAAU and $2,262 in GLD, affirming their parallel gold-tracking mechanisms.

The similarity underscores a fundamental truth: once you select a physical gold ETF, your returns hinge almost entirely on precious metal price movements rather than fund selection. The real decision involves cost versus convenience.

Understanding the Holdings

AAAU and GLD both maintain direct holdings of physical gold bullion stored in secure vaults. This structure eliminates counterparty risk associated with derivatives or futures-based alternatives. By holding tangible metal rather than company stock or complex instruments, these funds preserve capital directly tied to gold’s spot price, minus their respective fees.

Both avoid leverage and financial engineering, making them straightforward commodity exposure vehicles suitable for conservative and aggressive portfolios alike.

The Volatility Story

Beta measurements reveal interesting distinctions. AAAU’s beta of 0.48 suggests lower price volatility relative to the S&P 500, while GLD’s 0.13 beta indicates even greater stability. These figures reflect how gold typically moves inversely to equity markets during stress periods, providing portfolio diversification benefits beyond commodity speculation.

Making Your Choice

For Cost Optimization: Investors planning to hold positions across years or decades should prioritize AAAU. The expense ratio advantage ($2.20 annually per $1,000) may seem modest but accumulates substantially, especially within tax-advantaged accounts where fees have uninterrupted compounding impact.

For Trading Flexibility: Active traders managing large positions benefit from GLD’s liquidity and tighter spreads. The operational efficiency matters most when executing trades rapidly or moving substantial capital.

For New Investors: The best gold ETF depends on your timeline and trade size. First-time investors building a small position often find AAAU’s lower cost structure more forgiving of fees. Those eventually trading six-figure amounts benefit from GLD’s infrastructure.

Key Takeaway

The 2025 gold rally continues attracting diverse investor interest. Whether selecting AAAU for its fee advantage or GLD for its market depth, both ETFs provide legitimate pathways to gold exposure within a brokerage account. The choice ultimately reflects your investment horizon, transaction size, and fee sensitivity rather than fundamental quality differences.