Gold ETFs (like GLD and IAU) track the gold price, but owning ETF shares is nothing like owning physical metal.
Key Differences
| Feature | Physical Gold | Gold ETF |
|---|---|---|
| **Ownership** | You own metal | You own fund shares |
| **Counterparty Risk** | None | Fund manager, custodian |
| **Storage** | Your choice | Fund’s vault |
| **Annual Cost** | \$100–\$300 storage | 0.25–0.40% expense ratio |
| **Liquidity** | Sell to dealer | Sell on exchange |
| **Tax Treatment** | 28% collectibles rate | 28% collectibles rate |
| **Can Be Leased** | Not without consent | Potentially |
| **Bankruptcy Protection** | Full | Depends on fund structure |
| **Physical Delivery** | At any time | Generally not available |
The Fundamental Question
Do you want to own gold, or do you want exposure to the gold price?
- If you want a trading vehicle: ETFs are convenient
- If you want genuine wealth protection: physical metal is irreplaceable
Why Physical Wins for Preservation
In a systemic crisis — the exact scenario gold is meant to protect against — ETF shares depend on functioning exchanges, solvent custodians, and reliable technology. Physical gold depends on nothing.