ETF Battles: IAU vs. GLD vs. GDX- A Gilded Cage Match!

Gold has been one of 2025's best ETF trades. Some gold ETFs give you direct exposure to the metal itself. Others give you exposure to gold miners, which are companies digging for it, and their profits rise and fall based on gold prices and, of course, how well they do in terms of their discovery. Today's audience requested ETF matchup is a faceoff between physical gold and gold miner ETFs. So, who wins the battle, and when is the better choice? Stick around for the answer.

Well, this is ETF Battles, and I'm Ronda Ley, and a warm welcome to all. Hit the like button if you've been enjoying our program, and, of course, join our community. For those of you that are new to the program, new to our channel, subscribe. We're almost at 60,000 subscribers, and a big thanks to all of our loyal fans. We could not have done this without you, and this will be our last program for season 6 2025, and we're so glad that you've joined us on this journey. It's been a great year.

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Today's ETF contest was recommended and suggested to us by a viewer named Ke 19901. He's a longtime viewer and fan of the program. He also goes by the name Keith, and it's a physical gold versus gold miners matchup. Which strategy is the better play? Well, let's ask our judges. We've got the best in the business, Ethan Ferris with Bloomberg, and David Durkin with the street.com. Great to see both of you. Welcome back.

So, we've got our four battle categories: Cost, exposure, strategy, performance, and mystery. For the mystery category, our judges can choose any factor or thing that they feel is crucial to today's contest. They can also opt for split decisions. They can nominate wildcard ETFs. We'll just have to see what they come up with. I've got the scorekeeping chores, and at the end of the program, we will declare an overall winner. Keep in mind none of the battle outcomes on this program are ever predetermined or known in advance by myself or our judges. So, let's kick things off with the first category, cost. Dave, please get us started.

Yeah, I'm definitely going to be throwing out some wild cards in this category. GLD and IAU. GLD comes in at 40 basis points. IAU is at 25 basis points. So, if you're looking at just those two, the EyesShares product is going to be the winner. But I think if you're a retail investor, you definitely want to go with the mini shares versions of these funds. So, that would be AUM for EyesShares. It comes in at nine basis points. GLDM from Spider is the mini shares version of that fund. It comes in at 10 basis points. Since they all invest in physical gold, there's really not much reason to not go with the cheapest option in this category. GDX is at 51 basis points. You know, that's a whole different beast that we'll get into in a moment. But as far as just going with the cheapest product here, I'm going to go with AUM is my winner, the mini shares version of the EyesShares Gold ETF.

Thank you, Dave. That's a strong start. Aan, you're up next. How do you see it when it comes to cost? Well, we're on the same wavelength, Dave, because I was thinking about the other mini versions. So, there's a GLDM and I Mikey had mentioned without breaking those in. Let's just look at what we have here. Obviously, 40 basis points like you mentioned for GLD. This is the default vehicle for everyone. When people think about gold, they just go to GL GLD. That's why it's got 143 billion in assets. IU's got 66 even though it's more expensive. Just sometimes investors just tend to gravitate towards one product or one ticker. GLT's been around for a long time. One I think difference that why not only is it why that is cheaper at 25 basis points so I'm going to give it to IU.

The other thing to keep in mind is the actual price handle of the ETF, meaning you're going to pay $380 or so dollars for GLD and $79 a share for IAU. Sometimes that's important to people if they want more shares, if it's getting put into a model, things like that. So the lower price handle which also the mini products that David had mentioned also alleviate that but just because of the lower expense ratio and the lower handle I think this is easy pick IU.

That takes us next to exposure strategy. Aan, you're still up. Give us your analysis. Great, so GLD and IAU are pretty much exactly the same thing. If you run performance over the long term, they're doing exactly they're giving you exposure to gold spot. Now if you care about how the gold is being sourced, right? You can one's being they're both being housed in London. One has HSBC as a custodian that's GLD. The other one has JP Morgan. Pretty much the same thing. I think a lot of investors don't necessarily, not that they don't care, they don't get into that level of depth. They're both obviously secured by actual gold in the vaults.

The GDX, which is the Van product, that's a completely different animal. That's gold mining stocks. The only reason I'm going to screen out GDX is I think you have to if you're going to buy be buying gold, a lot of times you want to buy it as a hedge or some sort of uncorrelated assets. When you have GDX and stocks, you're obviously much more correlated to the market. So, this one's basically kind of a tie to be honest cuz they're really doing the same exact thing. They're both giving you really good efficient exposure to gold spot. It's better than the futuresbased product. So, really a tie for me between GLD and IAU.

David, you're up next. Give us your analysis on exposure strategy, please. Yeah, as Ethan alluded to, this is kind of a, you know, very much an apples to oranges comparison here because with the gold miners, you're looking at stocks. So, you're, you know, you're exposing yourself to operational risk, earnings, revenues, you know, that whole type of thing when it comes to investing in really any kind of stock. So if you look at the historical volatility because of that added risk GDX or really a lot of the gold miners are more than twice as volatile as just physical gold. So that should be a consideration as well.

