After Russia invaded Ukraine in 2022, the U.S., European Union and their allies froze about $300 billion worth of Russian foreign exchange assets held in international depositaries. About $5 billion of those government bonds, cash and other investments is denominated in U.S. dollars, and it remains to be seen whether Western powers will seize the assets outright to pay for reconstructing Ukraine.
Western nations also banned major Russian banks from using the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, network that banks and financial institutions used to speedily communicate cross-border trade instructions. Many different currencies can be used with the system, but the U.S. dollar dominates, with around half of transactions denominated in the American currency, followed by the euro in distant second with around 20%.
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Gold and Perceived Risk of Dollar-Denominated Assets
What does all this have to do with gold and U.S. investors’ exposure to the precious metal and companies that mine it?
Many viewed the asset freezes and exile from the international payments system as a weaponization of the U.S. dollar. As a result, central banks around the world began increasing their purchases of gold to diversify their holdings away from the U.S. dollar and greenback-denominated assets like bonds.
“Dollar-denominated assets are seen as increasingly risky in view of U.S. sanctions, denial of SWIFT privileges, asset seizures, military interventions and similar actions,” says Thomas Winmill, portfolio manager with Midas Funds.
Gold futures traded in New York set a record above $5,500 an ounce in late January. After a brief and steep pullback, the precious metal resumed its climb and is above the $5,000 mark again. It was trading at less than $2,000 an ounce just prior to Russia’s invasion of Ukraine.
Gold Prices and Geopolitical Conflict
Now, with the military conflict between the U.S. and Iran roiling the Middle East, “safe haven” assets like gold have spiked in the short term. Gold futures were nearing $5,400 as of midday March 2.
“The moves we see in gold really started in 2022, when the U.S. froze Russian assets, which sent a message that Treasury bonds were no longer safe as central banks first thought,” says Vince Stanzione, CEO at First Information, a publisher of educational materials related to financial spread betting and derivatives trading. “We then saw central banks buying gold to add to their balance sheets with no counterparty risk.”
Last year, central banks bought 863 metric tons of gold, even as prices hit record highs, according to the World Gold Council, a gold industry trade group. In each of the previous three years, these institutions bought more than 1,000 metric tons. That compares to an average of 470 metric tons per year from 2010 to 2021.
“Last year can still be viewed as an acceleration in buying, even though the net amount of gold purchased was somewhat lower, largely because prices had rallied significantly,” says David Miller, chief investment officer with Catalyst Capital Advisors.
Gold as an Inflation Hedge
The desire to diversify away from U.S. dollar holdings is also one reason regular investors have been piling into gold. Gold has long been seen as a store of value, or inflation hedge, holding up even when government-backed currencies falter.
Worry about a weaker U.S. dollar in general has been a big part of gold’s recent rise. The ICE U.S. Dollar Index, which measures the greenback against a basket of world reserve currencies, fell nearly 9% over the past 52 weeks as Federal Reserve interest rate cuts made U.S. bond yields less attractive, higher U.S. tariffs introduced uncertainty about the economy, and geopolitical tensions involving the U.S., E.U. and Greenland added to investor worries. It recovered about a percentage point as of midday March 2, as the most recent U.S.-Iran conflict flared in the Middle East and investors leaned into liquidity.
Gold Supply vs. Demand
Meanwhile, central banks are likely to continue buying gold, but mining companies aren’t keeping up with demand, Miller says.
“The supply response is not there to quickly meet higher prices and improved profitability as new gold mines can’t be brought online in a short period of time,” Miller says. “There has been a significant pickup in demand without a corresponding pickup in supply.”
With all that in mind, investors may want to consider adding gold funds to their portfolio in addition to, or perhaps instead of, owning gold bars and coins.
