Investors choosing between SPDR Gold Shares (NYSEMKT:GLD) and Sprott Gold Miners ETF (NYSEMKT:SGDM) are deciding between direct exposure to physical gold prices and equity exposure to the companies extracting the metal.
Both funds provide a path to include gold in a portfolio, yet their underlying mechanics differ significantly. While GLD tracks the spot price of bullion, SGDM invests in mining stocks. This distinction leads to varying levels of volatility, liquidity, and sensitivity to broader stock market movements.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the close of trading on July 20.
The SPDR Gold Shares is slightly more affordable with an expense ratio of 0.4%, compared to the 0.46% fee charged by Sprott Gold Miners ETF. This minor cost difference persists despite the massive scale of the SPDR trust, which manages over $120 billion more in assets under management (AUM) than the Sprott fund. Investors pay roughly $4 annually per $1,000 invested in GLD, versus $4.60 in SGDM.
Performance & risk comparison
What’s inside
The SPDR Gold Shares is designed to track the market price of physical gold bullion. The fund consists of physical gold with cash holdings as needed. This fund was the pioneering gold ETF introduced in the U.S. and remains the largest fund backed by a tangible asset. It was launched in 2004. For many investors, this structure is more convenient and cost-effective than acquiring, safeguarding, and insuring physical bars in a private account. It typically exhibits lower volatility than mining stocks because it is not subject to the operational risks of individual companies.
The Sprott Gold Miners ETF focuses on the equity side of the industry, holding 49 mining companies. Its largest positions include Agnico Eagle Mines Ltd. (NYSE:AEM) at 9.3%, Barrick Mining Corp. (NYSE:B) at 7.8%, and Newmont Corp. (NYSE:NEM) at 7.1%. The fund was launched in 2014. It targets gold-producing companies situated in the United States and Canada. This equity focus means the fund is influenced by corporate management, labor costs, and mining productivity in addition to the spot price of gold. It maintains a non-diversified status, concentrating its portfolio entirely within the basic materials sector.
Which fund is the better buy?
Gold prices have been on a tremendous rally for the past year. Spot gold is currently trading around $4,070 per ounce, up about 20% in the past 52 weeks, and more than double the price of two years ago.
While gold has returned to earth a bit (it was as high as $5,608 in January), investors have flocked to the yellow metal for its historic inflation-hedging characteristics. Each of these funds gives you access to that characteristic. But they are quite different.
Investors seeking exposure to the commodity’s rally without the time and expense of buying bullion or futures contracts directly can buy GLD, the SPDR Gold Shares ETF. Keep in mind that while this is an ETF, holding physical gold through GLD brings different tax implications. In the U.S., gains from these funds are treated as collectibles, which usually means a higher tax rate than for stocks for most. For some investors holding less than a year, the top tax rate is 37%. If you hold them in a tax-advantaged account, such as an IRA, you should sidestep these taxes.
Owning a collection of gold mining stocks, like SGDM, the Sprott Gold Miners ETF offers, isn’t a pure play on the price of gold, but it tracks rather closely. Studies show that the vast majority of the price movement of gold mining stocks is influenced by gold’s price.
The benefit for stock ETF holders is that when gold prices rise, they usually outpace operating costs. That’s because miners are pulling gold from the ground that they have already paid to acquire, while the royalties and other costs don’t rise as high. That means in the early years of a gold rally, the higher prices flow mostly to the bottom line. As a bonus, SGDM pays a dividend because of its stock holdings, whereas GLD doesn’t.
Yet mining stocks tend to suffer more when the price of gold is in decline, as it has been in 2026. That means GLD has outperformed over the past three months, having lost 6.7% versus SGDM’s 9.3% decline. In the 3-year and 5-year time frames, the Sprott ETF bests GLD with annualized returns of 36.1% to 27.7% (past three years) and 18.9% vs. 17.5% (past five years). Interestingly, GLD is the better 10-year performer at 11.4% compared to 10.2% for SGDM.
Still, gold mining companies can make decisions that boost returns to shareholders, like raising dividends or merging with another miner at a premium to their stock price, two common occurrences. Those gains can flow through to ETF shareholders. That means that SGDM is ultimately the better ETF to participate in the long uptrend gold has been showing.
For more guidance on ETF investing, check out the full guide at this link.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Gold Has Doubled in Less Than Two Years. Which ETF is Better to Play the Historic Rally, GLD or SGDM? was originally published by The Motley Fool