The gold miners are really just kind of a a leveraged play on gold. They're correlated to gold, but there's so many other factors that go into it. It's kind of an entirely separate asset class. So, looking at GDX specifically, I looked at a couple of other similar minor ETFs. I looked at the Sprat Gold Miners ETF, SGDM, and I looked at the EyesShares Global Miners ETF. The ticker symbol is Ring on that one. Very nice. Within those three, I would still stick with GDX. I tried to get to the other two, but they really have they're really topheavy. Ring in particular has about 40% of the portfolio in just three minor stocks. So it's really it's very concentrated, very topheavy. GDX is a little more spread out at least. So I think as far as the diversification standpoint, I think GDX is better than the other gold miner ETFs. But again, it it's tough to really compare gold to gold miners since they're so different.

So I agree with what Aan said. I think most people are trying to use gold as a hedge of some sort. So, I would lean towards the physical gold ETFs. I chose AEUM, the ISShares mini shares version of the gold. I'm going to choose it here again. I AUM is my winner.

That takes us next to performance. And you're still up, David. So, break it down for us. How do these ETFs compare? Yeah, again, GLD and IAU, the performance is virtually identical. Everything about these is virtually identical outside of the the fee level on that. So, because IU has the lower expense ratio over the long term, that's going to come out a few basis points ahead. So, between those two, there's probably a slight advantage there. If you look at GDX over the last 10 years, it's it's about 50% greater return. If you look at the physical gold ETFs, they've made about 14% a year over the last 10 years. GDX is around 20 to 20% 20 to 21% a year. Most of that obviously has come in the last year or so. But again it gets back to this this point of risk adjusted returns.

You know with the gold miners you would have got a 50% greater return but you're also taking about 150% more risk to get it. So is that worth it? Depends on on what you're looking for. Some people just prefer absolute returns instead of riskadjusted returns. So, they're okay with that. Really, it really depends on what you're looking for. But, this is a case where I I would probably give it a split decision between all three of them because I think as far as physical gold and gold miners, you can really use them both together. You can get physical gold for kind of the the hedge and you can get GDX as sort of the gold correlated outperformance potential, I guess you could say. And that would be potentially give you a little more juice in your returns. And because you're investing in stocks versus gold, there's really there's really a big difference between what you're investing in. So, I guess I'll call it a a split between all three of them just because I think you can really use physical gold and gold miner stocks together in your portfolio.

Aan, you're up. What is your take when it comes to uh performance? Yeah, that was great. And I can't argue with GDX performance over the long term. Like I said, it's it's completely crushing GLD and IAU, but I think we've done some research here. Not to make like a shameless plug for our research, but if anyone's interested in it, let me know. But it's about performance when the market is down. And this is what we looked at is like yes, we can compare to the S&P, but I wanted to see how GLD or even Bitcoin perform on down days, right, in the market. And actually GLD is a pretty decent hedge. It's never perfect. There's no such thing as like a perfect hedge, but it tends to do really well when the market is down. So, I liked its it's it's its behavior as a hedge. And that's why I'm thinking someone would want to own you know, GLD or IAU.

So, even though yes, it doesn't have the strongest absolute performance relative to GDX, I like it when I need it. And this is why I think GLD is such an attractive or one of the other two. So, it's kind of a tie. Hey, if I just had just to have another split decision, I'll probably just pick IU because it's a cheaper option. They're both going to behave exactly the same. You might as well just pick the the cheaper of the two. So, for performance, I like it when you need it. And this is where I think the the actual gold spot steps up in its role as a as a portfolio hedge.

My late grandma said, "It's better to have it and not need it than need it and not have it." That's true. Sounds to me like what the good advice that Aan just gave us. So that takes us next to the mystery battle category. This is where our judges give us that certain factor or thing that they feel is crucial to today's contest. So Aan, what is your mystery battle category and which of these ETFs takes it?

Man, you know, I taxes can't escape the the tax man, unfortunately. And one thing to keep in mind about these gold spot gold ones to the government, they're taxed as collectible. So what that means to you is it tends to carry a little bit higher tax rate. So they'll view these as as actual gold, not like equity or cap, you know, or so you're going to get a different rate. So they tend to be taxed up to 28% relative to some of the more favorable capital gains rates of like 15 or 20%. So they are taxed a little bit higher if it's in a taxable account, meaning the gains on that. There's no dividends obviously, but if you just if you sell them and whatnot, when when it comes time to pay taxes, you're going to be paying a little bit of a higher rate.

So, GDX doesn't have that, right? They're not taxed as a collectible. Again, it all depends on your, on your tax situation, but let's just say from a tax perspective, GDX, avoids all that just because it's stocks. So, I'll probably just give them give this to that just because it's not taxed as a collectible because it's actual stocks. So, I'll give this one to GDX.

