Gold ETFs vs Physical Bullion in IRAs
In most advisory practices, gold exposure is added to portfolios through ETFs. They are liquid, operationally simple, and easy to integrate into model allocations.
At the same time, some high-net-worth and self-directed clients are asking about holding physical gold directly inside an IRA. The relevant question for advisors is not which option is universally better, but which structure aligns with a client’s objectives, risk tolerance, time horizon and preferences.
For a subset of clients, those objectives now explicitly include concerns about U.S. dollar depreciation, persistent inflation and broader societal instability. As conversations around automation and AI raise questions about labor markets, social cohesion and policy responses, some investors are looking to tangible assets that feel resilient through a wide range of macro and political regimes.
Advisors can evaluate gold ETFs versus physical bullion in an IRA through three key lenses:
1. Structure and Risk: What Exactly Does the Client Own? A gold ETF is a security that provides price exposure through a fund structure. Even when backed by bullion, the investor owns shares of a trust rather than specific bars or coins. When an IRA holds physical bullion, the account owns identifiable metal stored in an approved depository under IRS rules. The value of the position is tied directly to the underlying asset rather than to the operational mechanics of a financial product. For many households, the ETF structure is entirely appropriate. However, some clients—often higher-net-worth or more self-directed investors—place value on direct ownership of tangible assets. For them, a modest allocation to physical gold may complement other real assets already in the portfolio. From a fiduciary standpoint, the tradeoffs are clear: ETFs introduce layers of financial intermediation but provide simplicity and liquidity. Physical gold reduces product-layer exposure but increases the importance of custody oversight, storage compliance and concentration discipline. Advisors should also ensure clients understand IRS storage requirements and prohibited transaction rules when evaluating physical holdings inside retirement accounts. The objective is not to choose a side, but to document which structure best aligns with the client’s overall risk framework.
2. Implementation, Liquidity and Long-Term Cost. Gold ETFs offer intraday liquidity, tight spreads and streamlined trading and reporting. They may trade at modest premiums or discounts to net asset value during periods of stress, but for many clients, the operational efficiency outweighs that nuance. Physical bullion held in an IRA is less convenient to trade and is generally better suited to long-term strategic allocations rather than tactical positioning. Pricing tracks spot gold directly, subject to dealer spreads. Cost comparisons depend largely on the time horizon. ETFs carry ongoing expense ratios that compound over time. Physical gold involves upfront spreads plus storage, insurance and custodial fees, but does not impose a perpetual percentage-based management fee tied to asset value. For clients planning to hold a small allocation for a decade or longer, modeling total cost of ownership can clarify which structure is more efficient.
3. Client Profile and Behavioral Considerations. Not all gold allocations are driven purely by expected returns. Some high-net-worth clients view physical gold as:
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A tangible store of value;
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A complement to other real assets such as real estate or private investments; and/or
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A defined component of a broader resilience strategy.
For certain clients, that resilience lens is shaped by concerns about a weakening U.S. dollar, structurally higher inflation, or the potential for social and political stress in an AI-driven economy—including the concern that AI-driven automation could weaken the labor force and increase the risk of civil unrest. For those investors, owning physical bullion inside an IRA can feel like a more concrete hedge than a financial product that sits entirely within the capital markets plumbing. Advisors frequently work with clients who prefer to maintain a low single-digit percentage of net worth in tangible assets. When properly custodied and appropriately sized, physical gold inside an IRA may align with that philosophy. The advisor’s responsibility is to right-size any allocation, ground the rationale in diversification and suitability, and clarify when an ETF may be the more appropriate option for clients seeking liquidity and operational simplicity.
The Advisor Takeaway
For many clients, a gold ETF will remain the most practical way to access the asset class, given its liquidity and operational simplicity. The key for advisors is to document when an ETF is sufficient and when a carefully sized position in physical bullion inside an IRA is warranted based on a client’s objectives, risk tolerance, and behavioral preferences. The opportunity for wealth managers is not to promote one structure over another, but to ensure clients understand what they own, how it fits into the broader portfolio, and the tradeoffs between liquidity, cost, and structural complexity. Keeping the conversation centered on portfolio construction and long-term objectives preserves the fiduciary focus where it belongs.
