Gold ETFs have surged in popularity, holding over 4,000 tonnes valued at $526 billion as of mid-2026. This makes trading gold far easier for many investors who want exposure without dealing with physical storage. Their daily trading volume has shot up to around $12 billion, highlighting the deep liquidity available on these platforms. Meanwhile, buying physical gold still means facing premiums, wait times, and sometimes empty shelves, as coin dealers report shortages of popular one-ounce coins.
Understanding the Different Experiences
When investors choose gold ETFs like SPDR Gold Shares (GLD) or iShares Gold Trust (IAU), they get shares backed by allocated physical bars stored in major vaults, mainly London bars. These ETFs charge annual fees 0.40% for GLD and 0.25% for IAU that cover custody and management costs. Physical gold holders avoid these ongoing fees but must handle storage and insurance themselves, which can add up.
The way ETFs maintain price alignment with the actual gold market is by letting authorized participants create or redeem shares through the delivery of gold bars. If ETF shares trade above the value of the metal, participants bring physical gold to the custodian and receive new shares to sell on the market. This process helps keep ETF prices close to the spot gold price and ensures liquidity.
Who Benefits from Each Option?
Gold ETFs offer instant purchase and sale, appealing to traders and advisors needing quick portfolio adjustments. They also sidestep issues like shipping delays or storage concerns. Conversely, physical gold attracts investors who want direct control or tangible assets that don’t rely on the financial system’s functionality during crises.
Despite the convenience and scale of ETFs, physical gold remains popular, especially when market volatility spikes. Those premiums and waitlists at local dealers signal sustained demand for holding metal in hand. The choice boils down to whether you prioritize liquidity and ease or physical possession and control.
This is informational content and should not be taken as financial advice.
