Gold ETFs

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A gold ETF (exchange-traded fund) is a fund that tracks the price of gold and trades on a stock exchange like any other share, giving investors exposure to gold’s price movements without buying, storing, or insuring physical metal themselves. The largest gold ETFs, such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), between them hold well over a thousand tonnes of gold on behalf of shareholders, making them among the largest gold holders in the world, rivalling many national central banks’ reserves.

Structurally, most gold ETFs are trusts or funds that hold physical gold bars in a vault on behalf of shareholders and issue shares designed to track the gold price. Shares can be bought and sold instantly through an ordinary brokerage account, in the same way as any listed stock, which is the main appeal for many investors. Owning shares in a gold ETF isn’t the same as owning gold directly, though: shareholders own a claim on the fund, not a specific bar of metal, and in almost every case cannot redeem their shares for physical gold.

This guide covers how gold ETFs work, how the leading funds such as GLD, IAU, and SGOL compare on cost and structure, how to actually buy one, and how gold ETFs stack up against owning physical gold and other gold investment vehicles. If you’re weighing up how gold fits into your wider portfolio, BullionStar’s complete guide to investing in gold covers the full range of options.

What Is a Gold ETF? How They Work

A gold ETF is a fund that tracks the price of gold and trades on a stock exchange like any ordinary company share, bought and sold throughout the trading day through a standard brokerage account. Most of the largest funds, often described as a physical gold ETF or gold-backed ETF, hold physical gold bars with a custodian bank and issue shares intended to mirror the price of that gold, minus the fund’s ongoing costs.

How Do Gold ETFs Work?

Behind the scenes, gold ETFs rely on a creation and redemption mechanism that ordinary investors never actually touch. Only a small number of large financial institutions, known as Authorized Participants, are permitted to create or redeem large blocks of ETF shares directly with the fund, delivering gold in exchange for new shares, or delivering shares back in exchange for gold. This mechanism is what keeps the ETF’s share price closely aligned with the gold price: if shares trade too far above or below the value of the gold backing them, Authorized Participants have a financial incentive to arbitrage the difference away.

For ordinary retail investors, though, none of this creation and redemption process is directly accessible. Retail holders can only buy and sell shares on the open market, in the same way they would trade any other stock, and have no ability to redeem their shares for physical gold, even when the fund is marketed as physically backed. In practice, this means a gold ETF gives investors exposure to the price of gold, not ownership of gold itself, a distinction that matters more than it might first appear, and one worth keeping in mind throughout the rest of this guide.

Physical Gold ETFs vs Futures-Based ETFs

Not all gold ETFs are structured the same way, either. The large majority of assets sit in physical gold ETFs like GLD, IAU, and SGOL, which back their shares with bullion held in a vault. A smaller number of funds instead use gold futures contracts or derivatives to track the gold price without holding any physical metal at all. This is worth checking before assuming any given gold ETF actually holds bullion.

Best Gold ETFs in 2026 (The Top Funds Compared)

The gold ETF space is dominated by a handful of large funds, all of which hold physical gold and aim to track the spot gold price closely, but differ meaningfully on cost, size, and structure. This gold ETF list ranks the largest options by assets under management (AUM).

Fund	Ticker	Issuer	Expense Ratio	AUM (2026)
SPDR Gold Shares	GLD	State Street	0.40%	~$141.7 billion
iShares Gold Trust	IAU	BlackRock	0.25%	~$72.9 billion
SPDR Gold MiniShares Trust	GLDM	State Street	0.10%	~$28.0 billion
abrdn Physical Gold Shares ETF	SGOL	abrdn	0.17%	~$6.9 billion

Because each fund’s share price tracks only a small, fixed fraction of an ounce of gold, gold ETF prices differ substantially from one fund to the next, even though all four are designed to move in line with the same underlying spot gold price.

GLD (SPDR Gold Shares)

The GLD ETF is the oldest and largest gold ETF in the world, launched in 2004 and still the default choice for many institutional investors due to its size and trading liquidity. Its 0.40% expense ratio is the highest of the major funds, a cost that compounds meaningfully over years of holding.

