Gold ETF vs Gold Futures: Understanding The Difference – 2024 Guide

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Fear of the delta variant of COVID-19 derailing economic recovery efforts has spread as far and fast as the virus itself.

Now investors are searching for new ways to protect their assets from a potential market crash. And after what happened in 2024, it only makes sense.

While trying your luck on untested investments such as cryptocurrency is a trending option, you should go with the time-tested solution instead—gold.

If you were to go back and look at previous historic market crashes you’d notice a pattern involving gold.

When the economy begins to buckle, countless investors rush to gold as safe heaven against anticipated inflation.

And while physical gold is often sought after, savvy investors will target other routes, such as Gold ETFs and Gold futures.

Learn the key differences between a gold ETF vs gold futures to understand how you can use them as a hedge against inflation.

How Gold Affects Currencies

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Back when you were a kid you may have heard that the US dollar is backed by gold. Well, that hasn’t been the case since the 1970s.

Despite this, a relationship between gold and currencies around the world has existed throughout history. Oftentimes, when paper currencies begin to lose value or economies begin to slow down, gold’s price rises.

In a way, you could measure the health of any economy by the price of gold. The higher the price, the dimmer the outlook of the economy (in most cases).

Is Gold Worth Investing in Today?

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Understanding the relationship between gold prices and currencies can help put you in a prime position to cash in.

No one can predict the future, but you can prepare for it! And in uncertain times as we find ourselves in today—you can use all the security you can get.

Even if the delta variant doesn’t cause a similar market collapse as COVID-19 did in 2024, other disasters/crashes could occur at any time.

This isn’t meant to make you panic buy gold, but to help you understand why you should invest in it in the first place.

After all, you don’t buy insurance after a disaster, you get it in anticipation. The difference here is unlike insurance, you can sell your investment later on for a profit.

Investing in Gold

Society has always valued gold. It’s shiny, it has incredible conductive properties, and it’s rare. So it should be no surprise that investing in gold can be fruitful.

However, your return on investment depends on how you invest. For one, most people find accessing physical gold to be cumbersome. So what options are left?

Luckily, there are several ways to cash in on gold without ever physically owning it. For this article, we’ll stick to comparing and discussing gold ETF vs gold futures.

What Is a Gold ETF?

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While exploring your gold investment options you’re likely to come across gold ETFs.

An ETF (exchange-traded funds) can be traded just like an ordinary stock excerpt that it can track an index, commodity, sector, or other assets.

A gold ETF can be traded on the stock market, presenting you with the opportunity to invest in gold while not investing in storage and other fees associated with physical gold.

However, this doesn’t mean that your investment in a gold ETF will cost you nothing. To cover fund expenses, gold ETF holders pay an annual fee, the fund’s expense ratio.

The amount you pay in fees will depend on the expense ratio of your fund, so choose wisely. Additionally, there are commission fees to pay for each time you buy or sell a gold ETF.

These fees are usually small but can pile up over time, especially for an active investor. If you choose to use a broker, that will likely come with additional fees.

What are Gold Futures?

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Another convenient way to gain gold exposure without owning it physically is gold futures.

A futures contract commonly referred to as “futures,” is a legal agreement that states you must buy or sell a certain asset by a predetermined date.

Futures contracts are traded on exchanges and investors often use futures contracts to offset or anticipate the risk of a price change in an asset over time.

An investment in a gold futures contract would mean that you agree to buy a set amount of gold at a set price on a set date.

How do investors use this to their advantage? Well, consider that the price of gold today could be vastly different from the price of gold in a month.

By claiming a stake in gold’s future price, you could be potentially locking yourself into a lower price than it is today, or a higher price depending on your goals.

Difference Between Gold ETF and Gold Futures

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Let’s dive into the gold ETF vs gold futures debate to determine which method of gold investment is best for you.

Futures contracts, just like ETFs, are traded on the market. However, unlike ETFs, futures contracts do not come with management fees.

This makes futures contracts the more straightforward route but does not make it superior. Since you are essentially locked into a price, if the price of gold falls, you’ll be losing money.

And since gold prices are known for volatility, gold futures can be a high-risk, high-reward investment.

Gold ETFs in comparison is less risky. Gold ETFs are a lot like investing in an index in that it is not much of a hands-on investment.

Since ETFs are handled by a manager and the fund itself requires fees, they are not an attractive investment for active investors.

At the end of the day, your gold investment route will depend on who you are as an investor.

If you prefer a passive investment strategy, then gold ETFs might be perfect for you. However, those who like to analyze the market and stay active may be interested in gold futures.


Whether you’re looking for a gold investment guide or want to know if Warren Buffet is investing in gold—Dear Retail has you covered. Dear Retail is a community of like-minded investors who dedicate themselves to making you a smarter investor. Gain access to our reports and analysis by becoming a Dear Retail investor. Find out the latest news regarding metal markets in 2024 and so much more. Join today.