Golden Investment Opportunity: How to Precisely Select ETF Gold Funds in 2024

Why Gold Becomes the Safe-Haven of Choice in 2024

Amid escalating geopolitical tensions and the Fed’s policy uncertainty, gold—a traditional safe-haven asset—has once again attracted the attention of global investors. The escalation of conflicts in Ukraine and Gaza, deepening strategic confrontations among the US, China, Russia, and Iran, have reinforced market demand for safe assets. Meanwhile, Federal Reserve Chair Powell openly acknowledged that the US faces an “unsustainable fiscal path,” a candid statement that further boosts investors’ preference for financial refuges.

Compared to the cumbersome and risky process of directly holding gold bars, gaining exposure through ETFs has become the preferred method for modern investors. These products are known for their low costs, high liquidity, and trading convenience, enabling both retail and institutional investors to easily participate in the gold market.

The Two Main Operating Models of Gold ETFs

Physically-backed ETFs are the mainstream products. These ETFs store real gold bars in secure vaults in international financial centers such as London and Zurich. Each share of the ETF represents an ownership stake in a certain amount of gold, relieving investors from concerns about transportation, insurance, and theft.

Synthetic ETFs track gold prices indirectly through derivatives such as futures contracts. While these products often have lower fees, they introduce counterparty risk—their returns depend on the creditworthiness of the issuer. In the current environment of high leverage and high risk, physically-backed ETFs are considered safer.

Subtle Changes in the Global Gold Market

Surprisingly, although gold prices have been steadily rebounding since October 2022, ETF fund flows show a contradictory pattern. In February 2024, global gold ETF products experienced a net outflow of $2.9 billion, with North America contributing $2.4 billion in withdrawals, Europe $700 million, and Asia showing an opposite inflow of $200 million.

This large-scale withdrawal did not depress gold prices but instead highlighted another powerful force—the systematic gold purchases by central banks worldwide. According to the World Gold Council, in 2023, 71% of the 57 central banks globally indicated they would increase their gold reserves over the next 12 months, up from 61% in 2022. Major countries like the US, Germany, Italy, France, Russia, and China are quietly increasing their gold holdings, reflecting deep-seated pressures on the international monetary system.

From another perspective, many retail investors may have taken profits and shifted into high-yield assets such as tech stocks and Bitcoin, while institutional investors continue to favor gold supported by central banks and geopolitical risks.

Diverse and Stable Sources of Gold Demand

It is noteworthy that gold demand does not rely on a single market. In Q4 2023, global gold demand reached 1,149.8 tons, with diversified sources:

• Jewelry consumption accounts for the largest share (581.5 tons), representing the most stable fundamental demand
• Investment demand reached 258.3 tons, driven significantly by physical-backed ETFs
• Central bank purchases totaled 229.4 tons, serving as the strongest support
• Industrial uses amounted to 80.6 tons, mainly for electronics and medical applications

Over the past 14 years, global gold demand has rarely fallen below 1,000 tons, indicating that even during economic downturns, the underlying demand remains resilient. On the supply side, mining and recycling support supply, which is difficult to significantly increase in the short term, providing structural support for gold prices.

The Logic Behind Gold Amid the Global Debt Crisis

It cannot be ignored that since the 2008 financial crisis, global debt levels have grown exponentially. US debt as a percentage of GDP has reached 129%, Japan’s peaked at 263.9%, and while the Eurozone is relatively moderate, it is also rising. The effectiveness of governments’ debt-financed economic growth has diminished, resulting in a continuous erosion of real purchasing power worldwide.

Against this macro backdrop, investors are rationally turning to gold as a wealth preservation tool. Historical data shows that gold performs steadily during high inflation periods, and even as current inflation figures decline, long-term risks persist. If the Fed is ultimately forced to cut rates sharply, it could accelerate dollar depreciation, further enhancing gold’s relative appeal. Some economists even warn that the global debt spiral may trigger a new financial crisis, with gold being the most effective risk hedge in investors’ hands.

Top Gold ETF Products to Watch in 2024

With numerous options available, investors need to balance cost, liquidity, and risk based on their individual needs. The following six products represent the most competitive options in the current market:

SPDR Gold Shares (NYSE: GLD)— The Market Liquidity King

As the largest gold ETF, GLD manages assets worth $56 billion, with a daily trading volume of 8 million shares. It tracks London gold prices and is custodied by HSBC. The expense ratio is 40 basis points (0.40%), which is not the lowest but reasonable considering its unmatched liquidity. Up to 2024, it has gained 6.0%, with a share price of $202.11.

GLD is suitable for large investors seeking absolute liquidity and minimal bid-ask spreads, as well as traders who want quick entry and exit under any market conditions.

iShares Gold Trust (NYSE: IAU)— Cost-Effective Choice

IAU is known for its low fee of 25 basis points (0.25%), managing $25.4 billion in assets, with an average daily trading volume of 6 million shares. It is also custodied by JP Morgan Chase in London, with a price of $41.27 and a 6.0% increase in 2024.

