2024: Why are investors betting heavily on gold ETFs?

Precious metals have regained interest among market participants. Rising geopolitical tensions, expectations of interest rate cuts, and unprecedented global debt levels have converged to make gold—and its investment vehicles—the protagonists of defensive portfolios.

But, is it really advisable to allocate capital to gold ETFs during 2024? The answer depends on your risk profile and objectives. What is clear is that these financial instruments offer democratic access to an asset that has served as a store of value for millennia.

Understanding Gold ETFs: More Than Just Bars

A gold ETF is simply an exchange-traded fund that allows any investor to gain exposure to the metal without the complications of physical storage. There are two main modalities:

Physically backed: the fund holds actual bars deposited in vaults of recognized financial institutions. Each share represents a fraction of that tangible ownership.

Synthetic: they use derivatives (futures, options) to replicate price movements. They offer lower expense ratios but introduce counterparty risk.

Liquidity is a key advantage. Unlike buying physical gold, these shares are traded throughout the trading session, enabling quick entry and exit from the market.

Why is gold more interesting now than ever?

The numbers speak for themselves. Global debt levels have reached critical points. The United States maintains a public debt-to-GDP ratio of 129%, while Japan leads with 263.9%. China and the European Union, although manageable, show sustained growth.

This situation has raised doubts about the sustainability of the current financial system. Jerome Powell, Chairman of the U.S. Federal Reserve, recently acknowledged that “the federal government is on an unsustainable fiscal path. Debt is growing faster than the economy.”

Meanwhile, central banks worldwide have intensified their purchases. According to 2023 surveys by the World Gold Council, 71% of the 57 central banks surveyed plan to increase their gold reserves in the next 12 months, 10 percentage points above the 61% recorded in 2022.

Market signals in 2024

Although it may seem paradoxical, gold ETFs have recorded net capital outflows over the past nine months. Only in February 2024, $2.9 trillion was withdrawn globally, with $2.4 trillion concentrated in North America. Europe saw $0.7 trillion in outflows, while Asia showed a net inflow of $0.2 trillion.

However, these outflows did not halt the recovery of the metal’s price. Since October 2022, gold has shown a strengthening trajectory, supported by strong institutional demand and central bank purchases.

Demand itself comes from diverse and stable sources. In Q4 2023, global demand reached 1,149.8 tons, distributed as follows: jewelry (581.5 tons), investment (258.3 tons), central banks (229.4 tons), and technology (80.6 tons).

Demand has rarely fallen below 1,000 tons in the last 14 years. This underlying stability explains why many investors see gold as a defensive complement to their portfolios.

Six solid alternatives to invest in gold ETFs

Choosing the best gold ETF depends on specific needs: fees, liquidity, historical performance, and price accessibility. Here are six competitive options:

1. iShares Gold Trust ETF (NYSE: IAU)

One of the giants in the sector with $25.4 billion in assets under management. Offers direct exposure to the daily movement of gold bars under custody of JP Morgan Chase Bank in London.

• Expense ratio: 0.25% annually
• Average daily volume: 6 million shares
• Price per share: $41.27
• 2024 performance: +6.0%
• Since 2009: 151.19%

2. SPDR Gold Shares ETF (NYSE: GLD)

The largest gold ETF on the market, with $56 billion in assets and 8 million shares traded daily. Tracks gold bars in London under custody of HSBC Bank USA.

• Expense ratio: 0.40% annually
• Average daily volume: 8 million shares
• Price per share: $202.11
• 2024 performance: +6.0%
• Since 2009: 146.76%

3. SPDR Gold MiniShares ETF (NYSE: GLDM)

A low-cost alternative that replaces the traditional GLD. Ideal for investors seeking to minimize fees.

• Expense ratio: 0.10% annually (one of the lowest)
• Assets under management: $6.1 billion
• Average daily volume: 2 million shares
• Price per share: $43.28
• 2024 performance: +6.1%
• Since 2009: 72.38%

4. iShares Gold Trust Micro ETF (NYSE: IAUM)

The most cost-effective gold ETF in terms of fees. Perfect for small investors wanting to participate with limited capital.