Top Gold Funds to Buy Now
Some of these exchange-traded funds, or ETFs, are backed by physical gold held in vaults, while others invest in mining companies. There are also funds backed by gold futures:
| ETF | Net Assets | Expense Ratio |
| SPDR Gold Shares (ticker: GLD) | $174.1 billion | 0.40% |
| VanEck Gold Miners ETF (GDX) | $28.9 billion | 0.51% |
| VanEck Junior Gold Miners ETF (GDXJ) | $10.4 billion | 0.51% |
| Invesco DB Precious Metals Fund (DBP) | $335.9 million | 0.75% |
| WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN) | $232.4 million | 0.45% |
SPDR Gold Shares (GLD)
When it comes to ETFs that are backed by physical gold, this fund managed by State Street Investment Management is the biggest, with over $174 billion in assets. GLD was the first gold-backed ETF to trade on U.S. markets, and it remains one of the most popular gold ETFs with both retail and institutional investors.
The fund’s gold is held on behalf of shareholders with trusted custodians like JPMorgan Chase & Co. (JPM) in the U.S. and HSBC Holdings PLC (HSBC) in London. The fund has an expense ratio of 0.4%, or $40 annually on $10,000 invested.
“I invest in both, but historically, investing in a gold mining ETF has been a poor investment; you’d have done better in a plain gold-backed ETF like GLD,” Stanzione says. “The reason is when you invest in mining, you have geopolitical risks, management (that) historically have been poor allocators of capital, and operational risk. With the actual gold ETF, it’s a pure gold play.”
VanEck Gold Miners ETF (GDX)
Gold mining companies and the funds that hold them carry operational risks. But they also can have advantages over gold itself.
Gold mining stocks can outperform the price of gold as the metal rises in value because the increase in the gold price adds to cash flow while operating and financial leverage amplify the gains. This may be happening as production costs and company debt remain stable. While lower gold prices can have the opposite effect, companies in a declining gold-price environment can take measures to offset the damage by cutting costs, finding efficiencies or boosting production.
GDX holds the world biggest gold miners, including Newmont Corp. (NEM) and Barrick Mining Corp. (B). Their size and geographic diversification give larger mining companies a measure of stability that can be welcome in a difficult industry.
This mining equity ETF tracks the MarketVector Global Gold Miners Index and has an expense ratio of 0.51%.
VanEck Junior Gold Miners ETF (GDXJ)
In addition to large mining companies with producing operations, the gold mining sector also has so-called junior miners that are primarily involved in exploring for gold, developing mines or producing much smaller amounts than their larger brethren.
These miners tend to be more risky, and so an ETF can be particularly helpful. But that diversification can be a double-edged sword because it means the ETF as a whole may not perform as well as a single gold miner that strikes it rich.
This ETF tracks the MVIS Global Junior Gold Miners Index, and has an expense ratio of 0.51%.
Invesco DB Precious Metals Fund (DBP)
Investors who want exposure to gold futures contracts without the hassle of setting up a futures trading account can turn to this offering. While this fund also invests in silver and platinum futures, most of its holdings are in gold futures traded on the Comex division of the New York Mercantile Exchange.
Futures tend to track the price of gold more closely than mining stocks. And, unlike physical gold, which is priced on the spot market, futures offer investors a chance to express an opinion about where prices will go in coming months.
This fund has a 0.75% expense ratio.
WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN)
Stanzione points to this ETF, which is a hybrid that combines both futures and major mining stocks.
The fund’s literature notes that investors seeking exposure to gold will often buy exposure to the physical metal and mining companies in two separate trades. By combining mining stocks and futures, the fund aims to offer a more efficient use of capital. Futures offer leverage, which can amplify returns — or magnify losses.
For every $100 invested in the fund, $90 goes to mining stocks and $10 to short-term collateral. Because of the nature of futures markets, where leverage allows investors to control relatively large positions with a small amount of collateral, the fund also invests $90 in gold futures.
The fund has an expense ratio of 0.45%.
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5 Best Gold ETFs to Buy for 2026 originally appeared on usnews.com
Update 03/02/26: This story was published at an earlier date and has been updated with new information.
