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How to tap into the gold rally with ETFs

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  Published in Stocks and Investing on Tuesday, October 21st 2025 at 5:59 GMT by The Globe and Mail
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How to Tap Into the Gold Rally with ETFs

Gold has once again surged past its previous highs, spurred by a mix of rising inflation, currency weakness, and geopolitical uncertainty. For investors who want to ride the wave but dislike the logistics of storing or buying bullion outright, exchange‑traded funds (ETFs) offer a convenient route. The Globe and Mail’s “How to tap into the gold rally with ETFs” breaks down the landscape of gold ETFs, explains the mechanics behind each type, and provides guidance on how to align an ETF choice with your investment objectives.

1. The Gold Rally in Context

Gold prices are currently trading near a $40‑per‑ounce level, a sharp climb from the $2000‑to‑$3000 mark that prevailed earlier this decade. Analysts point to a combination of weak U.S. dollar momentum, persistent inflationary pressures, and escalating tensions in regions such as the Middle East as the chief catalysts. In this environment, gold is seen as a “safe‑haven” asset that can protect portfolios against downside risk when other asset classes falter.

2. Types of Gold ETFs

a. Physical‑Gold ETFs

The most straightforward approach is to invest in an ETF that holds actual gold bars or coins. These funds are backed by real bullion stored in vaults, and the gold price they track is the spot price of gold on a global exchange.

• SPDR Gold Shares (GLD) – The most heavily traded gold ETF, GLD holds approximately 150,000 troy ounces of gold. Its expense ratio is 0.40 % per annum, and it offers tight bid‑ask spreads because of its high liquidity.
• iShares Gold Trust (IAU) – IAU holds a similar amount of gold but charges a lower expense ratio of 0.25 %. This makes it attractive for long‑term investors who want a low‑cost vehicle.
• Aberdeen Standard Physical Gold Shares ETF (SGOL) – This European‑based ETF also holds physical gold but is structured for investors in the European Union, making tax treatment easier for those jurisdictions.

Physical‑gold ETFs are simple to understand: the share price moves closely with the underlying spot price. They are free from the operational risk of mining companies and are the closest you can get to owning gold through the exchange.

b. Gold‑Miner ETFs

Gold‑miner ETFs invest in a basket of companies that produce gold. They offer exposure not only to the price of gold but also to the performance of mining operations, management teams, and production costs.

• VanEck Vectors Gold Miners ETF (GDX) – GDX tracks the performance of large‑cap gold mining firms such as Barrick Gold and Newmont. Its expense ratio is about 0.50 %.
• VanEck Vectors Junior Gold Miners ETF (GDXJ) – GDXJ focuses on small‑cap “junior” miners that are often in the exploration or early production phase. Because of the higher risk profile, the expense ratio is slightly higher at 0.70 %.
• iShares MSCI Global Gold Miners ETF (AUY) – AUY offers a diversified global exposure to gold‑mining companies, with an expense ratio around 0.50 %.

Investing in miner ETFs can amplify gains if a mining company’s production increases or if its cost base decreases. However, it also introduces company‑specific risk and can be more volatile than the pure‑gold track.

c. Gold Futures ETFs

A more complex route involves ETFs that hold gold futures contracts. These instruments can provide exposure to gold at a lower cost but introduce contango, roll‑over risk, and liquidity considerations.

• ProShares Gold Strategy ETF (PGJ) – PGJ holds a portfolio of gold futures contracts, aiming to approximate the performance of physical gold while keeping fees lower.
• VanEck Gold ETF (ZAG) – This fund uses a combination of futures and physical gold to deliver a more stable exposure.

Gold futures ETFs may be preferable for traders looking for shorter‑term exposure or who want a vehicle that can be hedged more efficiently in a larger portfolio.

3. Choosing the Right ETF

Investment Horizon
If you intend to hold gold as a long‑term hedge, a physical‑gold ETF such as GLD or IAU is generally the simplest and safest choice. For shorter time horizons or speculative bets on gold price momentum, futures‑based ETFs may offer a more nimble approach.

Risk Tolerance
Miner ETFs add company‑specific risk and can be more volatile than pure‑gold ETFs. A conservative investor may prefer a physical‑gold fund, while a more aggressive investor might mix in a miner ETF to benefit from upside potential in mining operations.

Expense Ratio
The difference between GLD’s 0.40 % and IAU’s 0.25 % may not seem large, but over a decade it can erode a significant portion of your returns. When comparing miners, GDXJ’s 0.70 % is noticeably higher than GDX’s 0.50 %, which may be a deciding factor if you’re cost‑conscious.

Liquidity & Tax Considerations
Physical‑gold ETFs are highly liquid in the U.S. market. If you’re based outside the U.S., consider the local tax treatment of gold ETFs. In the EU, SGOL is often more tax‑friendly for residents due to its structure.

4. Practical Steps to Invest

1. Open a brokerage account that allows trading in ETFs.
2. Decide on the exposure type—physical, miners, or futures.
3. Select an ETF with a low expense ratio and sufficient liquidity.
4. Set a dollar‑cost‑averaging plan to mitigate short‑term volatility.
5. Monitor your holdings quarterly, especially if you have a miner ETF, to account for earnings reports and production updates.

5. Bottom Line

Gold’s recent rally presents a compelling opportunity for diversification and inflation protection. ETFs provide a flexible, low‑cost, and tax‑efficient way to capture this upside. Whether you opt for the simplicity of physical‑gold ETFs, the potential higher returns (and higher risk) of miner funds, or the tactical advantages of futures‑based ETFs, a clear strategy aligned with your investment horizon, risk tolerance, and cost sensitivity will help you make the most of gold’s current trajectory.