While many commodities are used primarily for industrial purposes, gold holds a unique role as an investment.
Beyond its use in jewelry, the precious metal is seen as a store of value, or inflation hedge, holding up even when government-backed currencies falter. Also, gold can act as a safe-haven investment, and investors and traders tend to flock to it when there is concern about the economy or geopolitics. While these factors can act in concert, they sometimes compete against each other, which is one reason gold prices can be volatile and hard to anticipate.
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Take the U.S.-Iran conflict, for example. While there was some initial safe-haven buying shortly after the U.S. and Israel began their attacks on Iran in late February, the precious metal then fell precipitously. That may be because investors booked profits from gold’s previous record high as the Iran war ratcheted up worries and set equities back.
“When the financial system experiences a shock and investors need to raise funds quickly, they sell what they can, not necessarily what they want to,” says Vince Stanzione, CEO at First Information, a publisher of educational materials related to financial spread betting and derivatives trading. “As gold is a very large and liquid market, it can be sold to raise cash instantly.”
Gold’s fall also may have been because inflation expectations boosted thinking that the Federal Reserve would keep interest rates higher for longer, which supported the dollar. Because the dollar and gold often move inversely to one another, gold prices fell.
Gold vs. Treasury Bonds as “Safe” Investments
Gold also competes against government debt, especially U.S. Treasurys, as a safe-haven investment. But government debt pays interest, and that creates an opportunity cost for gold, which doesn’t pay interest. So, expectations of higher interest rates may have dulled gold’s allure somewhat even in the face of higher inflation expectations.
But the tide seems to be turning for gold as the precious metal regains ground as the Iran conflict drags on. Although it’s no longer at record highs above $5,000 per ounce, $4,800 gold is nothing to sneeze at and suggests investors and traders may be shifting priorities once again.
“In past geopolitical shocks, gold often dips initially as investors sell assets, before moving higher again,” says Chris Gannatti, head of research with WisdomTree Asset Management. “That pattern appears to be playing out amid the Iran conflict, alongside short-term headwinds like a stronger U.S. dollar and rising bond yields. As those pressures ease, gold’s role as a geopolitical hedge is reasserting itself.”
What Types of ETFs Invest in Gold?
Before gold can be invested in, it has to come out of the ground, which brings us to gold mining stocks that feature in many gold exchange-traded funds, or ETFs.
Gold Miner ETFs
Miners 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 their gains. This is assuming production costs and company debt remain the same. While an erosion of gold’s value could create the opposite scenario, companies in a declining gold-price environment can take measures to offset the damage by cutting costs, finding efficiencies or boosting production.
As an example of the power of leverage when it comes to mining companies, Thomas Winmill, portfolio manager with Midas Funds, points to Lundin Gold Inc. (ticker: OTC: LUGDF). The company is the second-biggest holding in the Midas Discovery Fund (MIDSX) and has seen its return on equity rise from about 9% in 2022 when the gold price was about $1,800 to approximately 55% in the trailing 12 months. At the start of 2022, Lundin was trading around $8, and shares now are around $85.
Another advantage of mining companies is that they can use cash flow to fund dividends, unlike non-yield-bearing gold, or share buybacks.
“Gold miner ETFs have historically offered more leverage to moves in gold prices, along with the potential for dividend income,” says Trevor Yates, portfolio manager and senior investment analyst at Global X, which offers the Global X Gold Explorers ETF (GOEX) and Global X Gold Miners ETF (AUAU). “They also provide diversified exposure across a basket of companies, which can help mitigate idiosyncratic operational risks that are often specific to individual miners. At the same time, investors benefit from the liquidity, tax efficiency and transparency of the ETF structure.”
Physical Gold or Futures ETFs
In addition to ETFs that hold mining companies, others are backed by physical gold stored in vaults while some are backed by futures contracts. In these cases, the funds still trade on stock exchanges like regular shares of any company, meaning they’re much easier for investors to deal with than the complications of actually trading futures or buying and storing physical gold themselves.
For long-term investors, it’s crucial to keep in mind that gold acts as a store of value, which means it will likely hold up against inflation over the long run, but it won’t gain value like equities tend to do, and the precious metal does have its detractors.
Robert R. Johnson, finance professor at Creighton University, points out that Warren Buffett was one of those who didn’t think gold was a good investment. “While having a small position in precious metals may dampen portfolio volatility in the short run, the trade-off between slightly dampened volatility and the lost long-term return is certainly not a prudent one, particularly for Gen Z (and) millennials with long investing time horizons,” Johnson says.
Still, some investing experts say gold should make up a small portion of portfolios as a safety net. With that in mind, here’s a look at five top gold ETFs:
| Gold ETF | Expense Ratio | Total Assets | Fund Focus |
| VanEck Gold Miners ETF (GDX) | 0.51% | $31 billion | Large, geographically diversified global gold-mining corporations |
| VanEck Junior Gold Miners ETF (GDXJ) | 0.51% | $10 billion | Small-cap “junior” companies focused on gold exploration and mine development |
| SPDR Gold Shares (GLD) | 0.40% | $166 billion | Physical gold bullion held in secure vaults |
| Invesco DB Precious Metals Fund (DBP) | 0.77% | $301 million | Futures contracts for gold, silver and platinum |
| WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN) | 0.45% | $253 million | Combines mining stocks and futures, aiming for a more efficient use of capital |
VanEck Gold Miners ETF (GDX)
“I think people miss the boat on these gold miners as a gold proxy thing all the time,” says Chris Berkel, investment advisor and president of Axis Financial. “Buying gold miners as a proxy for gold is not the same thing. Gold miners essentially play hot potato with the metal and as they dig it up, it’s their goal to get it out of their hands and into the marketplace.”
And recently, gold miners have been doing very well with the gold they get to the market, as the gold they were expecting to dig up at a certain price is suddenly worth much more, he points out.
GDX holds the world’s 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%.
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 $163 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 custodians 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.
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 0.77% expense ratio.
WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN)
This ETF 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.
The fund gives investors 90% exposure to mining stocks and 90% exposure to gold futures. It can do that because of the nature of futures markets, where leverage allows investors to control large positions with a small amount of collateral. The fund uses 10% of its investments for short-term Treasurys as collateral.
“For investors with a constructive view on gold prices, the combined upside potential is compelling,” Gannatti says. “The flip side is that leverage cuts both ways: If miners and gold fall simultaneously, losses are compounded. Even so, for any investor bullish on gold, this fund warrants a serious look as a new addition to the toolkit.”
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 04/20/26: This story was published at an earlier date and has been updated with new information.