IAU (iShares Gold Trust)

The IAU ETF, run by BlackRock, is the second-largest gold ETF by assets, and charges a lower 0.25% expense ratio than GLD while tracking the same gold price. Its lower share price, roughly a tenth of GLD’s, also makes it marginally easier to buy in smaller, round-number increments.

GLDM (SPDR Gold MiniShares Trust)

Launched by State Street as a lower-cost companion to GLD, GLDM charges just 0.10% a year, the lowest expense ratio among the major physically-backed gold ETFs, and trades at a smaller per-share price aimed at investors dollar-cost averaging into gold.

SGOL (abrdn Physical Gold Shares ETF)

The SGOL ETF holds its gold bars in Swiss vaults rather than London, appealing to investors who want geographic diversification in their custody arrangements. Its 0.17% expense ratio sits between IAU and GLDM.

GLS/GLU (LionGlobal Singapore Physical Gold ETF)

For Singapore and Southeast Asian investors, the LionGlobal Singapore Physical Gold ETF (SGX: GLS in Singapore dollars, GLU in US dollars) offers a locally listed alternative to the major US funds. Listed on SGX in March 2026, it holds at least 90% of its assets in physical gold bars, including kilobars, vaulted in Singapore itself rather than London or Zurich, at a total expense ratio capped at 0.39% a year, broadly comparable to GLD despite its smaller size and much shorter track record.

How to Buy a Gold ETF

Buying a gold ETF is, on the surface, as simple as buying any other stock: open a brokerage account, search for the fund’s ticker symbol (GLD, IAU, GLDM, SGOL, or a locally listed option like GLS), and place a buy order during the exchange’s trading hours.

Opening a Brokerage Account and Choosing an Exchange

In practice, there are more steps involved than that summary suggests. You first need to open and fund a brokerage account, which for many first-time investors means identity verification, minimum deposits, and a settlement period before funds are available to trade. You then need to decide which exchange to buy on, since the same fund, or a similar one, is often cross-listed in different currencies (SPDR Gold Shares, for example, trades in both USD and SGD on SGX), each with its own liquidity and bid-ask spread. And because ETFs only trade during market hours, you can’t buy or sell outside the exchange’s trading session, unlike physical gold, which BullionStar prices and sells continuously online.

Gold ETF Returns and Expense Ratios

Once you own shares, ongoing gold ETF performance is primarily a function of two things: the spot gold price, and the fund’s gold ETF expense ratio, which is deducted continuously from the fund’s holdings rather than billed separately. This is why gold ETF returns, even across funds tracking the same gold price, diverge slightly over time, a lower expense ratio compounds into a small but real difference the longer you hold, and is worth weighing against a fund’s liquidity and trading costs when choosing between options.

Buying physical gold, by comparison, involves fewer moving parts: no ticker symbol to look up and no market hours to work around. Opening an account with a dealer like BullionStar may still involve identity verification, similar to opening a brokerage account, but from there, the process looks much like buying anything else online: you choose an easy to understand, transparently priced product, click buy, and have it delivered or stored.

Gold ETFs vs Physical Gold and Other Alternatives

Gold ETFs aren’t the only way to get exposure to gold without buying bars or coins, and physical gold isn’t the only alternative to a gold ETF. Here’s how the main options actually compare.

Ownership and Ongoing Costs

The core difference in any gold ETF vs physical gold comparison comes down to ownership and risk. A gold ETF shareholder owns a claim on a fund, not a specific, identifiable bar of metal, and in almost all cases has no right to redeem shares for gold. An owner of physical gold, by contrast, holds a specific bar or coin outright, either in hand or in allocated storage, with no fund structure, custodian, or Authorized Participant standing between them and the metal.

This difference matters most over time. Because a gold ETF’s expense ratio is paid by periodically selling a small amount of the fund’s gold, the actual amount of gold each share represents gradually declines, meaning even a “flat” gold price can still translate into a slowly shrinking entitlement per share. Physical gold carries no equivalent structural drag: a bar or coin you own outright doesn’t shrink to pay anyone’s fees, though storing it with a third party, if you choose to, is a separate and clearly stated cost. On top of the direct cost comparison, gold ETFs vs physical gold also differ on counterparty risk: an ETF holder is exposed to the fund’s trustee, sponsor, and custodian remaining solvent and honest, risks that simply don’t exist when you hold the metal yourself.