And you're up next, David. So, break it down for us. What is your mystery battle category and which of these ETFs wins it? Well, you know, honestly, I was going to talk about the price handles on these funds, as is why the mini shares or even IAU is a little more advantageous from a tradability standpoint, but, Ethan took that from me right off the top here. So, I'm just going to There was one other thing I just wanted to touch on, you know, since we're in sort of the mystery category.

A lot of people view gold as a defensive hedge or like a downside stock market hedge or even an inflation hedge. And I think if you look over the course the long-term course of history, gold really has almost no correlation with stocks whatsoever. So it that basically means that can it work as a downside hedge? Maybe, maybe not. Can it work as an inflation hedge? Maybe, maybe not. The only real consistent relationship with gold to stocks has been if there is sort of a hyperinflationary environment where inflation goes up to like 5 10% or higher than that. That's when gold really serves as a defensive hedge. That doesn't happen too often. So outside of that, gold is one of those assets that can really go up and down on its own. And because it has really no correlation to stocks, that makes it a good volatility hedge more than anything.

So, if you're looking to just lower the overall risk level in your portfolio, gold is a great, great tool to do that. Whether it can add return to your portfolio really depends on the environment. Over the last, you know, couple years, obviously, you would have done great. Some years, not so much. So, I just want to point that out as far as what investors might want to expect when they're investing in physical gold. It should work as, as far as reducing volatility in your portfolio. Will it work in a down market or an inflationary market? Maybe, maybe not. So, just to kind of set expectations there. But, as far as picking a winner, I was originally going to go with IAUM, uh, and the price handle, price handle thing. I I think as far as judging gold versus gold miners, I like physical gold here as well. It still works very well as a hedge, just as long as you know what you're getting. So, I'll go with AIU. I AUM is the winner in this category.

All right. Well, that takes us next to the part of the program where our judges can give us their overall battle winner. So, Dave, give it to us. Yeah. Overall, I I kind of view this battle as what people really look to gold to do. And I think for the most part, they use it as a hedge in their portfolio to either reduce risk or they want to try to provide sort of a defensive counterbalance to equities or even bonds. So, I think in that sense, I would probably choose one of the gold ETFs over the gold miners ETFs. I've gone with IAUM throughout this battle just because I think it does the the best job of providing the cheapest exposure to gold. I think that's probably going to serve investors best over the long term. Just going with the cheapest option here. So, I'm going to go with AUM is my overall winner in this.

Your final chance, Aan, to weigh in with your battle winner. Who who of these whom among these ETF tickers will it be? Well, I'm going to echo the same thing. I was going to bring in the wild card pick. um just because even though GLD is 40 basis points, GLDM is uh 10. It's a it's a quarter of the expense ratio. I to echo what you were saying, I also just like gold spot relative to gold stocks in your portfolio. So if you're going to do it, you want to hold it for the long term, just just buy the cheapest one. They all got sizable assets. They all trade really well. They're all backed by big issuers. So I think really if you pick any of those four, you're fine. But uh you might as well just go with the cheapest one. So, I also like a IUM cuz it's 21 basis points cheaper than GLDM. It's brutal out there how competitive issuers are, but um I think that's that's the one I would I would go with as well.

Well, our judges have spoken in today's ETF battle winner and this gold showdown is AUM from EyesShares. That's the gold trust micro. And that one, as our judges pointed out, has the lowest expense ratio. which also gives you that efficient exposure to physical gold without having to take custody. And as our judges pointed out, a few potential caveats, higher taxes, right? If you got a capital gains tax, if you're holding this in a taxable account, you're going to pay a higher capital gains rate for any type of physical precious metals exposure just because it's treated by the IRS as a collectible. So keep that in mind. you do have a little bit of an advantage with gold equities, which GDX is, but again, that was pointed out by our judges. Also, I thought Dave Dave's point was great, too, is is maybe you own a little bit of both. Does it have to be one or the other? I mean, you people are so extreme.

So, maybe it's a little bit of both. Um and certainly the the longer term performance when you look at it certainly favors gold equities, mining stocks over physical gold itself as far as bottom line performance. But again, we don't know what the future holds, but we do know that when markets get rocky and stocks go down, then you start to see some of these physical assets like precious metals perk up. Great job to both of our judges and we really appreciate having you not just on today's program but on on our season six all of 2025. It's been a great season and again we wish you both the best of success. We thank you also for your great analysis both of you.

Be sure to hit that description section below. We've got links to our program judges. get in touch. And we've also got links to our program sponsor, Direction. Lots of choices as far as ETF trades. We talked about gold. You got some choices there and direction's got lineup for leverage exposure to gold miners. So, hit that link to direction.com in the description section below. And also keep your ETF battle suggestions coming. We've had some great matchups this year. We could do double, triple, and quadruple headers. Send me your ETF ticker symbols in the comment section below. You can also send them on my X feed at ETF guide. I'm Ronda Ley. Thanks for watching ETF Battles. We'll see you soon.