In 2024, gold ETFs emerge as an alternative to global volatility: An analysis of the most profitable options

The Return of Gold as a Safe-Haven Asset in Times of Uncertainty

The current geopolitical landscape and systemic economic pressures have rekindled investors’ interest in gold exchange-traded funds (ETFs). Far from being a relic of the past, these instruments have experienced a notable resurgence in 2024, driven by international tensions on multiple fronts and the prospect of an eventual interest rate cut that could weaken the US dollar.

The inverse correlation between the dollar and gold prices remains a key factor. As the Federal Reserve considers future rate cuts, analysts anticipate a depreciation of the greenback, which has historically led to an appreciation of the precious metal priced in dollars globally.

Gold ETF Market Dynamics: Between Capital Outflows and Institutional Purchases

Data from the World Gold Council reveal an interesting paradox: although gold ETFs recorded significant net outflows during the first months of 2024 (approximately $2.9 trillion globally in February alone, with North America accounting for $2.4 trillion), the underlying gold price has maintained an upward trajectory since October 2022.

This disconnect suggests that many retail investors have taken profits to reallocate capital toward higher-growth segments such as technology or digital assets. However, simultaneously, an equally strong opposing force has been at work: global central banks are actively increasing their gold reserves, with 71% of the 57 surveyed central banks projecting increases in their holdings over the next twelve months.

Gold Demand: A Structurally Solid Support Base

Contrary to what might seem like weakness, global gold demand remains notably resilient. In Q4 2023, total demand reached 1,149.8 tons distributed among four sources:

Jewelry: 581.5 tons (traditional component)
Investment: 258.3 tons (where physically backed ETFs play an increasingly prominent role)
Central bank reserves: 229.4 tons
Technological applications: 80.6 tons

Over the past fourteen years, demand has rarely fallen below 1,000 tons, providing a stability floor that many investors find reassuring.

What mechanisms make gold ETFs attractive vehicles?

ETFs tracking gold operate mainly in two modalities. Physically backed ETFs hold actual bars in certified vaults, offering transparency and tangibility. Each share represents a fraction of the stored physical gold, eliminating risks associated with private storage.

Alternatively, synthetic structures use derivatives (futures, options) to replicate gold price performance. While they may offer lower expense ratios, they introduce counterparty risk, depending on the issuer’s solvency.

Operational advantages are clear: access with reduced capital, intraday liquidity compared to physical gold, significantly lower management fees than traditional mutual funds, and the elimination of private custody costs. The continuous trading session allows for quick buying and selling.

Six Notable Investment Alternatives in the Gold ETF Ecosystem for 2024

GLD: The Market Standard

The SPDR Gold Shares (NYSE: GLD) remains the benchmark in volume and assets under management ($56 billion). It tracks bars stored in London under HSBC custody, with a daily flow exceeding 8 million shares. Its structure has built trust over the years, although its 40 basis points (0.40%) fee is relatively high compared to newer competitors. It is currently trading at $202.11 per share, with a 6.0% appreciation year-to-date.

IAU: The Compact Alternative with a Solid Track Record

iShares Gold Trust (NYSE: IAU) offers equivalent exposure at a lower cost: 25 basis points annually. Its $25.4 billion in assets and daily volume of 6 million shares position it as a direct competitor to GLD. The physical gold is stored in vaults at JP Morgan Chase in London. Current price is $41.27, with the same 6.0% annual return.

SGOL: Accessibility with Swiss Custody

Aberdeen Physical Gold Shares (NYSE: SGOL) offers a different proposition: vaults in Switzerland and the UK provide geographic diversification of risk. Its fee of 17 basis points and assets of $2.7 billion make it accessible to retail investors ($20.86 per share). Daily volume is 2.1 million shares.

AAAU: Institutional Backing with Competitive Costs

Goldman Sachs Physical Gold (NYSE: AAAU) combines the prestige of a major institution with fees of only 18 basis points, significantly lower than the average 63 basis points of commodity ETFs. JP Morgan custody the physical assets in the UK. With $614 millions in assets and a flow of 2.7 million shares daily, it trades at $21.60 per share.

GLDM: Cost Minimalism

SPDR Gold MiniShares Trust (NYSE: GLDM) is the lowest-cost physically backed option, charging only 10 basis points annually. Its $6.1 billion under management and 2 million shares daily demonstrate significant adoption. Price is $43.28, with an annual return of 6.1%.

IAUM: The Cost Efficiency Frontier

iShares Gold Trust Micro (NYSE: IAUM) sets the current record in fee economy: 0.09% annually. Although it has a more modest asset base ($1.2 billion) and a daily volume of 344,000 shares, it offers access starting at $21.73 per share, making it ideal for beginner investors seeking maximum cost efficiency.

Cumulative Return Trajectory: 2009-2024

Since early 2009, performance comparison analysis shows:

• Spot gold price: +162.31%
• iShares Gold Trust (IAU): +151.19%
• SPDR Gold Shares (GLD): +146.76%
• Aberdeen Gold (SGOL): +106.61%
• Goldman Sachs Gold (AAAU): +79.67%
• SPDR Gold MiniShares (GLDM): +72.38%
• iShares Gold Trust Micro (IAUM): +22.82% (since launch in 2021)

The Fundamental Question: Is a Gold Position Worthwhile in 2024?

The answer depends on your specific risk profile and time horizons. Those with low or moderate risk tolerance will find ETFs of gold an effective mechanism to cushion portfolios against volatility. Three fundamental considerations justify this position:

Inflation Hedge: Although inflationary pressures have moderated, central banks still show caution regarding rate cuts. Gold has historically preserved purchasing power in inflationary contexts.

Portfolio Diversification: Gold maintains low or negative correlations with traditional assets, providing a buffer when stock markets decline.

Protection Against Systemic Risks: Global debt levels have reached unprecedented proportions. The US maintains a public debt-to-GDP ratio of 129%, while Japan leads with 263.9%. Analysts note that this debt accumulation could trigger adjustments in the international financial architecture, a scenario where gold would act as a fundamental store of value.

Strategic Considerations When Implementing a Gold Position

Before allocating capital, evaluate these factors:

Timing: Gold prices fluctuate considerably over short periods. Position with medium to long-term horizons in mind.

Position sizing: Do not concentrate all your capital in gold. Complement with other asset classes that provide growth and income generation (dividend-paying stocks, fixed income).

Macroeconomic context: Reading monetary policies, geopolitical tensions, and global capital flows is essential to determine the optimal timing.

Cost efficiency: Given the proliferation of options, choose ETFs with competitive expense ratios. The difference between 0.40% and 0.09% can accumulate significantly over decades.

The reality is that gold remains one of the best-performing defensive assets when global markets experience turbulence. With ETF technology, retail investors can access this safe haven without the complexity, risk, or costs of physical storage. The required capital is accessible, and the tools are available. What is missing is your strategic decision.