SPDR Gold Shares (NYSEMKT:GLD) provides direct exposure to physical bullion price movements, while VanEck Gold Miners ETF (NYSEMKT:GDX) offers a play on the equities of gold mining companies.
Investors looking for a haven in gold often face a choice between owning the commodity directly or investing in the companies that extract it. While one fund tracks the price of physical bullion, the other provides exposure to the operational leverage and equity risks of mining businesses. This analysis examines how these two popular vehicles compare in cost, volatility, and performance.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The SPDR trust is the more affordable option for investors, featuring a 0.4% expense ratio that covers the costs of storage and insurance. The VanEck fund carries a higher 0.51% fee to manage its portfolio of global mining stocks.
Performance & risk comparison
What’s inside
SPDR Gold Shares aims to mirror the price of physical bullion by holding the asset in secure vaults. The fund provides a way to gain gold exposure without the logistical challenges of securing physical metal. Its largest positions is physical gold at 100%, with a smidgen of cash as short-term reserves. It was launched in 2004.
The VanEck Gold Miners ETF provides exposure to the equity side of the industry by tracking the MarketVector Global Gold Miners Index. Its sector allocation is 100% in basic materials. Top holdings include Newmont Corp (NYSE:NEM) at 10.5%, Agnico Eagle Mines Ltd (NYSE:AEM) at 10.5%, and Barrick Mining Corp (NYSE:B) at 8%. The fund holds 69 different mining stocks and was launched in 2006. These companies’ profits are tied to gold prices, but their share prices are also influenced by production costs and exploration success.
Which fund is the better buy?
Gold prices have been on a furious rally for the past year. They are currently trading around $4,017 per ounce, up more than 20% in the past 52 weeks. 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 one of the great commodity metals, gold or silver. But they are quite different.
Investors seeking exposure to the metal rally without the time and expense of buying physical commodities directly can buy GLD, the SPDR Gold Shares ETF. It is worth noting that while this is an ETF, holding physical gold through GLD brings different tax implications. In the U.S., gains from these funds will be treated as collectibles, which typically means a higher tax rate than for stocks for most investors. 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 GDX, the VanEck 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. So in the early years of a gold rally, the higher prices flow mostly to the bottom line. As a bonus, GDX pays a dividend because of its stock holdings, whereas GLD doesn’t.
Performance-wise, GLD has outperformed GDX in the past three months, having lost 12.7% versus 17.4% for GDX. But in all other time frames, GDX bests GLD, returning positive annualized returns of 37.5%, 19%, and 11.6% over the 3-, 5-, and 10-year time frames, compared to 27.7%, 17.5%, and 11.4%, respectively for GLD.
Gold mining companies can make decisions that boost returns to shareholders, and those can flow through to ETF shareholders. Given that aspect, plus the superior long-term performance, GDX is the ETF to buy in 2026 to benefit from gold’s rise.
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’s Returns Are Shining: Is It Better to Invest With a Physical Gold or Mining Stock ETF in 2026? was originally published by The Motley Fool