In terms of long-term returns, IAU’s yield since 2009 (151.19%) even surpasses the larger GLD (146.76%), indicating that its meticulous management and low-cost structure offer significant advantages. Medium-sized investors should prioritize this option.

Aberdeen Standard Physical Swiss Gold (NYSE: SGOL)— European Quality Certification

SGOL is backed by vaults in Switzerland and the UK, managing $2.7 billion, with a daily trading volume of 2.1 million shares. Its fee rate of 17 basis points (0.17%) is more competitive, and the share price is only $20.86, making it the most economical among top-ranked products. It also gained 6.0% in 2024.

This product is especially suitable for investors who value the stability of the European financial system and want to reduce per-unit holding costs.

Goldman Sachs Physical Gold ETF (NYSE: AAAU)— Institutional Endorsement Confidence

As a product from an investment bank, AAAU has an expense ratio of 18 basis points (0.18%), far below the industry average of 63 basis points for commodity ETFs. It manages $614 million in assets, with a daily trading volume of 2.7 million shares. Custodian is JP Morgan Chase, with vaults in the UK. Its share price is $21.60, with a 6.0% increase in 2024.

While smaller in scale than the previous two, Goldman Sachs’s endorsement and low fees make it a good choice for those seeking a balance of cost and security.

SPDR Gold MiniShares (NYSE: GLDM)— Low-Cost Expert

This is a streamlined version launched by State Street for cost-sensitive investors. GLDM offers the industry’s lowest fee of 10 basis points (0.10%), managing $6.1 billion, with a daily trading volume of 2 million shares. Its share price is $43.28, with a 6.1% gain in 2024.

For long-term holders, this near-zero-cost structure can save thousands of dollars over a 20-year investment cycle, with these savings ultimately compounding into an advantage.

iShares Gold Trust Micro (NYSE: IAUM)— Retail Investor Entry Ticket

This is the lowest-cost gold ETF on the market, with an expense ratio of only 9 basis points (0.09%). Although managing only $1.2 billion and with a daily trading volume of 344,000 shares, its ultra-low fee and low share price of $21.73 make it the most convenient choice for retail investors. Since its listing in 2021, it has returned 22.82%.

Long-Term Performance Data Analysis (2009-2024)

Performance over the past 15 years clearly reflects the strengths and weaknesses of different products:

Spot gold prices have increased by 162.31%, while ETF tracking efficiency varies due to fees and custodial arrangements. IAU’s 151.19% return is closest to spot gold, followed by GLD at 146.76%. In comparison, the newer IAUM, despite having the lowest fees, only launched in 2021, with a 22.82% return, which is not enough to judge its long-term potential.

This data suggests that, over the long term, low-fee ETFs’ excess returns will accumulate annually, which is the core reason for choosing cost-optimized products.

Three Key Considerations for Gold Investment Decisions

Asset Allocation Framework: Gold should serve as a stabilizer within a core portfolio rather than the main component. Investors with lower risk tolerance can allocate 5-15% to gold, providing a buffer during significant equity declines. High-risk investors may view it as a tactical hedge.

Macro Timing: While gold is suitable for long-term allocation, timing remains important. Increasing exposure is especially prudent when the Fed shifts from tightening to easing, geopolitical risks rise, or the dollar faces depreciation pressures. Now is such a moment.

Balancing Fees and Liquidity: Novice investors should prioritize products with ample liquidity (daily volume over 2 million shares) and fees below 25 basis points, such as IAU or SGOL. Experienced institutional investors holding for over 10 years can consider the lowest-cost options like GLDM or IAUM.

Practical Advice for Gold Investment in 2024

Define Investment Horizon: Short-term volatility may be disappointing, but holding for more than five years will fully realize its safe-haven value. Do not expect explosive returns like stocks; instead, understand its role as a purchasing power shield.

Avoid Overconcentration: Even if bullish on gold, it should not exceed 20% of your portfolio. Combine it with bonds, real estate, and some stocks to form a truly diversified defensive lineup.

Adjust Strategies Dynamically: When the Fed begins a rate-cut cycle, the dollar index declines, or geopolitical tensions ease, consider taking profits on some positions. Conversely, when these factors reverse, increase your holdings decisively.

Research Over Blind Following: Although gold is a safe-haven, macroeconomic analysis is essential. Issues like US fiscal sustainability, central bank policies worldwide, and exchange rate trends all influence gold prices. Doing thorough research before investing is crucial.

Conclusion: The Role of Gold in the Transition of New and Old Orders

The debt-driven global financial system has shown signs of fatigue. From central bank actions and market choices to academic warnings, all point in one direction: gold is gradually returning from a supporting role to the center stage. For individual investors, now is an ideal time to establish gold positions using low-cost, highly liquid ETF tools.

From GLD’s dominance in the market to GLDM’s cost optimization, from IAU’s steady returns to IAUM’s inclusive design, the market offers ample tools for different investor types. The key is to make precise choices based on your investment cycle, risk appetite, and capital scale, rather than blindly following trends. Gold may not make you rich overnight, but in uncertain times, it is the most powerful safeguard for wealth.