Invest in Physical Gold ETFs in 2024: The Complete Guide to the Top 6 Instruments

Why Gold Remains a Safe Bet

The precious metal has regained prominence in investment portfolios during 2024, driven by a volatile geopolitical environment and expectations of interest rate cuts. Conflicts in Ukraine and Gaza, along with tensions among superpowers, have intensified the search for safe-haven assets. Simultaneously, the possibility of changes in U.S. administration projects greater uncertainty for the coming months.

From a macroeconomic perspective, global debt has reached unsustainable levels. The United States carries a public debt-to-GDP ratio of 129%, while Japan leads with 263.9%. This fiscal situation raises structural doubts about the international monetary system, especially considering that Jerome Powell, Federal Reserve Chair, openly acknowledges that “the United States is on an unsustainable fiscal path.”

In this context, physical gold ETFs emerge as a practical solution for retail investors to protect their capital without the complications of storing bars.

Understanding Gold ETFs: How Do They Work

A physical gold ETF is simply an investment instrument that replicates the behavior of the precious metal by holding real assets stored in international vaults. Unlike directly buying physical gold, each share represents a fraction of ownership of the stored metal.

There are two main types:

Physical Gold ETFs: Hold actual bars deposited in top-tier financial institutions (HSBC, JP Morgan Chase). They offer security and transparency, though with moderate fees.

Synthetic ETFs: Use derivatives (futures and options) to replicate the price. They feature lower expense ratios but introduce counterparty risk.

Liquidity is an undeniable advantage. Unlike traditional funds, ETFs trade like stocks throughout the trading session, allowing immediate buying and selling. Annual fees typically range from 0.09% to 0.40%, significantly lower than gold mutual funds.

The Gold Market Outlook in 2024

Gold demand comes from four complementary sources that ensure stability:

• Jewelry: 581.5 tons in Q4 2023
• Investment: 258.3 tons (with strong participation from physical gold ETFs)
• Central Banks: 229.4 tons
• Technology: 80.6 tons

Over the past 14 years, global demand has rarely fallen below 1,000 tons quarterly, reflecting a resilient consumption base.

Paradoxically, while demand remains robust, ETFs have recorded significant net outflows: in February 2024, approximately $2.9 billion flowed into other instruments, mainly from North America. However, this has not negatively impacted the gold price, which has been steadily recovering since October 2022 thanks to massive central bank purchases.

71% of the 57 central banks surveyed globally in 2023 plan to increase their gold reserves, reflecting a diversification trend away from the US dollar.

The Top 6 Physical Gold ETFs for 2024

1. SPDR Gold Shares ETF (NYSE: GLD)

The market giant, with $56 billion in assets under management. Physical gold is stored in HSBC Bank USA vaults in London. Trades approximately 8 million shares daily.

• Annual fee: 0.40%
• Current price: $202.11 USD
• 2024 performance: +6.0%
• Cumulative return (2009-2024): 146.76%

2. iShares Gold Trust ETF (NYSE: IAU)

Second largest with $25.4 billion in AUM, backed by gold stored at JP Morgan Chase Bank London. Daily volume: 6 million shares.

• Annual fee: 0.25%
• Current price: $41.27 USD
• 2024 performance: +6.0%
• Cumulative return (2009-2024): 151.19% (best performance)

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

Specialized alternative with $2.7 billion in AUM, stored across Switzerland and the UK. Volume: 2.1 million shares.

• Annual fee: 0.17%
• Current price: $20.86 USD (more accessible)
• 2024 performance: +6.0%
• Cumulative return (2009-2024): 106.61%

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

Physical gold ETF with custody at JPMorgan Chase, vaults in the UK. Net assets: $614 million USD. Volume: 2.7 million shares.

• Annual fee: 0.18%
• Current price: $21.60 USD
• 2024 performance: +6.0%
• Cumulative return (2009-2024): 79.67%

5. SPDR Gold MiniShares ETF (NYSE: GLDM)

Economical version of the original GLD, maintaining the security of physical gold. AUM: $6.1 billion USD. Volume: 2 million shares.

• Annual fee: 0.10% (more competitive)
• Current price: $43.28 USD
• 2024 performance: +6.1%
• Cumulative return (2009-2024): 72.38%

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

The cheapest on the market with the lowest fee. AUM: $1.2 billion USD. Daily volume: 344,000 shares.

• Annual fee: 0.09% (lowest available)
• Current price: $21.73 USD
• 2024 performance: +6.0%
• Cumulative return (since 2021): 22.82%

Is It Really Worth It in 2024?

Investing in physical gold ETFs depends on your personal goals and risk profile. For conservative or intermediate investors, these instruments offer:

Diversification: Gold moves inversely to the stock market, cushioning losses during volatility.

Inflation hedge: Historically, the precious metal preserves purchasing power when fiat currency depreciates.

Security: Unlike dividend-paying stocks, gold does not generate income. But it also does not depend on corporate results.

However, there are limitations. Gold prices fluctuate significantly over short periods. The inverse relationship with the US dollar means that interest rate reductions could make the metal cheaper internationally.

Considering unsustainable global debt and declining confidence in reserve currencies, physical gold ETFs can be an effective defensive strategy in the medium and long term.

Recommended Investment Strategy

Define your goals first: Are you seeking protection or returns? Gold ETFs excel in the former.

Diversify properly: Do not allocate more than 10-15% of your portfolio to gold. Complement with stocks, bonds, and cryptocurrencies according to your profile.

Prioritize long-term: Ignore daily fluctuations. Gold is a tool to protect capital during cycles of 5 to 10 years.

Choose by costs: If your horizon is very long, each 0.1% annual fee impacts significantly. IAUM (0.09%) and GLDM (0.10%) offer the best ratio.

Monitor macroeconomic context: Central bank decisions on rates, dollar behavior, and geopolitics are key catalysts.

Conclusion

Physical gold ETFs are the most accessible way for retail investors to participate in the safety of the precious metal without the complications of physical storage. With competitive fees, guaranteed liquidity, and backing from top-tier custodians, these instruments have proven to be solid alternatives during periods of uncertainty.

In 2024, when global fiscal imbalances raise structural doubts about the current monetary system, positioning a disciplined portion of your portfolio in physical gold ETFs can be a prudent decision to preserve value in the long run.