Gold ETF 2024: Complete Guide for Investors Looking to Protect Their Capital

The current geopolitical context and uncertainty about the global financial architecture have revitalized interest in gold ETFs as a diversification instrument. But does it really make sense to allocate capital to these funds in 2024? The answer depends less on current trends and more on your personal financial situation.

Why Gold and Its ETFs Are on Investors’ Radar

In recent years, we have witnessed a buildup of factors pushing investors toward safe-haven assets. Tensions between major powers (Ukraine, Gaza, and the US-China-Russia-Iran relationship) have generated systemic volatility. Simultaneously, expectations of interest rate cuts by the FED create a contradictory scenario: declining inflation, but still restrictive rates.

The inverse relationship between the US dollar and the gold price is well known in markets. When the FED begins to lower rates, the dollar tends to weaken, making imported gold more attractive. This is especially relevant in 2024, when central banks are reconsidering their monetary positions.

However, what many analysts overlook is that gold demand comes from highly diversified sources. During Q4 2023, global demand reached 1,149.8 tons, distributed as follows:

• Jewelry: 581.5 tons
• Investment: 258.3 tons (with growing participation from physically backed ETFs)
• Central banks: 229.4 tons
• Technology: 80.6 tons

This diversification has kept demand stable for over a decade, rarely falling below 1,000 tons annually.

The Paradox of Global Debt and Gold

This is where the conversation gets interesting. Governments of developed economies have reached debt levels that are historically unsustainable:

• United States: 129% of public debt to GDP
• Japan: 263.9% (the highest in the world)
• European Union: growing but still manageable
• China: also on an upward trajectory

Jerome Powell, FED Chair, publicly acknowledged that “in the long term, the United States is on an unsustainable fiscal path.” This admission from such a prominent monetary authority should not go unnoticed.

What does this imply for gold ETFs? If the international financial system truly reaches a breaking point, gold will be one of the few assets that retains value. Central banks are aware of this: 71% of the 57 central banks surveyed in 2023 plan to increase their gold reserves in the next 12 months, a 10 percentage point increase from 2022.

Market Movements: The Outflows No One Talks About

A recent data point from the World Gold Council shows that gold ETFs have recorded net capital outflows over the past 9 months. In February 2024 alone, $2.9 trillion exited globally, with North America accounting for $2.4 trillion.

Does this mean gold is in decline? Not necessarily. It’s likely that investors are taking profits after months of continuous recovery (gold prices recovered since October 2022). Some have redirected those funds into higher-yield assets in the short term, such as tech stocks or Bitcoin, which experience more intense euphoria cycles.

However, gold supply remains relatively inelastic: mining and recycling cannot change radically in the short term. This suggests that any withdrawal of speculative demand will be offset by structural buyers (central banks, jewelry, technology).

Performance Comparison: The 6 Gold ETFs You Should Know

Not all gold ETFs are the same. Here is a breakdown of the most solid options for 2024, compared from multiple angles:

SPDR Gold Shares ETF (GLD) - The Market Giant

With $56 billion in assets under management and a daily volume of 8 million shares, GLD is practically synonymous with gold investment for many institutional investors. The ETF tracks the spot price of bars stored in London under HSBC custody.

• Expense ratio: 40 basis points (0.40%)
• Price per share: $202.11
• 2024 performance: +6.0%
• Cumulative performance 2009-2024: 146.76%

iShares Gold Trust ETF (IAU) - Efficiency and Low Cost

Historically, IAU has been the best-performing physical gold ETF, with $25.4 billion in AUM.

• Expense ratio: 25 basis points (0.25%)
• Price per share: $41.27
• 2024 performance: +6.0%
• Cumulative performance 2009-2024: 151.19%

Aberdeen Physical Gold Shares ETF (SGOL) - Accessibility and Swiss Custody

With assets stored in Switzerland and the UK, this ETF offers the advantage of geographic diversification.

• Expense ratio: 17 basis points (0.17%)
• Price per share: $20.86 (the most affordable among the main options)
• 2024 performance: +6.0%
• Cumulative performance 2009-2024: 106.61%

Goldman Sachs Physical Gold ETF (AAAU) - Institutional Backing

Custodied by JPMorgan Chase Bank with backing in UK vaults.

• Expense ratio: 18 basis points (0.18%)
• Price per share: $21.60
• 2024 performance: +6.0%
• Total assets: $614 millions

SPDR Gold MiniShares ETF (GLDM) - The Ultra-Low-Cost Option

The ETF with the lowest fees that still maintains considerable liquidity.

• Expense ratio: 10 basis points (0.10%)
• Price per share: $43.28
• 2024 performance: +6.1%
• Total assets: $6.1 billion

iShares Gold Trust Micro ETF (IAUM) - For Retail Investors

The champion in terms of expense ratio.

• Expense ratio: 9 basis points (0.09%)
• Price per share: $21.73
• 2024 performance: +6.0%
• Cumulative performance since 2021: 22.82%

Is It Really Worth It? Analysis by Investor Profile

For conservative or medium-risk tolerance investors: Gold ETFs offer exactly what they promise: relative stability in extreme volatility contexts. They do not generate dividends like stocks but also do not suffer 30-50% drawdowns characteristic of other assets.

For aggressive investors: Gold might seem “boring” compared to tech or cryptocurrencies. However, even for them, a 5-10% allocation acts as a “safety net” against market crashes.

For investors concerned about resurging inflation: Although current inflation is lower than two years ago, reactivation risks are present. Historically, gold has preserved purchasing power during inflationary periods.

Practical Strategy for Investing in Gold ETFs in 2024

1. Define your time horizon: Gold is volatile in the short term but stable long-term. If your horizon is less than 2 years, reconsider your allocation.

2. Calculate your portfolio percentage: Experts suggest 5-15% for conservative profiles, less than 5% for aggressive ones.

3. Choose based on costs: If you have small volumes, IAUM or GLDM are better. If you have institutional access, GLD or IAU offer higher liquidity.

4. Monitor macroeconomic context: FED rate movements, geopolitical tensions, and central bank reports are your key signals.

5. Don’t expect extraordinary returns: Gold ETFs won’t triple in a year. Expect annual returns of 3-8% long-term, with the main advantage being capital preservation.

The Long-Term Reality

Gold has proven to be one of the best buffers against global market downturns. Its inclusion in portfolios is justified not by expectations of explosive returns but by its defensive role in systemic stress scenarios.

With global debt levels at record highs and the financial architecture in question, gold ETFs represent a sensible option for those seeking balance. The question is not whether to invest in gold, but how much to allocate according to your specific risk profile.