Gold ETF 2024: Why Now Is the Time to Consider This Hedging Strategy

The Macroeconomic Context Driving Gold Demand

The global financial system faces an unprecedented challenge. Debt levels around the world have reached historic highs: the United States maintains a public debt-to-GDP ratio of 129%, while Japan leads with an alarming 263.9%. This uncontrolled accumulation of debt has eroded the purchasing power of currencies worldwide.

Jerome Powell, Chairman of the Federal Reserve, recently acknowledged that “the United States is on an unsustainable fiscal path” where “debt is growing faster than the economy.” This diagnosis explains why many investors are seeking protection alternatives, and here is where gold ETFs come into play as a shield against systemic volatility.

Current geopolitical tensions—conflicts in Ukraine and Gaza, plus the escalation among global powers—have revitalized the appetite for safe-haven assets. Simultaneously, the prospect of the Federal Reserve lowering interest rates creates a potential catalyst: lower rates would weaken the dollar, making gold cheaper internationally.

What You Should Know About Gold ETFs

A gold ETF operates differently from physical gold. Instead of storing bars at home with all security risks, these financial instruments allow investors to access the metal through shares traded on the stock exchange. Physically backed ETFs store genuine gold bars in vaults of recognized institutions; each share represents a fractional ownership of that tangible gold.

There are also synthetic variants that use derivatives to replicate the price but introduce counterparty risk. The main advantage of ETFs lies in their liquidity during trading hours, lower fees than traditional mutual funds, and democratic access to the precious metal even for investors with limited capital.

Positive Market Signals for Gold ETFs

Despite net capital outflows over the last 9 months (especially in February 2024 with $2.9 trillion), the gold price has shown sustained recovery since October 2022. Investors who took profits likely recycled funds into technology or Bitcoin, but this did not prevent the precious metal from appreciating thanks to strong demand from central banks.

According to the World Gold Council, 71% of the 57 central banks surveyed in 2023 expect to increase their gold reserves in the next 12 months—a 10-point rise compared to 2022. This trend reflects the gradual decline of the US dollar’s weight in international reserves.

Global demand for gold comes from four stable sources: jewelry (581.5 tons in Q4 2023), investment (258.3 tons), central banks (229.4 tons), and technology (80.6 tons). It has rarely fallen below 1,000 tons in 14 years, indicating a resilient demand base.

The Top 6 Gold ETFs for 2024

SPDR Gold Shares ETF (GLD): The giant with $56 billion in assets under management. Offers unmatched liquidity with an average volume of 8 million shares daily. Tracks gold bars stored by HSBC in London at a cost of 40 basis points. Trades at $202.11 with a 6.0% gain in 2024.

iShares Gold Trust ETF (IAU): Second major competitor with $25.4 billion in assets. Lower cost of 25 basis points and backed by JPMorgan Chase. Trades an average of 6 million shares at $41.27, also with a 6.0% annual increase.

Aberdeen Physical Gold Shares ETF (SGOL): With $2.7 billion and fees of only 17 basis points, offers exposure to gold stored in Swiss and British vaults. Affordable price of $20.86 per share with a daily volume of 2.1 million.

Goldman Sachs Physical Gold ETF (AAAU): $614 million in net assets with custody in the UK. Stands out for its ultra-competitive fee of 18 basis points, well below the average of 63 points for commodity ETFs. Trades at $21.60 with a 6.0% increase.

SPDR Gold MiniShares ETF (GLDM): Low-cost version with just 10 basis points—the cheapest physical option in the US. Manages $6.1 billion with 2 million shares daily. Price of $43.28 records a 6.1% increase.

iShares Gold Trust Micro ETF (IAUM): Cost-efficient champion with an expense ratio of 0.09%. Ideal for retail investors with limited capital; trades at only $21.73. Although it has a shorter track record since its launch in 2021, it has yielded 6.0% this year.

Historical Performance: 2009 to 2024

Spot gold has generated 162.31% since the beginning of 2009. IAU leads among ETFs with 151.19%, followed by GLD with 146.76%. SGOL accumulates 106.61%, AAAU 79.67%, GLDM 72.38%, and IAUM shows 22.82% since its inception. These figures highlight the metal’s appeal as a long-term store of value.

Smart Strategy for Investors in 2024

Before positioning yourself, clarify your objectives and risk tolerance. Gold ETFs work best as a diversification component, not as a total concentration. Invest with a long-term horizon—daily volatility can be considerable.

It is crucial to study the macroeconomic timing. Although gold acts as a safe haven, there are better and worse cycles. The current context of record debt, expected rate cuts, and geopolitical instability suggests that holding exposure to the precious metal deserves serious consideration.

Small investors have the advantage of participating with minimal capital thanks to these instruments. Now that you know the characteristics of the top 6 gold ETFs, the next step is to evaluate which aligns with your profile and your confidence that governments will continue expanding the monetary base without restraint.