• Expense ratio: 0.09% annually (the lowest in the market)
• Assets under management: $1.2 billion
• Average daily volume: 344,000 shares
• Price per share: $21.73
• 2024 performance: +6.0%
• Since 2021: 22.82%

5. Aberdeen Physical Gold Shares ETF (NYSE: SGOL)

ETF backed by physical gold stored in vaults in Switzerland and the UK. Offers transparency and international custody security.

• Expense ratio: 0.17% annually
• Assets under management: $2.7 billion
• Average daily volume: 2.1 million shares
• Price per share: $20.86 (most accessible)
• 2024 performance: +6.0%
• Since 2009: 106.61%

6. Goldman Sachs Physical Gold ETF (NYSE: AAAU)

Backed by a top-tier financial institution, with custody in UK vaults via JPMorgan Chase Bank.

• Expense ratio: 0.18% annually (much competitive compared to the average of 63 basis points in commodities)
• Assets under management: $614 million
• Average daily volume: 2.7 million shares
• Price per share: $21.60
• 2024 performance: +6.0%
• Since 2009: 79.67%

Gold vs. Other Assets: Cumulative Return 2009-2024

Since early 2009, spot gold performance has been 162.31%. Among the evaluated gold ETFs:

• Best performance: iShares Gold Trust ETF (IAU) with 151.19%
• Second place: SPDR Gold Shares ETF (GLD) with 146.76%
• Third place: Aberdeen Physical Gold Shares ETF (SGOL) with 106.61%

Newer funds like IAUM (launched in 2021) have accumulated 22.82%, reflecting different market cycles.

Is it advisable to invest in gold ETFs in 2024?

The decision depends on your personal context. If your risk tolerance is low or medium, these instruments deserve serious consideration.

Reasons to include gold ETFs in your portfolio:

Diversification: Gold moves inversely to many assets, especially during market stress. It acts as a buffer during stock market downturns.

Inflation hedge: Historically, the metal has preserved value during inflationary periods. With potential price rebounds, this coverage becomes more relevant.

Safe haven asset: While technology and other growth sectors experience volatility, gold tends to appreciate.

Accessibility: Small investors can participate with limited capital, without storage costs or security concerns.

Institutional support: The interest of central banks worldwide provides a structural demand floor.

Caution factors:

• Gold does not generate income (no dividends or interest)
• Its price can fluctuate widely over short horizons
• Fees, though low, impact long-term returns
• The macroeconomic environment is crucial (not all periods are equally favorable)

Practical guide to investing in gold ETFs in 2024

Define your investment horizon: If you seek long-term protection against systemic uncertainty, gold ETFs work. For short-term speculation, consider other vehicles.

Calibrate your exposure: Typically, 5% to 15% of a defensive portfolio can be allocated to gold without compromising growth.

Compare fees: The difference between 0.09% and 0.40% accumulates significantly over decades. Especially for small investors, micro ETFs justify their selection.

Assess liquidity: If you need quick entry and exit, GLD and IAU offer higher volumes.

Consider access price: IAUM and SGOL allow participation with minimal capital.

Diversify within gold: Do not concentrate everything in a single ETF. Combining options reduces operational risk.

Final reflection

The question is not whether to invest in gold ETFs, but how much and when. The 2024 context—critical debt levels, geopolitical tensions, expected rate cuts—suggests that precious metals will remain relevant.

Governments continue expanding their balance sheets through debt. Central banks keep accumulating gold. Institutional investors seek hedging. These factors converge in a scenario where gold ETFs deserve a place in well-structured defensive portfolios.

What matters is starting with clarity about personal objectives, selecting the ETF that aligns with your profile (fees, liquidity, price), and maintaining a long-term vision. In a world of economic uncertainty and questioned financial architecture, gold—in its modern ETF form—remains a valid alternative to preserve value.