Investors Are Seeking Safety in Gold ETFs. Is It Working?
Also, four top ETFs and how this speculative asset is faring against another popular hedge.
Investors are piling into global gold ETFs for a safe haven from uncertainty.
Why it matters: Demand surged in the first half of 2025, according to a new report from the World Gold Council. The industry trade group points to geopolitical turmoil, global trade policies, and higher gold prices for driving interest in these ETFs. The lure of investing in gold ETFs can vary from wanting to diversify a portfolio, hedge against inflation risks, or simply bet on rising prices. Bryan Armour explains what you should know about this speculative asset. He’s the director of ETF and passive strategies research for North America at Morningstar Research Services.
11 Questions on Gold ETFs
- What are gold ETFs, how many types are there, and how do they work?
- The World Gold Council says there was strong demand for global gold ETFs in the first half of 2025. How much money has flowed in and out of these ETFs, and what’s your take on that?
- How have gold ETFs held up against market volatility in 2025? How does it compare with other periods of uncertainty?
- Let’s talk about your recent article about how to choose the right gold ETFs. You pointed out that a two-month launch difference helped create a big gap in assets between the two largest gold ETFs. Can you talk about the rivalry between SPDR Gold Shares GLD and iShares Gold Trust IAU?
- You listed those two ETFs and several others as top gold ETFs in your article. What makes one of these ETFs different from the other?
- What should investors zoom in on to find the right ETF for them?
- How do trading costs affect buy-and-hold investors and day traders differently?
- The IRS applies a different tax treatment to gold than stocks or bonds. What should investors know?
- What are the best gold ETFs, and why?
- Let’s quickly pivot to another speculative asset. People sometimes refer to bitcoin as digital gold. Is that a fair comparison? How has it performed so far this year?
- Would you say gold ETFs or bitcoin has served as a better hedge?
Key Quote on Gold ETFs
Gold is uncorrelated to stocks and bonds, and so what that means is sometimes it works really well and sometimes it does drop the same amount as stocks and bonds. And uncorrelated does not mean negatively correlated. So this year was a good year to own gold. I think it’s up about 25% over the first half, while stocks are up 8.
But in the throes of April, at one point, stocks were down 15% and gold was up 15. So it worked as a great, as a diversifier, as intended, this year, but there are also times where it won’t.
Bryan Armour, director of ETF and passive strategies research, North America, Morningstar Research Services
The Takeaway: Investors have flocked to gold as a safe-haven asset during market volatility. Twenty-six billion dollars flowed into gold ETFs this year, according to Morningstar data. Holding gold is the same regardless of what ETF you choose, and investors will find better deals in ETFs with higher liquidity and lower fees, according to Armour. Despite cryptocurrencies like bitcoin being compared with gold as a diversifier, crypto will usually fall further than stocks when markets are taking a downturn, even though, like gold, the asset isn’t directly correlated with stocks and bonds. Armour says investors are better off investing in gold if they are looking for a hedge against market conditions.
Top Gold ETF Picks
More From Morningstar on Gold ETFs
As one of the few investments older than Warren Buffett, gold doesn’t act like traditional assets. It holds its value in its scarcity. Whether investors are looking for diversification, or a hedge against market conditions, Armour outlines the best way for investors to choose the right gold ETF for their portfolio, and which gold ETF reigns as king when it comes to this ancient element.
Trading costs are key to finding the right gold ETFs. Here are 5 tips for trading ETFs from Armour. If you’re wondering how use gold in your portfolio, Amy Arnott breaks it down in this iteration of her Portfolio Basics series. Gold has become a top choice as hedge against inflation. But are commodities a better inflation hedge? Arnott breaks down the winner, and why. If you’re looking for more ETFs to diversify your portfolio, Armour shares 3 ETFs investors can use to diversify their portfolios amid market uncertainty.
Jess Bebel, an associate multimedia editor at Morningstar, contributed to this article.
The author or authors own shares in one or more securities mentioned in this article. Find out about Morningstar’s editorial policies.
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