Gold ETFs in 2024: Why Investors Should Consider This Alternative? The Top 6 Products in the Market

Gold continues to be one of the most sought-after safe havens for investors during times of uncertainty. Unlike directly owning physical bars, exchange-traded funds (ETFs) specialized in this asset have revolutionized how small savers can access this type of investment. Reduced fees and ease of buying and selling during trading hours make these instruments particularly attractive in the current context.

Understanding Investment Mechanisms in Gold ETFs

How Do These Funds Work?

There are two main categories. The first maintains authentic physical gold stored in vaults of reputable financial institutions. Each share represents a fraction of the actual ownership of that precious metal. The second operates through financial derivatives—futures and options—that replicate the price behavior without requiring physical storage. Both strategies allow investors to gain exposure without facing the logistical challenges and security risks associated with direct possession of bars.

Competitive Advantages of the Format

These funds are characterized by their immediate accessibility within the traditional stock market. Annual expense ratios are substantially lower than actively managed mutual funds. They generally range between management fees and brokerage costs imposed by each broker. Liquidity is another strength: with daily volumes of millions of shares, there is no difficulty entering or exiting positions quickly.

The Macroeconomic Context Explaining Renewed Interest

Geopolitical Factors Drive Demand

The international landscape has generated considerable appetite for safe-haven assets. Ongoing regional conflicts, along with tensions among global powers, have reinforced the perception of gold as a protective medium. Analysts warn that the possibility of significant political changes in key economies could intensify this volatility in the coming months.

Interest Rate and Currency Dynamics

There is a well-documented inverse correlation between the cost of money set by central banks and the international price of gold. As monetary authorities consider reductions in their benchmark rates, a depreciation of the US dollar—denomination in which gold is globally priced—is anticipated, which could make it cheaper. This scenario would favor increased demand. Simultaneously, a reduction in returns from fixed-income instruments would make alternatives like gold, digital assets, and equities comparatively more attractive.

Market Data: What the Numbers Reveal

Capital Movements in the Sector

Although gold prices have shown sustained recovery since late 2022, organizations like the World Gold Council have documented net capital outflows from these funds during recent quarters. Just in February 2024, approximately $2.9 billion were withdrawn globally, with North America accounting for 82% of this volume. However, this withdrawal has not prevented the metal from maintaining gains, supported by massive purchases from central banks and strong physical demand.

Central Bank Intentions

A survey conducted among 57 global monetary authorities showed that 71% plan to increase their gold holdings over the next 12 months. This figure marked a significant rise compared to previous years. The precious metal remains a strategic component of international reserves due to its safety, liquidity, and value preservation properties. Countries like the United States, Germany, China, and India hold considerable positions, underscoring the geopolitical and economic importance of the asset.

Diversified and Resilient Demand

The composition of global demand illustrates structural stability. It comes from four main sources that balance according to economic cycles: jewelry (approximately 50% of consumption), speculative investments (22%), purchases by monetary authorities (20%), and industrial applications (7%). In the fourth quarter of 2023 alone, about 1,150 tons of total consumption were recorded. Rarely has this indicator fallen below 1,000 tons in the last 14 years, demonstrating a fairly robust demand floor.

Evaluation: Is Investing in This Asset Class Prudent?

The answer depends crucially on individual risk profiles and time horizons. Those with less capacity to withstand fluctuations should allocate significant portions to these funds as a protective mechanism. In contrast, investors with higher tolerance will typically seek exposure to categories with higher return potential.

Arguments in Favor of the Position

Effective diversification: These funds introduce a decorrelated component from stocks and bonds, mitigating total losses in mixed portfolios. Safe haven characteristic: Historically, when equity markets suffer stress, gold tends to appreciate, acting as a buffer. Inflation hedge: Prolonged historical series demonstrate that this metal maintains purchasing power during periods of monetary erosion. Global fiscal uncertainty: Unprecedented levels of public debt—United States at 129% of GDP, Japan exceeding 260%—raise questions about macroeconomic sustainability. In this context, experts like Jerome Powell acknowledge that fiscal trajectories of many nations are unsustainable in the long term.

Limitations to Consider

Gold does not generate cash flows like dividends. Its price experiences significant short-term volatility. Therefore, these instruments work optimally as medium- to long-term strategies, not as short-term speculation.

The 6 Most Relevant Products for 2024

1. SPDR Gold Shares (NYSE: GLD)

Leads the market with $56 billion in assets under management. Tracks directly the price of bars stored by HSBC in London. Approximate daily volume of 8 million shares. Annual fee of 40 basis points. Current price around $202 per share, with a 6.0% increase year-to-date. Offers unmatched liquidity and an extended track record.

2. iShares Gold Trust (NYSE: IAU)

With $25.4 billion in assets, it is the second most capitalized option. Custody at JP Morgan Chase Bank, London. Average daily volume of 6 million shares. Fee of just 25 basis points annually. Share price of $41.27, with a 6.0% performance this year. Historically, it has offered the best return among these funds since 2009 (151.19% accumulated).

3. Aberdeen Physical Gold Shares (NYSE: SGOL)

Storage in Swiss and British vaults. Asset base of $2.7 billion. Trades with solid volume of 2.1 million shares daily. Minimum annual fee of 17 basis points. Affordable price of $20.86 per share. Gains of 6.0% so far this year. It is the lowest-cost alternative without sacrificing custody quality.

4. Goldman Sachs Physical Gold (NYSE: AAAU)

Assets of $614 million, backed by JPMorgan Chase. Volume of 2.7 million shares daily. Cost of 18 basis points, significantly below the industry average of 63. Quotation of $21.60 per share, with a 6.0% annual return. Provides institutional security with a competitive cost structure.

5. SPDR Gold MiniShares (NYSE: GLDM)

A compressed version of the giant GLD. Manages $6.1 billion in assets. Daily volume of 2 million shares. Minimum fee of just 10 basis points—one of the lowest available. Price of $43.28. Increase of 6.1% in 2024. Represents the lowest-cost option for moderate-volume investors.

6. iShares Gold Trust Micro (NYSE: IAUM)

The lowest-fee instrument on the market, with 9 basis points annual fee. Has $1.2 billion in accumulated assets. Modest daily volume of 344,000 shares. Price of only $21.73 per share. Return of 6.0% this year. Specifically designed for retail investors seeking maximum cost efficiency.

Historical Performance Comparison (2009-2024)

Since early 2009, spot gold has generated a return of 162.31%. Among these six funds: IAU leads with 151.19%, followed by GLD with 146.76%, SGOL with 106.61%, AAAU with 79.67%, GLDM with 72.38%, and IAUM (since its launch in 2021) with 22.82%. These figures show that even during volatile periods, most of these instruments have preserved value robustly.

Strategic Guidelines for Positioning in Gold in 2024

Clarify personal objectives: Before allocating capital, specifically define what you want to protect and how much risk you are willing to tolerate. Build a balanced portfolio: Gold funds work best as a complementary component, never as a sole position. Adopt a long-term perspective: Avoid seeking quick gains; these assets shine over years, cushioning macroeconomic shocks. Assess the global situation: It is crucial to stay alert to changes in monetary policy, geopolitical conflicts, and public debt levels—variables that drive gold prices.

The central question is not whether investing in gold is correct, but how much exposure is appropriate for your particular situation. Small savers now have sophisticated and cost-effective tools to participate in this ancient market. The final decision depends on your careful analysis of the macroeconomic environment and your own risk aversion.