Oro Digital: Why Gold ETFs Are the Smart Choice in 2024

The Resurgence of Gold as a Safe Haven

In the complex economic landscape of 2024, gold ETFs have once again captured the attention of global investors. The reasons are multiple: increasing geopolitical tensions, expectations of interest rate cuts by central banks, and unprecedented public debt. Unlike owning physical gold, these stock market instruments offer a quick and cost-effective way to gain exposure to this precious metal.

The reality is that governments have generated colossal debt since 2008. The United States has a debt-to-GDP ratio of 129%, while Japan leads the ranking with 263.9%. This situation has constantly eroded global purchasing power, regardless of the currency. Jerome Powell, Chairman of the U.S. Federal Reserve, recently warned that the country is on an “unsustainable fiscal path.” In this context, holding gold ETFs represents a fundamental defensive strategy.

Understanding Gold ETFs: Beyond Traditional Bullion

A gold ETF functions as an intermediary between the investor and the physical metal. There are two main categories:

Physically backed ETFs hold actual bars in secure vaults of reputable financial institutions. Each share represents a fractional ownership of that stored gold. This structure eliminates security and storage risks associated with physically owning metal.

Synthetic ETFs operate indirectly through derivatives such as futures or options. Although they offer slightly lower expense ratios, they introduce counterparty risks inherent to the issuer’s solvency.

The advantages are clear: high liquidity allowing buying and selling throughout the trading session, significantly lower fees than traditional mutual funds, and democratic access with modest initial investments.

Market Dynamics: Incoming and Outgoing Capital

Interestingly, during 2024, gold ETFs have experienced significant net outflows. According to data from the World Gold Council, February saw a global outflow of $2.9 billion, concentrated in North America with $2.4 billion. However, paradoxically, the gold price has maintained its upward trend since October 2022.

This apparent contradiction explains why many investors have taken profits accumulated over previous years, reallocating capital into assets with higher immediate returns such as technology or cryptocurrencies. Nonetheless, fundamental demand remains robust thanks to central institutions.

Seventy-one percent of 57 central banks surveyed in 2023 expressed plans to increase their gold reserves in the following 12 months. This percentage increased by 10 points compared to 2022, reflecting a solid trend. The main holders are the United States, Germany, Italy, France, Russia, China, Switzerland, India, and the Netherlands.

Stable Demand from Multiple Sources

Global demand for gold comes from four complementary sources that ensure structural stability: jewelry, investment, central banks, and technological applications.

In the fourth quarter of 2023, total demand reached 1,149.8 tons, distributed as follows: jewelry (581.5), investment (258.3), central banks (229.4), and technology (80.6). It rarely falls below 1,000 tons annually over the past 14 years. Supply, mainly from mining and recycling, remains stable with no foreseeable radical changes.

Is Investing in Gold ETFs Worth It in 2024?

Its relevance depends entirely on your investor profile. Those with low or moderate risk tolerance will find gold ETFs a robust protective mechanism. Key factors include:

Defensive diversification: They add a protective layer, mitigating losses in other asset classes during market turbulence.

Inflation hedge: Historically, gold preserves value during periods of high inflation. With central banks cautious about rate reductions, this protection remains relevant.

Security in volatile markets: As the tech rally shows signs of exhaustion, safe-haven assets like gold gain renewed importance.

It’s essential to remember that gold itself does not generate income flows like dividends, and its short-term volatility can be significant. However, its resilience against global downturns positions it as a strategic component in balanced portfolios.

The Top Six Gold ETFs for 2024

1. SPDR Gold Shares (GLD)

This giant with $56 billion in assets offers unmatched liquidity with a daily volume of 8 million shares. Tracks physical gold stored in London by HSBC Bank USA. Annual fee: 0.40%. Current price: $202.11 per share with a 6.0% yield in 2024.

2. iShares Gold Trust (IAU)

Second largest with $25.4 billion under management. Combines a low expense ratio of (0.25%) with a solid track record. Physical gold stored by JP Morgan Chase Bank in London. Daily volume: 6 million shares. Price: $41.27 with a 6.0% annual increase.

3. Aberdeen Physical Gold Shares (SGOL)

A Swiss and British option with $2.7 billion in assets. Reduced fee to 0.17% annually. Trades 2.1 million shares daily. Quoted at $20.86, making it the most accessible on the list, with a 6.0% gain in 2024.

4. Goldman Sachs Physical Gold ETF (AAAU)

Backed by $614 millions in assets under custody of JPMorgan Chase in the UK. Very low cost of 0.18%, well below the average commodity ETF at 0.63%. Volume: 2.7 million shares daily. Price: $21.60 with a 6.0% rise.

5. SPDR Gold MiniShares (GLDM)

A low-cost alternative with an ultra-competitive fee of 0.10%. Manages $6.1 billion with a daily volume of 2 million shares. Price: $43.28 with a 6.1% yield in 2024.

6. iShares Gold Trust Micro (IAUM)

The most economical on the market with a ratio of 0.09%. Holds $1.2 billion in assets trading 344,000 shares daily. Accessible price: $21.73 per share. Up 6.0% since the beginning of the year.

Historical Performance: 2009-2024

Since early 2009, the spot price of gold has generated a return of 162.31%. Among the six main ETFs: IAU leads with 151.19%, followed by GLD with 146.76%, SGOL with 106.61%, AAAU with 79.67%, GLDM with 72.38%, and IAUM with 22.82% since its launch in 2021.

Strategy: How to Position in Gold ETFs

Define your horizon: Short-term volatility requires a long-term mindset. Gold ETFs act as multi-year defensive shields, not for speculative trading.

Study the macroeconomic context: Understand interest rate dynamics, the movement of the US dollar, and geopolitical tensions before investing.

Diversify intelligently: Gold ETFs complement diversified portfolios; they never replace them. Maintain a balance between defensive and growth assets.

Research before acting: Compare expense ratios, types of backing (physical vs. synthetic), and trading volumes according to your preferences.

Final Reflection

The phenomenon of unsustainable global debt, combined with geopolitical uncertainty, positions gold ETFs as a legitimate tool for wealth preservation. Small investors now access what was once the privilege of large institutions with modest capital. With costs ranging from 0.09% to 0.40% annually and guaranteed liquidity, these instruments deserve strategic space in any defensively oriented portfolio for 2024 and beyond.