An easy way to safeguard portfolios during times of market volatility is with gold exchange-traded funds (ETFs)
Consider purchasing one of these five gold ETFs.
Gold prices are skyrocketing as markets crash. With gold exchange-traded funds (ETFs) being one of the most effective ways to increase your gold allocation, now is a good time to do so.
Gold ETFs offer a number of significant benefits, particularly for individual investors, compared to other methods of investing in gold or at least gaining exposure to its price fluctuations.
Early in 2025, the price of gold reached all-time highs, rising by almost 40% in the last 12 months to more than £3,300 per troy ounce. The macroeconomic environment is also in favor of gold, but one of the factors driving these price increases has been positive capital flows into gold ETFs.
There is currently a lot of precious metal available, and investing in it has long been viewed as a proactive hedge against high inflation and economic uncertainty.
After initially reverting to the Bank of England's 2 percent target, the inflation rate has since increased and is predicted to surpass 3 percent later this year.
Furthermore, the US-China trade war is rapidly reaching a boiling point, and Donald Trump's tariffs have rocked world markets.
To BFIA, Tom Bailey, head of research at HANetf, says, "Gold has become an island of stability in a seemingly more chaotic world." Bond and stock prices fell as a result of Trump's tariffs, making gold a safe haven.
Historically, in times of crisis, investors gravitate toward US assets, especially bonds, because of the nation's reputation for stability and safety. However, Trump's tariffs are undermining this reputation because some people view them as an attack on the US-led order that was established after the war. As a result, gold gains favor as an asset.
Investors have been forced to reevaluate how well their portfolios are safeguarded against economic and political risks as a result. The price of the yellow metal rises as a result of investors looking to protect their safe-haven assets due to the events in Europe and across the Atlantic.
Gold has historically served as a store of value during economic downturns, according to Dzmitry Lipski, head of funds research at Interactive Investor. Since it is widely acknowledged that gold can also be used as an inflation hedge, rising inflation is required for the price of gold to rise.
Because gold is valued in US dollars, it takes more of them to purchase the same amount of gold when the value of each dollar declines.
"On the other hand, low inflation and a rising US dollar are bad for gold prices.
Owning one or two gold ETFs could therefore help safeguard the returns on your portfolio. Given its volatility and lack of interest, the majority of experts advise holding between 2 and 10% of your portfolio in gold.
How to expand your portfolio with gold.
One way to include gold in your portfolio is to purchase gold bullion, which can be actual coins or bars, or to stock up on jewelry. You will be able to hold and admire some lovely, shiny trinkets, but the cost may be high, and you will also have to worry about how to store them.
Shares of gold miners are another option. However, these frequently don't closely follow the price of gold, so you're not getting the best exposure. In addition, you have to worry about picking the best stock and paying platform and trading fees. Mining is a highly cyclical industry that frequently experiences booms and busts, making it a highly volatile sector.
Gold ETFs: The easiest way to make gold investments.
Investing in an exchange-traded fund (ETF) that tracks gold is an alternative. The goal of this fund is to follow the price of gold.
The simplest gold exchange-traded funds (ETFs) are backed by actual gold; they purchase gold bullion and keep it in safe deposit boxes.
In order to "leverage" your investment and increase gains, more complex ETFs use options or derivatives; however, they will also increase losses, so proceed with caution.
In addition, fees for leveraged ETFs are typically higher than those for physical gold-backed ETFs. Therefore, it is best to stay away from leveraged funds if you are purchasing gold to offer security. The secret to investing in ETFs is simplicity.
The European Union (EU) prohibits ETFs that only track one commodity. These funds are known as "exchange-traded commodities" (ETCs). ETFs that are backed by actual gold are ETCs, not ETFs, although there is very little difference between the two.
Bailey reports that "European investors have added £4 billion to gold ETC holdings since the start of the year." "That is a significant change from the outflows that occurred in gold ETCs last year.
Besides funds that follow the price of gold, there are funds that invest in stocks of gold miners. However, these aren't the most pure way to be exposed to changes in the price of gold because the performance of mining stocks is inherently tied to the company's operations and profitability rather than just the price of gold.
The simplicity and affordability of physical gold exchange-traded funds (ETFs) are their greatest features. You can purchase them from nearly all brokers or do-it-yourself investing platforms, and they are frequently held in an ISA or SIPP.
Five gold ETFs and ETCs to think about.
1. . Physical Gold Sourced Responsibly by HANetf Royal Mint RMAP The environmental impact of gold is one of the main problems. To extract, refine, and store gold, a lot of energy is needed. Possible labor violations in the supply chain are another problem.
Addressing these concerns for investors is the goal of the HANetf Royal Mint Responsibly Sourced Physical Gold (LON:RMAP). It only possesses gold bars that have been approved by the LBMA since 2019. According to initial testing, these refiner bars "have been found to meet the required standard for acceptability in the London bullion market."
In order to create circular economy gold with a minimal environmental impact, the Mint is also constructing the first plant in the world to recover gold from electronic waste. It is traded on the London Stock Exchange and has an annual fee of only 0.25 percent. 2. . PHGP, or WisdomTree Physical Gold.
There are two varieties of the physically backed gold ETC Wisdom Tree Physical Gold (LON:PHGP). It is backed by actual gold that HSBC Bank owns and is valued in sterling. It has a continuous charge of 0 percent. In essence, WisdomTree Physical Gold Individual Securities ETC (LON:PHAU) is the same fund with the same ongoing fee of 0.39% and is denominated in US dollars.
3. Swiss Gold Physical WisdomTree SGBS.
If you would prefer that your gold be kept in Switzerland, JPMorgan Chase Bank's subsidiary, WisdomTree Physical Swiss Gold ETC (LON: SGBS), keeps its gold in safe vaults in Zurich. The continuous charge is between 0 and 15 percent.
4. . Physical Gold SGLN for iShares.
The London-based JPMorgan Chase Bank holds physical gold that is invested in by the iShares Physical Gold ETC (LON:SGLN). Zero to twelve percent is the continuous charge.
5. . GDX is the VanEck Gold Miners ETF.
These products are all ETCs with physical backing. They will keep tabs on gold price fluctuations, but they won't expose you to gold miners.
According to Lipski, "investors may want to consider investing in gold mining stocks via passive ETF such as the VanEck Gold Miners ETF (LON:GDX)".
Investors should understand, though, that stocks in gold mining companies and actual gold are two very different asset classes.
"Gold mining stocks offer operating leverage for investors who are comfortable with higher risk, but physical gold is better for diversification and inflation hedging. The mining company's profit margins improve as the price of gold rises, possibly increasing the potential return to investors more quickly than the price of gold itself. In this scenario, owning mining stocks is preferable to holding actual gold.
One can hold the aforementioned funds in a SIPP or an ISA.
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