Vault Access, Insurance, and Tax Treatment

There’s also a practical difference in access. Retail ETF holders can never visit the vaults holding the gold behind their shares, and for funds like GLD and IAU, the specific vault locations of custodians such as HSBC and JP Morgan aren’t even publicly disclosed. That also rules out any independent audit by the holder, regardless of the size of their position. BullionStar customers storing physical gold, by contrast, can visit BullionStar’s Singapore vault in person and view their own holdings directly.

Insurance is another point worth checking rather than assuming. The SPDR Gold Trust’s own prospectus and FAQ state plainly that the Trust does not insure its gold: it relies on the custodian’s general business insurance, which explicitly does not cover the full value of the gold held, and the Trust has no ability to dictate the existence or extent of that coverage. If gold held by the custodian were lost or stolen, shareholders would bear that loss themselves. Physical gold held in fully insured storage, or in your own possession, doesn’t carry this particular gap.

There’s also a jurisdiction-specific tax advantage worth flagging for buyers in Singapore. Gold, silver, and platinum bullion that qualifies as Investment Precious Metals (IPM), broadly, bars and a defined list of coins of minimum purity, produced by an LBMA or LPPM-accredited refiner, is exempt from Singapore’s Goods and Services Tax (GST). Gold ETF shares don’t benefit from any equivalent product-level exemption; they’re taxed under ordinary securities and income tax rules instead, which, as covered in the FAQ below, can be considerably less favourable depending on where the ETF and the investor are based.

For a broader look at how gold ETFs and other paper gold products compare to owning bullion directly, see BullionStar’s Why Physical Gold & Silver Beats Paper.

Gold Mining ETFs

A gold mining ETF, such as VanEck Gold Miners ETF (GDX) or its junior-miner counterpart GDXJ, invests in the shares of gold mining companies rather than gold itself. These funds are correlated with the gold price, since miners’ profits rise and fall with it, but they also carry company-specific risks that have nothing to do with gold: operational setbacks, management decisions, debt levels, and geopolitical exposure in the countries where the miners operate. A gold mining ETF is a bet on the mining industry, not a substitute for owning gold or a gold ETF that tracks the metal directly.

Leveraged Gold ETFs

A leveraged gold ETF aims to deliver a multiple, commonly 2x or 3x, of gold’s daily price move, using derivatives rather than physical gold to do so. Because the leverage resets each day, returns over longer periods can diverge significantly from a simple multiple of gold’s actual price change over the same period, an effect known as volatility decay. Leveraged gold ETFs are built as short-term trading tools, not long-term holdings, and carry a materially different risk profile to both standard gold ETFs and physical gold.

Gold ETFs vs Gold Mutual Funds

Gold mutual funds predate gold ETFs and are still offered by some fund managers, but the two aren’t quite the same thing. In a gold ETF vs gold mutual funds comparison, the key differences are pricing and cost: ETFs trade continuously on an exchange at a market price, while mutual funds are priced once a day based on their net asset value and bought or sold directly through the fund manager. Mutual funds also typically charge higher fees than the major gold ETFs, and many hold a mix of mining equities, derivatives, and bullion rather than being purely physically backed, so it’s worth checking a fund’s actual holdings rather than assuming “gold fund” means direct gold exposure.

A Physical Alternative With ETF-Like Convenience

If what appeals to you about a gold ETF is the ability to start small, buy online, and add to your holding flexibly, BullionStar’s Bullion Savings Program (BSP) is worth considering as an alternative. BSP lets you buy gold by the gram online, fully backed by physical metal held in BullionStar’s vault, with storage fees of just 0.09% a year, and unlike a gold ETF, BSP gold grams can be converted into physical bars for free once you’ve accumulated enough, giving you a direct path from a low-cost, flexible savings product into bullion you can actually hold or have delivered.

Frequently Asked Questions

Does Vanguard have a gold ETF?

