Ways to Invest in Gold

Investors have several options to consider when looking to gain exposure to gold and tap into its diverse portfolio benefits. Understanding the potential advantages and considerations for different gold investment vehicles—ETFs, mutual funds, gold bars and coins, gold mining stocks, gold derivatives, or gold stablecoins—can help investors determine which option is best suited to their personal investment goals.

Comparing gold investment vehicles

Gold-backed ETFs

Gold-backed exchange traded funds (ETFs) provide investors a highly efficient route into gold: intraday tradability on major exchanges, low tracking error to the bullion price, and scale-driven liquidity.¹ Over the past five years, the ETF channel, led by State Street’s gold-backed ETFs, has seen substantial growth, with aggregate assets climbing and trading volumes expanding sharply,² highlighting how ETFS are now an established mainstream access point for gold exposure.

ETFs may also provide deep liquidity and access to the market to rebalance and position exposures. But it’s important for investors to note that not all gold ETFs are created equal—or invest exclusively in gold bullion—and investors should carefully review the holdings to determine how much of the ETF’s portfolio is invested in physical gold. This is especially true when comparing gold mining ETFs and gold mutual funds that invest only a small portion of their assets in gold.

Gold mutual funds

Gold mutual funds provide investors with the same daily liquidity as gold ETFs, but they do not trade intraday on national exchanges, as do ETFs. And many mutual funds that hold gold in their portfolio may not exclusively invest in gold, which means they may not track gold’s price movements and reap the full value of gold’s diverse potential benefits. Mutual funds also tend to maintain a higher total expense ratio than that of many ETFs.³

Gold mining stocks and ETFs

Gold mining stocks and ETFs are another way that investors can gain exposure to gold. But investing in these companies is not the same as directly investing in gold bullion or a gold-backed ETF. These represent investments in gold mining companies and operations, and these companies may be impacted by additional factors beyond the price of gold—such as profitability, company management, free cash flow, industry competition, and other financial and operational decisions.

Gold bars and coins

Gold bars and coins remain the most popular way that global investors access gold. But that habit may be shifting. Today, global gold-backed ETFs hold 3,893 tonnes of gold.⁴ While gold-backed ETF flows can be volatile, more investors are selecting ETFs for their gold allocation. Although directly holding bars and coins has a high level of transparency given physical possession, investors are often required to pay a premium over the spot price of gold for their purchase. Cost and liquidity considerations also come into play when holding bars and coins outright—including costs for insurance, transportation, and safekeeping, each of which can impact the underlying potential performance benefits.

Gold futures

Gold futures provide another established route for gaining price exposure, particularly for sophisticated investors seeking leverage, tactical positioning, or hedging flexibility. Futures traded on regulated exchanges like COMEX offer standardized contracts that settle financially or through physical delivery.

Gold futures are not physically backed by gold, and they carry defined expiration dates, which require holders to roll over the contract according to a scheduled expiry to maintain their gold exposure. Although gold futures are generally traded in larger positions with lower brokerage commissions due to their size, the associated brokerage and roll costs need to be considered when determining the total cost of ownership.

In recent years, futures trading volumes have declined relative to the peaks observed in the 2010s and early 2020s.⁵ This moderation reflects lower speculative participation and a gradual migration of some institutional trading activity toward ETFs and OTC instruments. Despite the volume contraction, futures markets continue to play a central role in price discovery and remain a key tool for short-term exposure and portfolio hedging.

Over-the-counter (OTC) gold market

The OTC gold market, primarily centered in London, complements exchange-traded products and futures by enabling large, customized trades between financial institutions. Most settlements are just cash settled or use gold as a reference price. Transactions typically occur through bilateral agreements and often involve unallocated gold accounts managed by major bullion banks.

Recent data indicate that OTC trading volumes have increased, even as exchanged-based futures activity softened.⁶ This rise reflects greater use of bespoke contracts by central banks, sovereign funds, and institutional investors that prefer tailored settlement and confidentiality. The expansion of OTC activity underscores the ongoing globalization of gold demand and highlights how liquidity in the gold market is now increasingly diversified across multiple trading venues.

Gold-backed stablecoins

Gold-backed stablecoins are digital tokens that represent ownership of real gold stored in secure vaults. They let investors, especially those familiar with cryptocurrency, gain exposure to gold price directly on-chain. Each token is linked to a specific amount of physical gold and can usually be exchanged for the metal itself or for its cash value.

The main advantages are that these tokens can be traded at any time, divided into small fractions, and used easily across the wider crypto system. But investors still face risk if the company that issues or stores the gold loses credibility. If confidence drops, the token’s price could separate from the actual value of the gold it represents.

In a broader sense, gold-backed stablecoins create a new bridge between digital finance and the physical gold market. As long as these tokens remain fully backed by real gold, they could bring new buyers who might not otherwise invest in the yellow metal. Today the industry is very small but over time, this could add to—not replace— traditional demand for bullion and gold-backed ETFs.

Choosing ETFs for gold exposure

For many investors, the case for gold ETFs may be strong relative to other gold investment vehicles, particularly in terms of accessibility, transparency, and cost. ETFs often provide a higher degree of flexibility for investors at a potentially lower overall cost than many of the other options do—and gold-backed ETFs are no exception.

Gold ETFs have grown to record levels in terms of popularity and AUM since 2004, when SPDR ETFs introduced the first physically backed gold ETF designed to track the price of gold bullion, SPDR® Gold Shares (GLD®). Since that time, gold investing via gold-backed ETFs has grown to US $503 billion in assets.⁷

Work with a global gold leader

In November 2004, the World Gold Council partnered with SPDR ETFs to launch GLD®, the first US gold-backed exchange traded fund. GLD’s arrival made it convenient and cost effective for investors to hold gold in their portfolios. Since then, GLD has reached over $134 billion in assets,⁸ making it the largest and most liquid gold-backed ETF in the world.⁹ In 2018, we launched GLDM®, a low-cost gold-backed ETF option, providing an innovative low-cost solution to meet investor demands.

Both ETFs provide investors a relatively efficient and liquid way to access the gold bullion market through physically backed ETFs. Learn more about our heritage in the gold market or read more about our gold ETFs below.

When considering similar products, it’s important to understand both liquidity and overall costs—and the impact that each can have on your portfolio. Get the facts about liquidity and why total cost of ownership matters.