## [# Gold ETFs Explained: What Investors Should Know About GLD, GLDM, IAU, and IUAM](/sections/etf-basics/gold-etfs-explained-what-investors-should-know-about-gld-gldm-iau-and-iuam)
# Gold ETFs Explained: What Investors Should Know About GLD, GLDM, IAU, and IUAM
Which gold ETF is right for your portfolio? Discover the pros and cons of physical gold ETFs, from liquidity to tax rules, and how the biggest funds compare.
[](/contributors/lara-crigger)
[By Lara Crigger](/contributors/lara-crigger)
Edited by: ETF.com Staff
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## The Big Takeaway
*Think of physical gold ETFs as a portfolio life preserver: something steady to cling to when all other assets are underwater. When deciding among many similarly-built options, let your holding period and investing style guide your choice.*
### Why Own Gold ETFs?
For thousands of years, investors have gravitated toward gold, especially as a store of value in troubled times. But its modern appeal isn’t limited to doomsday preppers hoarding coins and canned goods.
Gold plays a practical role as a portfolio diversifier, zigging when other assets zag. Historically, the price of gold has moved independently from stocks and bonds, rising when markets panic and falling when investors feel more confident. It even tends to move differently than other commodities, such as oil or wheat.
In early 2026, both stocks and gold began to rise together—an unusual pairing that probably says more about gold’s newfound popularity as a meme asset than about any fundamental shift in economic principles. Once the “shiny object” trade wears off, though, gold’s value as a diversifier will still hold.
Whether you’re hedging against inflation, preserving purchasing power, or just seeking peace of mind during market storms, gold can play a quiet, yet vital, role in stabilizing your portfolio.
### How Do Gold ETFs Work?
Issuers of physical gold ETFs, like the [**SPDR Gold Trust (GLD)**](https://www.etf.com/GLD) or the [**iShares Gold Trust (IAU)**](https://www.etf.com/IAU), hold bars of gold in a highly secured bank vault. Each share of the ETF represents some fractional ownership of those bars, usually one-tenth or one-hundredth of an ounce (more on that later).
Pricing-wise, the gold ETF’s daily net asset value (NAV) tracks the LBMA Gold Price PM, the (ahem) gold standard international benchmark for gold prices. This value, set once per day by the London Bullion Market Association, represents the official, best price of gold around the world.
To calculate their ETF’s NAV, gold ETF issuers simply multiply the total ounces of gold in their vaults by the daily value of the LBMA Gold Price PM. (Note, however, that the ETF’s intraday NAV can drift from this value, because ETFs trade all day, just like stocks. As such, supply and demand, premiums/discounts, and market sentiment can push a gold ETF’s price higher or lower.)
It’s hard to overstate just how much easier the ETF structure has made owning physical gold for investors of all sizes. With an ETF, there are no storage costs, no insurance, no worries that someone will walk off with your bullion. The ETF issuer and its partners handle everything.
### What Are The Downsides Of Gold ETFs?
Of course, gold ETFs possess unique quirks that might confuse even veteran ETF investors.
For starters, unlike stock ETFs, which regularly pay dividends, or bond ETFs, which make periodic coupon payments to shareholders, physical gold ETFs don’t have any built-in source of income. You buy gold; you hold gold. The end. The value of your investment is determined solely by the asset’s appreciation (or lack thereof).
In addition, the IRS considers gold ETFs to be collectibles, not securities, meaning they are subject to higher long-term capital gains taxes than those on stock ETFs. For physical gold ETFs, long-term capital gains (as in, for shares held longer than one year) are taxed as ordinary income, capped at 28%. That’s significantly higher than stock ETFs, which typically cap long-term gains taxation at 20%.
On the other hand, because physical gold ETFs are considered collectibles and not securities, they are generally considered exempt from the wash-sale rule, meaning you could feasibly sell them at a loss in a taxable account and re-buy a substantively similar ETF without waiting the requisite thirty days. The IRS hasn’t formally blessed this approach, however, so it’s best to consult with a CPA or other tax professional before making any such moves.
### What Is Gold-Per-Share?
One more quirk of physical gold ETFs is their the gold-per-share ratio, or how much gold each share of a given ETF represents. This might sound like a trivial accounting detail, but it’s one that can significantly impact your investment experience.
