Why is 2024 a key year to invest in gold ETFs? Discover the top 6 in the market

The geopolitical and macroeconomic context supports gold demand

The international landscape of 2024 has generated renewed interest in gold exchange-traded funds. Geopolitical tensions in the Middle East and Eastern Europe, along with potential volatility stemming from global political changes, have prompted investors to seek safe-haven assets. Simultaneously, expectations that central banks will cut interest rates have created a favorable environment for this precious metal, especially considering the inverse relationship between gold and the US dollar.

From a macroeconomic perspective, the level of global debt has reached unsustainable levels. The United States maintains a public debt-to-GDP ratio of 129%, while Japan is the most indebted economy with 263.9%. This widespread over-indebtedness has eroded confidence in fiat currencies and raises fundamental questions about the long-term international financial architecture.

What exactly are gold ETFs and why do they work?

Contrary to physical gold storage of bars, gold ETFs are investment vehicles that track the value of this metal in two main ways. Funds backed by physical gold hold actual gold in vaults of reputable institutions, where each share represents a fraction of ownership of that tangible gold. In contrast, synthetic ETFs use financial derivatives to follow the price, offering lower costs but incorporating counterparty risks.

The most obvious advantage of these instruments lies in their accessibility: investors gain exposure to gold without logistical issues, security risks, or storage costs associated with physical metal. Additionally, these funds offer superior liquidity, allowing for instant buying and selling during trading sessions with standard broker commissions.

Gold demand comes from multiple sources and remains stable

According to global market data, gold demand in the fourth quarter of 2023 reached 1,149.8 tons, distributed as follows:

• Jewelry: 581.5 tons
• Investment (including physical ETFs): 258.3 tons
• Central banks: 229.4 tons
• Technology: 80.6 tons

This diversified demand profile provides stability to the asset, as different sectors strengthen according to the economic cycle. Over the past 14 years, global demand has rarely fallen below 1,000 tons. At the same time, 71% of the 57 central banks surveyed in 2023 estimated they would increase their gold reserves in the next 12 months, demonstrating institutional confidence in this metal as a store of value.

Why invest in gold ETFs in 2024

The decision to incorporate these funds into your portfolio fundamentally depends on your risk profile and financial objectives. For investors with low to medium risk tolerance, gold ETFs can act as a protective cushion, mitigating losses in other assets during periods of stock market turbulence.

Gold has historically proven to be an effective hedge against inflation. Although inflation indices have decreased, central banks remain cautious about reducing interest rates, justifying maintaining exposure to this asset as a preventive hedge.

Another relevant factor is that gold better withstands declines in global markets compared to other assets. When the tech rally shows signs of exhaustion—such as what appears to be happening currently—gold ETFs offer an alternative to preserve capital.

Analysis of the top 6 gold ETFs for 2024

1. SPDR Gold Shares ETF (NYSE: GLD)

This fund is the undisputed market leader with $56.0 billion in assets under management. Gold is deposited in vaults in London under the custody of HSBC Bank USA. With a daily volume of 8 million shares, it offers unmatched liquidity. The annual fee is 40 basis points (0.40%), and its current price is around $202.11 per share, reflecting a 6.0% increase so far in 2024.

2. iShares Gold Trust ETF (NYSE: IAU)

With $25.4 billion in assets, this fund ranks as the second major option. Its expense ratio of 25 basis points (0.25%) is significantly more competitive. Gold is custodied by JP Morgan Chase Bank in London. It trades an average of 6 million shares daily, at $41.27 per share, with a 6.0% gain during 2024.

3. Aberdeen Physical Gold Shares ETF (NYSE: SGOL)

With an asset base of $2.7 billion and a daily volume of 2.1 million shares, this ETF keeps gold in vaults located in Switzerland and the United Kingdom. Its annual fees are only 17 basis points (0.17%), making it an economical choice. The trading price is $20.86 per share, the most affordable among the main competitors, with an annual return of 6.0%.

4. Goldman Sachs Physical Gold ETF (NYSE: AAAU)

This fund has $614 million in net assets and custody with JPMorgan Chase Bank in the UK. With a daily volume of 2.7 million shares, its fees of just 18 basis points (0.18%) are competitive compared to the industry average of 63 basis points. The current price is $21.60 per share, with a 6.0% increase in 2024.

5. SPDR Gold MiniShares ETF (NYSE: GLDM)

This fund offers the lowest-cost alternative with fees of just 10 basis points (0.10%). It manages $6.1 billion in assets with an average daily volume of 2 million shares. It trades at $43.28 per share, with a 6.1% increase so far in 2024.

6. iShares Gold Trust Micro ETF (NYSE: IAUM)

As the lowest-cost option on the market, this fund has an expense ratio of just 0.09%. With $1.2 billion in assets and a daily volume of 344,000 shares, it is ideal for retail investors. Its price of $21.73 per share makes it highly accessible, showing a 6.0% return during 2024.

Historical performance of gold ETFs (2009-2024)

The analysis of historical performance reveals interesting patterns. Since 2009, the spot gold price has generated a return of 162.31%. Among the selected funds:

• iShares Gold Trust ETF (IAU) leads with 151.19%
• SPDR Gold Shares ETF (GLD) reaches 146.76%
• Aberdeen Physical Gold Shares ETF (SGOL) achieves 106.61%
• Goldman Sachs Physical Gold ETF (AAAU) accumulates 79.67%
• SPDR Gold MiniShares ETF (GLDM) totals 72.38%
• iShares Gold Trust Micro ETF (IAUM) records 22.82% since its launch in 2021

Practical recommendations for investing in gold ETFs in 2024

Before making any decision, clearly define your investment objectives and risk tolerance. Effective investing requires understanding whether you seek defensive coverage or long-term growth.

Diversification is essential: gold ETFs should complement a balanced portfolio with stocks, bonds, and other asset classes, not concentrate all capital. Consider these funds as medium- and long-term protection strategies, not short-term speculative investments.

Study the macroeconomic context before trading. Although gold acts as a safe haven, there are more favorable moments than others to increase exposure. The current situation of unsustainable debt, geopolitical tensions, and expectations of lower interest rates suggests that 2024 presents a favorable scenario.

Finally, research the specific features of each ETF: expense ratios, custody of physical gold, liquidity history, and performance. Small investors can now participate in this market with minimal capital, accessing well-established funds with competitive fees and institutional management backing.