Gold pulls investors in when markets get shaky, and gold ETFs offer a convenient way to gain exposure without storing bars. With over 20 options trading in the U.S., finding the best gold ETF requires comparing costs, liquidity, and performance.
Largest gold ETF: SPDR Gold Shares (GLD) with over $60 billion in assets ·
Lowest expense ratio: iShares Gold Trust Micro (GLDM) at 0.10% ·
Best 5-year annualized return: GLDM at 22.1% ·
Number of gold ETFs in the US: Over 20
Quick snapshot
- SPDR Gold Shares (GLD)
- Highest liquidity
- Expense ratio 0.40%
- Over $60B AUM
- iShares Gold Trust Micro (GLDM)
- Expense ratio 0.10%
- Low entry price
- Physical gold backing
- iShares Gold Trust (IAU)
- Expense ratio 0.25%
- Low tracking error
- Well-established since 2005
- VanEck Gold Miners (GDX)
- Exposure to mining stocks
- Higher potential returns and risk
- Dividend yield ~1-2%
Here is a quick summary of the key statistics for the top gold ETFs.
| Metric | Value |
|---|---|
| Top gold ETF by assets | SPDR Gold Shares (GLD) — $62B |
| Lowest expense ratio | GLDM — 0.10% |
| Highest 5-year return | GLDM — 22.1% annualized |
| Number of US gold ETFs | 22 (ETFdb) |
What is the best gold ETF to buy?
Top gold ETFs by assets
- The largest physically backed gold ETF is SPDR Gold Shares (GLD), with over $60 billion in assets under management (ETF Database, commodity ETF directory).
- Second is iShares Gold Trust (IAU) at roughly $30 billion.
- By comparison, the iShares Gold Trust Micro (GLDM) holds about $7 billion but charges an expense ratio of just 0.10% (Investopedia, financial publisher).
The pattern is clear: size brings liquidity, but smaller funds can offer lower fees.
Best gold ETFs for long-term growth
- For long-term holders, low-cost physically backed ETFs tend to track the gold price most closely. GLDM and IAU are strong candidates.
- According to Morningstar (investment research firm), SPDR Gold MiniShares (GLDM) “combines a low fee and low trading costs, which makes it the best choice for most investors.”
- Over the five years through 2025, GLDM delivered an annualized return of 22.1%, slightly ahead of GLD due to its lower fee.
What this means: the fee difference compounds. A 0.30% gap in expense ratio can cost tens of thousands of dollars over a 20-year holding period.
Gold ETFs with lowest fees
- Investopedia’s 2025 review found that iShares Gold Trust Micro ETF (IAUM) has the lowest expense ratio among the gold ETFs it highlights — just 0.09% (Investopedia).
- Kiplinger set a maximum expense-ratio screen of 0.40% in its gold ETF roundup (Kiplinger, financial publisher), and found several funds charging 0.25% or less.
- On the European side, justETF reports that the total expense ratio (TER) of gold ETCs ranges from 0.00% to 0.99% per year, with boerse.de Gold ETC charging 0.00% as of May 2026 (justETF, ETF/ETC comparison site).
The trade-off: ultra-low fees often mean less trading volume, which can widen bid-ask spreads. Morningstar warns that “the cheapest annual fee does not always equal the lowest total trading cost” (Morningstar).
The choice depends on your investment horizon and trading frequency.
Are gold ETFs a good buy?
When gold ETFs perform well
- Gold prices set fresh all-time highs multiple times in 2025 (Investopedia).
- Franklin Gold and Precious Metals ETF (FGDL) posted a one-year return of 44.12% in Investopedia’s review, driven by surging gold prices and mining equity exposure.
- Gold ETFs are widely used for portfolio diversification and as an inflation hedge. U.S. News notes that physically backed ETFs like GLD and IAU track the spot price closely (U.S. News / Money, financial news publisher).
Risks of investing in gold ETFs
- Gold ETFs generate no income or dividends (except mining ETFs like GDX, which yield roughly 1-2%).
- Expense ratios eat into returns: a 0.40% fee on a $10,000 investment costs $40 per year.
- Some ETFs use futures or derivatives, introducing counterparty risk. Physically backed funds avoid this.
The catch: gold is a volatility hedge, not a growth engine. During bull markets, gold ETFs often lag equities.
Gold ETFs can make sense as a 5-10% portfolio allocation for diversification. But for pure growth, stocks have historically outperformed.
Investors should weigh the diversification benefits against the lack of income and potential drag from fees.
Why avoid gold ETFs?
Hidden costs and fees
- Besides the expense ratio, trading costs matter. Morningstar calculated that over the three months through July 17, 2025, GLD’s bid-ask spread-to-price ratio was just 0.007%, while GraniteShares Gold Trust (BAR) had the highest at 0.033% (Morningstar).
- ETFs with lower assets may have wider spreads, eroding the advantage of a low expense ratio.
Underperformance compared to physical gold
- Physically backed ETFs follow gold minus fees, so they always lag the spot price by the expense ratio.
- Mining ETFs like GDX and GDXJ (both 0.51% expense ratio per U.S. News) may outperform or underperform gold depending on mining company profits.
Tax disadvantages
- In the U.S., gold ETFs are taxed as collectibles, with a maximum long-term capital gains rate of 28%, higher than the 20% rate for most stocks.
- ETFs holding gold mining stocks are taxed at standard equity rates.
Why this matters: taxes can turn a 5% gain into 3.6% after federal taxes. Consider holding gold ETFs in tax-advantaged accounts.
Synthetic gold ETFs that use derivatives may face regulatory changes or counterparty defaults. Stick with physically backed funds for safety.
Understanding these drawbacks helps avoid costly mistakes.
Which ETF holds the most gold?
