Gold delivered a historical rally over the past couple of years, surging from $2,000 an ounce at the beginning of 2024 to more than $5,500 at its peak in early 2026. Central bank buying was a big supportive catalyst, but so was shifting investor sentiment, safe haven demand, and the desire to own tangible assets.
With more than $163 billion in assets, the SPDR Gold Shares ETF (GLD +0.51%) is the biggest fund in this space. But it’s not necessarily the best. Its 0.40% expense ratio is higher than average in the gold ETF category. Since cost is the biggest differentiator in this group, the cheapest options are often the best.
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Instead, investors might want to consider the SPDR Gold MiniShares Trust ETF (GLDM +0.48%), which carries an expense ratio of just 0.10%. Its $32 billion in total assets under management are more than enough to ensure high liquidity.
If you’re wondering why State Street offers two gold ETFs, the larger SPDR Gold Shares ETF has much more liquidity and is better suited for institutional traders looking to make larger trades. The smaller SPDR Gold MiniShares Trust ETF has a lower expense ratio that will be more attractive to retail traders. Two different ETFs. Two different target audiences (although both can use either ETF).
Over the past five years, GLDM has returned an average of 22.1% per year. That beats the SPDR Gold Shares ETF‘s 21.8% average annual return and is due almost entirely to its fee structure. In a sector where the underlying asset is essentially the same, investors should go with the lower-cost option.
The bullish case for gold after the recent rally
Gold’s rally has been driven by central bank buying, tariff- and geopolitics-related dollar weakness and, elevated inflation rates. The case for investing in gold now is pretty much the same one that drove prices higher over the past couple years.
- Federal debt: The U.S. government continues to pile up debt at a prolific rate. People have become accustomed to tens of trillions of dollars of debt on the books, but the market is starting to get worried. All of that printed money comes at the expense of the existing supply that’s already out. It continues to devalue the dollar, and that helps the value of gold.
- Central bank buying: Current net gold purchases by central banks have slipped off of their highs from the past couple of years, but they’re still in positive territory. Central banks are one of the largest gold buyers in the world. As long as they keep buying, there will be an underlying wave of support.
- Safe haven demand: With stock prices continuing to hit record highs, safe havens haven’t seen the biggest demand. But 2026 could be an interesting case should economic conditions keep slowing. If we get another risk-off environment, gold could find new interest.
- High inflation: Inflation rates had been falling into more of a historically normal range until the Iran war. Now, the inflation rate in the U.S. is back to well above 3% and could stay there for a while. Gold is traditionally viewed as an inflation hedge and could be in demand if inflation stays elevated.
The catalysts for further upside in precious metals are still in place. If buying a gold ETF for your portfolio, look for the cheapest one. In this case, the SPDR Gold MiniShares Trust ETF is the best option.
David Dierking 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.
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