No. Despite “Vanguard gold ETF” being a common query, Vanguard doesn’t offer a physically-backed gold ETF. Its only gold-related product, the Vanguard Global Capital Cycles Fund (VGPMX), is an actively managed fund investing in gold mining and metals companies, not physical bullion, and its price doesn’t track the gold price directly.

Can I convert my gold ETF shares into physical gold?

For almost all retail investors, no. Only large institutions known as Authorized Participants can redeem blocks of shares for physical gold directly with the fund; individual shareholders can only sell their shares for cash on the open market. If being able to convert into physical metal matters to you, products like BullionStar’s Bullion Savings Program are built specifically to let you convert gram-based holdings into physical bars for free once you have accumulated enough.

What happens to a gold ETF if the fund or custodian goes bankrupt?

Most gold ETF prospectuses acknowledge this as a real, if unlikely, risk: if a custodian became insolvent, the fund’s assets might not be immediately available, and there could be delay and cost involved in identifying and reclaiming the specific gold bars held on its behalf. This is a form of counterparty risk that doesn’t apply when you own physical gold outright or hold it in allocated storage.

Are gold ETFs available in India?

Yes. Gold ETFs are widely available in India and regulated by SEBI, which requires them to hold at least 95% of assets in physical gold of at least 99.5% purity, or SEBI-approved gold-related instruments. Popular Indian gold ETFs include Nippon India ETF Gold BeES, HDFC Gold ETF, and SBI Gold ETF, all listed on the NSE or BSE and bought through a regular Indian brokerage account.

Are gold ETFs available in Singapore?

Yes. Singapore investors can access gold ETFs through SGX-listed options, including SPDR Gold Shares (dual-listed as O87 in USD and GSD in SGD) and the locally vaulted LionGlobal Singapore Physical Gold ETF (GLS/GLU), as well as international funds like GLD or IAU through a brokerage account with overseas market access.

Are gold ETFs taxed differently?

Often, yes, and the difference can be significant depending on where you’re based. In the US, physically-backed gold ETFs are classified by the IRS as “collectibles,” meaning long-term gains are taxed at up to 28%. In Singapore, physical gold, silver, and platinum bullion that qualifies as Investment Precious Metals (IPM) is exempt from GST, an exemption that applies to the physical metal itself, with no equivalent relief for gold ETF shares. Tax treatment varies significantly by country, and can also differ between an ETF, physical gold, and other gold investment vehicles, so it’s worth checking the rules in your own jurisdiction, or speaking to a tax advisor, before investing.

Do gold ETFs hold physical gold?

Some do, some don’t. Large funds like GLD, IAU, GLDM, and SGOL are physically-backed, holding gold bars in a vault. Others, including many leveraged gold ETFs and some gold mining ETFs, use futures contracts, derivatives, or mining company shares instead, and hold no physical gold at all. It’s worth checking a fund’s prospectus or fact sheet rather than assuming “gold ETF” always means direct gold ownership.

Gold ETFs vs Physical Gold: The Bottom Line

Gold ETFs solve a real problem: they make it simple to get exposure to the gold price through an ordinary brokerage account, with no need to arrange storage, insurance, or delivery. For short-term trading, or as a small, liquid slice of a broader portfolio, that convenience has genuine value.

For investors buying gold as a long-term store of value, though, the tradeoffs are harder to ignore. A gold ETF share is a claim on a fund, not a specific bar of metal, carries counterparty and custodian risk that physical ownership doesn’t, and quietly loses a small amount of its underlying gold backing every year to cover fees. None of that shows up clearly on a stock chart, but it compounds the longer you hold.

If what actually appeals to you about a gold ETF is the convenience, low starting cost, and ease of buying online, it’s worth knowing a physical alternative covers that same ground. BullionStar’s Bullion Savings Program lets you buy gold by the gram online, at a lower ongoing cost than most major gold ETFs, fully backed by allocated metal, with the option to convert into physical bars whenever you choose.

For investors who’d simply rather own gold outright from the start, buying gold bars or gold coins directly remains the most straightforward way to hold physical gold, with no fund structure, ticker symbol, or ongoing fee standing between you and the metal. For most long-term holders, either route offers a stronger starting point than a gold ETF.