Gold exchange-traded funds (ETFs) and gold mining ETFs invest in either gold itself or gold mining companies. Both offer a way to diversify, invest in gold, and benefit from higher prices. The key difference is in what assets these ETFs hold.

Gold ETFs invest directly in physical gold bullion or use derivatives contracts to gain indirect exposure. Gold mining ETFs invest in the stocks of gold mining companies.

How Gold ETFs and Gold Mining ETFs Work

As with other ETFs, gold ETFs and gold mining ETFs trade like shares of stock and are listed on the major stock exchanges. This means investors can buy and sell these ETFs throughout the day with low or no commissions.

For gold ETFs, each share represents a fixed amount of gold stored securely in a vault controlled by the ETF manager. They give investors exposure to the price of gold without owning the physical metal directly.

Meanwhile, gold mining ETF shares represent ownership in a portfolio of gold mining firms, and their performance is tied to the profits of extracting and refining gold and broader stock market trends.

Gold ETFs

Physical gold ETFs like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) own gold bullion stored in vaults in London, New York, Canada, and other safe jurisdictions. Each ETF share represents fractional ownership of the underlying gold. Some issuers offer a “mini” version of the ETF with a lower share price for smaller investors. For example, one share of GLD represents 1/10 of one ounce of gold, while the “mini” version of GLD, GLDM, holds 1/50, making it a more affordable option for those looking to invest in gold without committing too much money.

The metal is audited and insured for physical gold ETFs to confirm its bona fides. These ETFs regularly publish lists of their gold holdings, and for investors, they have fewer fees and other costs than storing the gold themselves.

Synthetic gold ETFs instead use derivatives like futures and options contracts to track the price of gold rather than owning physical gold. This can lower expenses but adds counterparty and other potential risks. Some gold ETFs may employ derivative contracts for leverage (e.g., two- or three-times returns) or inverse returns (i.e., the ETF’s price falls when the gold’s value rises).

Many gold ETFs track the London Bullion Market Association (LBMA) gold price, which replaced the London Gold Fix in 2015 and is the global benchmark based on auctions between large gold traders and refiners. Other benchmarks include the Bloomberg Gold Subindex and futures prices on the COMEX in the United States.

Gold Mining ETFs

Gold mining ETFs hold a basket of publicly traded gold mining stocks and related companies. Their portfolios typically include miners focusing on gold exploration, production, and processing. By owning shares of gold mining firms, the ETFs provide equity exposure to the industry rather than the price of gold itself.

While these companies’ profits are often tied to the price of spot gold, owning shares in them exposes investors to the operational risks, costs, labor issues, and geological uncertainty involved in gold mining operations.

Many gold mining ETFs hold a broad portfolio of gold producers, but some focus on so-called junior gold mining firms. These are smaller companies exploring or in early production, working to identify and prove gold deposits.

The rationale for carving out specific ETFs for them is that junior firms have more upside potential and more risk. As gold prices rise, junior firms may see greater growth as they produce new reserves. However, junior mining companies are less diversified in their operations, often with weaker balance sheets and higher failure rates.

Gold ETFs vs. Gold Mining ETFs
Aspect	Gold ETFs	Gold Mining ETFs
Investment Objective	Track the price of physical gold	Invest in a basket of gold mining companies
Benefits	Inflation hedge, diversification, liquidity, ease of investment, price transparency	Leveraged exposure to gold, dividend potential, and company growth beyond the price of gold
Risks	Price volatility, no income generation, storage and insurance costs (if holding physical gold)	Operational risks, higher volatility, and market risks influenced by company-specific factors
Income Generation	None	Potential for dividends
Correlation with Gold Prices	Direct correlation	Indirect and often leveraged correlation
Suitability	For investors looking for direct exposure to gold prices and those seeking a hedge against inflation or currency devaluation	For investors seeking potential growth and willing to accept higher volatility and company-specific risks

Benefits and Risks of Investing in Gold ETFs and Gold Mining ETFs

The primary benefit of gold ETFs is that they expose investors to gold more easily than traditional methods. Owning gold can help diversify a portfolio and provide a hedge against inflation. ETF shares are highly liquid and can be bought and sold daily on the open market, making it easy to adjust a portfolio’s gold exposure when needed.

ETFs are also transparent—the holdings are published daily, and their costs are clearly stated in prospectuses. Physical gold ETFs are also subject to audit, a crucial peace-of-mind measure given the problems of fraud that have plagued the industry back to the earliest gold coins.

While gold mining stocks and their ETFs may pay dividends, most gold ETFs do not do so or provide interest income. However, exceptions like the FT Vest Gold Strategy Target income ETF (IGLD) financially engineer an income flow.

Precious metals and the companies that mine them can be highly volatile, especially the younger firms. As such, gold ETFs and gold mining ETFs may not be well-suited for conservative investors seeking wealth preservation.