Take two of the biggest names: [**GLD**](https://www.etf.com/GLD) and the [**SPDR Gold MiniShares Trust (GLDM)**](https://www.etf.com/GLDM). As funds issued by the same entity, State Street, both ETFs store the same type of gold in the same vaults and follow the same custody arrangements. However, the two ETFs’ gold-per-share differs: Each share of GLDM represents one one-hundredth (0.01) ounce of gold, while each share of GLD represents one-tenth (0.10) of an ounce.1
This matters because the smaller gold-per-share ratio makes GLDM’s share price (or “handle”) lower. GLD recently closed at a share price of $458.28, compared to GLDM, which closed the same day at $98.66.
A smaller handle makes GLDM a more cost-effective option for individual investors building up smaller buy-and-hold positions. You can start and ramp up investment more easily, purchasing more shares with the same amount of money. Rebalancing is likewise easier, as is gradually scaling up exposure over time.
Whether you’ve got a couple hundred dollars or a couple million, that flexibility makes GLDM—and its peers with smaller gold-per-share ratios—a more nimble fit for individual investors. (It doesn’t hurt that GLDM charges just 0.10% in annual expenses, either!)
1*Kinda. An ETF’s gold-per-share often drifts over time, as the fund issuers have to sell off holdings to pay for expenses. You likely won’t notice this drift month to month, but over the course of decades, your gold exposure will (very slightly) decrease; e.g., according to recent filings, GLD’s current gold per share is 0.091906 troy ounces,*
*not 0.10.*
### Why Traders Still Love GLD
Even though GLDM is cheaper to hold, GLD remains the heavyweight champion gold ETF. As the original and biggest gold ETF, GLD’s massive daily trading volume and sizable gold exposure make it a dream for active traders. Yes, GLD may charge 0.40% in annual fees, but its liquidity is deep, its spreads are razor thin, and you can move big positions with almost no friction, even in volatile markets. If you’re the type who likes to trade gold tactically—say, shifting in and out of big positions based on economic sentiment—GLD’s efficiency is hard to beat.
Then there’s IAU, another low-cost stalwart with wide adoption. If GLD is the trader’s choice, and GLDM is a low-cost favorite, then IAU is the quiet middle child: big, inexpensive, and built for investors who just want straightforward gold exposure they never have to think about again. With an expense ratio of 0.25% and penny-wide spreads, it’s cheap and liquid enough for most investors to get in and out of without much drama, making it a strong choice for long-term gold allocation.
It’s worth mentioning that IAU also has a lower gold-per-share, lower cost sibling: the [**iShares Gold Trust Micro (IAUM)**](https://www.etf.com/IAUM). IAUM has a gold-per-share of 1/100, compared to IAU’s 1/50. Plus, with an expense ratio of just 0.09%, IAUM undercuts GLDM by a single basis point.
###
So What’s the Right Gold ETF?
ETF TickerAUMExpense RatioAvg. SpreadAvg. Daily VolShare PriceGold-Per-ShareStrengthsTradeoffs**GLD**$182.3B0.40%0.01%$7.85B$458.281/10High liquidity and minimal friction, even on large trades.Higher fees than many competitors, which will erode returns for long-term buy-and-hold investors.**IAU**$80.32B0.25%0.01%$1.43B$93.851/50Lower cost and gold-per-share than GLD, and still very liquid.Higher expenses than the "mini" versions.**GLDM**$31.95B0.10%0.01%$1.19B$98.661/100Low cost and gold-per-share makes it easy to start an allocation to gold and add to it over time.Less liquidity than its older cousin, which could result in higher trading costs.**IAUM**$7.80B0.09%0.02%$374M$49.701/100All the advantages of GLDM, but for ever-so-slightly lower expense.Less liquidity than the other ETFs, which could mean slightly higher trading costs.Which physical gold ETF is right for you really boils down to how (and why) you own gold. If you’re an active trader or moving big positions, GLD’s liquidity makes it hard to beat. But if you’re buying gold to hold for the long haul, maintaining low ongoing expenses should be your chief concern, which is where GLDM and IAUM shine. Furthermore, if you’re an investor dipping your toe into gold exposure with smaller dollar amounts, GLDM and IAUM’s smaller handles once again make them more attractive.
Regardless of which you choose, physical gold ETFs are elegant in their simplicity. They update the ancient idea of holding gold for security into a modern, portable investment that fits neatly in your brokerage account. Whether you’re buying for balance, defense, or just comfort, the trick is picking the one that fits your investment style—because in the world of gold, it’s all about peace of mind.
*Discover the news, data, and voices shaping the ETF community. Follow along* [***here***](https://www.etf.com/topics/gold)*.*
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[ Lara Crigger ](/contributors/lara-crigger)
Lara Crigger is a veteran financial writer with more than twenty years' experience writing about ETFs, markets, and investor education. Formerly… [View Bio](/contributors/lara-crigger)
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