The largest physically backed gold ETFs
- SPDR Gold Shares (GLD) holds the most gold of any ETF — approximately 1,000 tonnes (U.S. News).
- iShares Gold Trust (IAU) is second with around 500 tonnes.
- These holdings are stored in vaults managed by custodians such as JPMorgan Chase in the U.S. and HSBC in the U.K. (U.S. News).
How to verify gold holdings
- ETF sponsors publish daily or monthly gold bar lists. GLD’s holdings are updated daily on the SPDR website.
- Independent audits occur at least annually.
The pattern: the biggest funds offer the most transparency and the tightest spreads.
What Are the Best Gold and Silver ETFs?
Top gold-and-silver ETFs
- Most gold ETFs hold only gold. For combined exposure, consider the Sprott Physical Gold and Silver Trust (CEF) or the Aberdeen Standard Physical Precious Metals Basket (GLTR), which hold both metals.
- Silver-only ETFs like iShares Silver Trust (SLV) are also available.
Dual-metal ETFs vs. single commodity
- Dual-metal funds rebalance automatically, but often charge higher fees (e.g., GLTR’s expense ratio is 0.60%).
- Holding separate gold and silver ETFs gives more control over allocation.
The implication: for most investors, separate physically backed ETFs for gold and silver offer lower costs and more flexibility.
Three funds, one pattern: expense ratio drives long-term returns, but liquidity matters for short-term trades. GLD leads in liquidity, GLDM leads in all-in cost.
The table below compares the top gold ETFs across expense ratio, returns, and assets.
| ETF | Expense Ratio | 5-Year Annualized Return | AUM (approx) |
|---|---|---|---|
| SPDR Gold Shares (GLD) | 0.40% | 21.8% | $62B |
| iShares Gold Trust Micro (GLDM) | 0.10% | 22.1% | $7B |
| iShares Gold Trust (IAU) | 0.25% | 22.0% | $30B |
| VanEck Gold Miners (GDX) | 0.51% | 19.5% | $14B |
| Invesco DB Precious Metals Fund (DBP) | 0.77% | 17.2% | $0.5B |
Upsides
- Physical gold backing for GLD, IAU, GLDM, IAUM — no counterparty risk.
- Highly liquid market; GLD trades over 10 million shares daily.
- Low entry point: GLDM and IAUM trade for around $20-45 per share.
- Effective portfolio diversifier; gold often rallies when stocks fall.
Downsides
- Expense ratios erode returns over time (0.10%-0.77%).
- No income; mining ETFs offer only modest dividends.
- Taxed as collectibles at up to 28% for long-term gains.
- Some funds (e.g., DBP) use futures, adding roll costs.
Confirmed facts vs. what’s unclear
Confirmed facts
- GLD is the largest physically-backed gold ETF by AUM.
- Gold ETFs track the price of gold minus fees.
- Expense ratios directly reduce net returns.
- IAUM has the lowest expense ratio at 0.09% (per Investopedia).
- GLD’s bid-ask spread is the tightest at 0.007%.
What’s unclear
- Whether gold mining ETFs will outperform physical gold ETFs over the next decade.
- Future gold price direction and its impact on ETF returns.
- Regulatory changes affecting synthetic gold ETFs.
- No complete apples-to-apples ranking of all major U.S.-listed gold ETFs by expense ratio and AUM from a single source.
- The exact tracking error of each ETF is not consistently reported.
“Among the various gold exchange-traded funds, the iShares Gold Trust Micro ETF boasts the lowest expense ratio.”
Investopedia (financial publisher)
“SPDR Gold Shares comes with the highest annual fee, it reigns supreme in terms of trading costs.”
Morningstar (investment research firm)
“The total expense ratio of Gold ETCs is between 0.00% p.a. and 0.99% p.a.”
The evidence is consistent: fee differences compound, liquidity matters, and physically backed funds are the safest structure. For a U.S. investor in 2025, the implication is clear: choose GLDM for the best balance, IAUM for the absolute lowest fee, or GLD if you trade frequently and need instant execution.
For the American investor looking to allocate 5-10% of a portfolio to gold, the choice is simple: a physically backed ETF with an expense ratio below 0.25%. Paying more than that without a clear trading need is a self-inflicted drag on returns.
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Frequently asked questions
What is a gold ETF?
A gold ETF is an exchange-traded fund that tracks the price of gold. Most physically backed funds store actual gold bullion in vaults. Investors buy shares representing a fraction of an ounce.
How do gold ETFs work?
Gold ETFs issue shares backed by physical gold or gold derivatives. The share price moves with the spot price of gold, minus the fund’s expense ratio. You can buy and sell them on stock exchanges like regular stocks.
What is the difference between physical and synthetic gold ETFs?
Physical gold ETFs hold actual gold bars in vaults. Synthetic ETFs use futures contracts or swaps. Physical funds avoid counterparty risk but have storage costs; synthetic funds can have different tax treatment and roll costs.
Are gold ETFs safe?
Physically backed gold ETFs are generally safe assets that track gold. However, they are not insured by the FDIC. The main risk is a decline in gold prices. Trading liquidity is high for major funds like GLD.
How are gold ETFs taxed?
In the U.S., gold ETFs are classified as collectibles. Long-term capital gains are taxed at a maximum rate of 28%, higher than the 20% rate for stocks. Gold mining ETFs are taxed at standard equity rates.
Can I hold gold ETFs in a retirement account?
Yes, most gold ETFs can be held in IRAs and 401(k)s. This can defer or avoid the higher collectibles tax rate. Check your broker’s allowed list.
How much of my portfolio should be in gold ETFs?
Financial advisors often recommend 5-10% of a portfolio in gold as a hedge. The exact allocation depends on your risk tolerance and investment horizon.
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