Top Gold ETFs and Gold Mining ETFs

Gold ETFs Compared
Symbol	ETF Name	Mandate	Backed by Physical Gold?	Total Assets ($Millions)	Expense Ratio
GLD	SPDR Gold Shares	The largest physically backed gold (ETF) in the world	Yes	$57,122	0.40%
IAU	iShares Gold Trust	Tracks the performance of the price of gold	Yes	$26,065	0.25%
GLDM	SPDR Gold MiniShares Trust	Has a lower share price than GLD, offering a more convenient way for investors to access this market	Yes	$6,305	0.10%
SGOL	abrdn Physical Gold Shares ETF	Reflects the performance of the price of gold bullion	Yes	$2,758	0.17%
IAUM	iShares Gold Trust Micro ETF	Lower share price than IAU	Yes	$972.6	0.09%
BAR	GraniteShares Gold Trust	Reflects the performance of gold bullion	Yes	$957.3	0.17%
OUNZ	VanEck Merk Gold Trust	Holds gold bullion in the form of allocated London bars. It differentiates itself by providing investors with the option to take physical delivery of gold bullion in exchange for their shares.	Yes	$778.3	0.25%
AAAU	Goldman Sachs Physical Gold ETF	Reflects the performance of gold bullion	Yes	$631.3	0.18%
UGL	ProShares Ultra Gold	Seeks daily investment results that correspond to twice the daily performance of the Bloomberg Gold Subindex	No	$184.7	0.95%
DBP	Invesco DB Precious Metals Fund	Holds gold (80%) and silver (20%) futures contracts	No	$145.6	0.77%
IGLD	FT Vest Gold Strategy Target Income ETF	Offers participation in the price returns of the GLD ETF while providing a consistent income	No	$86.3	0.85%
DGP	DB Gold Double Long Exchange-Traded Notes	Offers 2× daily long leverage to the broad-based Deutsche Bank Liquid Commodity Index-Optimum Yield Gold	No	$80.1	0.75%
FGDL	Franklin Responsibly Sourced Gold ETF	Reflects the performance of the price of gold bullion, but all holdings are said to be responsibly sourced	Yes	$57.7	0.15%
IAUF	iShares Gold Strategy ETF	Tracks the investment results of an index that provides exposure, on a total return basis, to the price performance of gold	No	$43.1	0.34%
BGLD	FT Vest Gold Strategy Quarterly Buffer ETF	Seeks to match the price returns of the GLD ETF up to a predetermined upside cap of 10.50% while providing a buffer against underlying ETF losses of -5% to -15%	No	$29.0	0.91%
GLL	ProShares UltraShort Gold	Seeks daily investment results that correspond to twice the daily performance of the Bloomberg Gold Subindex	No	$13.4	0.95%
DZZ	DB Gold Double Short Exchange-Traded Notes	Offers 2× daily short leverage to the broad-based Deutsche Bank Liquid Commodity Index-Optimum Yield Gold	No	$4.3	0.75%
DGZ	DB Gold Short Exchange-Traded Notes	Offers 1× daily short exposure to the broad-based Deutsche Bank Liquid Commodity Index-Optimum Yield Gold	No	$3.2	0.75%
GLDX	USCF Gold Strategy Plus Income Fund ETF	Seeks the performance of the price of gold while generating dividend income by selling gold call options and gaining collateral interest income	No	$3.2	0.47%

Gold Mining ETFs Compared
Symbol	ETF Name	Mandate	Assets Managed ($Millions)	Expense Ratio
GDX	VanEck Gold Miners ETF	Tracks the overall performance of companies involved in the gold mining industry	$12,180	0.51%
GDXJ	VanEck Junior Gold Miners ETF	Tracks the overall performance of small-capitalization companies involved primarily in mining gold and silver	$4,166	0.52%
NUGT	Direxion Daily Gold Miners Index Bull 2× Shares	Seeks daily investment results of more than twice the performance of the NYSE Arca Gold Miners Index	$490.2	1.19%
RING	iShares MSCI Global Gold Miners ETF	Tracks the investment results of an index composed of global equities of companies primarily engaged in gold mining	$404.8	0.39%
JNUG	Direxion Daily Junior Gold Miners Index Bull 2× Shares	Seeks daily investment results of more than twice the performance of the MVIS Global Junior Gold Miners Index	$269.9	1.15%
SGDM	Sprott Gold Miners ETF	Tracks the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges	$220.2	0.50%
GDXU	MicroSectors Gold Miners 3× Leveraged ETN	Provides three times the daily leveraged exposure to a market-cap weighted index comprising GDX and GDXJ	$159.4	0.95%
JDST	Direxion Daily Junior Gold Miners Index Bear 2× Shares	Seeks daily investment results of more than twice the performance of the MVIS Global Junior Gold Miners Index	$114.5	1.02%
SGDJ	Sprott Junior Gold Miners ETF	Tracks the performance of smaller-sized gold companies whose stocks are listed on regulated exchanges	$102.3	0.50%
GOAU	US Global GO GOLD and Precious Metal Miners ETF	Provides access to companies engaged in the production of precious metals through mining, royalties, and production	$88.5	0.60%
DUST	Direxion Daily Gold Miners Index Bear 2× Shares	Aims for daily investment results of more than twice the performance of the NYSE Arca Gold Miners Index	$70.3	1.07%
GDXD	MicroSectors Gold Miners -3× Inverse Leveraged ETNs	Provides inverse three times the daily leveraged exposure to a market-cap weighted index comprising GDX and GDXJ	$45.6	0.95%
GOEX	Global X Gold Explorers ETF	Provides access to a broad range of companies involved in the exploration of gold deposits	$34.3	0.65%
AUMI	Themes Gold Miners ETF	Tracks the largest 30 companies by market capitalization that derive their revenues from gold mining	$1.3	0.35%

The Bottom Line

Both gold ETFs and gold mining ETFs provide ordinary investors with an accessible and cost-effective way to diversify into gold. Gold ETFs that hold physical gold track the price of gold, while gold mining ETFs hold stocks engaged in the gold mining industry.

Choosing which is best for your portfolio depends on your needs, risk tolerance, and investment goals. Regardless of which you choose, be sure to pay attention to expense ratios, liquidity measures, benchmarks, and the portfolio of ETF holdings.