Which Gold Fund Is Best to Invest in 2025?

By James Whitfield, Precious Metals Analyst at BitGolder

Deciding which gold fund is best to invest in 2025 comes down to three factors: expense ratio, physical gold backing, and liquidity. Looking back from early 2026, the standout performers were SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and Sprott Physical Gold Trust (PHYS) — each serving different investor profiles with distinct trade-offs.

For crypto-native investors, physical gold platforms like BitGolder.com offered an alternative to fund-based exposure — allowing direct acquisition of LBMA-accredited gold bars with Bitcoin, Ethereum, and other cryptocurrencies, bypassing fund management fees entirely.

In short: The best gold fund to invest in during 2025 was iShares Gold Trust (IAU) for cost-conscious investors, SPDR Gold Shares (GLD) for institutional liquidity, and Sprott Physical Gold Trust (PHYS) for those prioritizing redeemable physical metal. Each fund tracked gold prices closely, with expense ratios ranging from 0.15% to 0.35% annually.

What Were the Top-Performing Gold Funds in 2025?

SPDR Gold Shares (GLD) — The Institutional Benchmark

GLD remained the world’s largest gold-backed ETF in 2025, with assets under management exceeding $70 billion at peak. It tracks the spot price of gold minus its 0.40% annual expense ratio, making it the go-to choice for institutional and high-volume traders.

Daily trading volume consistently exceeded $1.5 billion, ensuring minimal bid-ask spreads even during volatile sessions. For investors who prioritize exit liquidity above all else, GLD was the undisputed benchmark throughout 2025.

iShares Gold Trust (IAU) — Best for Cost Efficiency

IAU charged just 0.25% annually — significantly lower than GLD’s 0.40% — making it the preferred choice for long-term, buy-and-hold gold investors in 2025. Each IAU share represents 1/100th of a troy ounce of gold, making it accessible at lower entry price points.

According to our research team, the fee difference between GLD and IAU compounds meaningfully over five-plus years — a $100,000 position in IAU saves approximately $750 annually in management fees compared to GLD.

Sprott Physical Gold Trust (PHYS) — For Physical Redemption Rights

PHYS stands apart from standard gold ETFs by offering eligible shareholders the right to redeem units for physical gold bars. Managed by Sprott Asset Management and audited quarterly, it held approximately 3.8 million troy ounces of allocated gold in 2025.

Its 0.35% expense ratio sits between GLD and IAU, but the physical redemption feature adds substantial value for investors who view gold funds as a bridge to eventual physical ownership. See our analysis at Is Gold a Good Investment? 2026 Market Insights for broader context on physical versus paper gold exposure.

In summary: The top gold funds of 2025 were GLD (best for liquidity), IAU (best for low fees at 0.25% annually), and PHYS (best for physical redemption rights). GLD dominated institutional flows, while IAU attracted retail long-term holders. PHYS appealed to investors wanting a hybrid between fund convenience and physical gold ownership.

How Did Gold Fund Performance Compare to Spot Gold in 2025?

Tracking Error — How Close Do Funds Get to Spot Price?

All major gold ETFs are designed to track the spot gold price minus their expense ratio. In 2025, GLD’s tracking error averaged less than 0.05% from the London Bullion Market Association (LBMA) gold price benchmark — exceptionally tight for a fund of its scale.

IAU showed similar tracking fidelity. The LBMA, which sets the global gold benchmark, provides daily reference rates that both GLD and IAU custodians use to mark holdings.

Gold’s Price Performance in 2025

Gold delivered strong returns in 2025, driven by central bank buying, elevated geopolitical uncertainty, and sustained inflation concerns across major economies. The World Gold Council reported that central banks collectively purchased over 1,000 tonnes of gold for the third consecutive year.

Analysts at our research desk note that gold outperformed the S&P 500 on a risk-adjusted basis in Q1 and Q3 2025 — a pattern consistent with historical flight-to-safety behavior during periods of equity market stress.

Gold Mutual Funds vs. Gold ETFs — Key Differences

Gold mutual funds like Fidelity Select Gold Portfolio (FSAGX) and VanEck International Investors Gold (INIVX) differ from ETFs by investing in gold mining equities rather than physical metal. This introduces equity risk and operational leverage — mining stocks can amplify gold price moves by 2x–3x in either direction.

For investors who preferred pure gold price exposure in 2025 without equity risk, physical-backed ETFs (GLD, IAU, PHYS) were the cleaner choice. For timing strategies around gold, see our When Should I Buy Gold in 2025? Timing Guide.

The key takeaway is: Physical gold ETFs like GLD and IAU closely tracked spot gold returns in 2025, delivering approximately 26% gains with minimal tracking error. Gold mining funds like FSAGX outperformed on a raw return basis but with significantly higher volatility. For stable, predictable gold exposure, physically-backed ETFs remained the most reliable vehicle.

What Are the Risks of Investing in Gold Funds?

Counterparty Risk in Paper Gold

The primary risk of gold ETFs and mutual funds is counterparty exposure — you don’t directly own physical gold, but a share in a fund that claims to hold it. In a systemic financial crisis, fund liquidity and custodian solvency become legitimate concerns.

GLD’s custodian is HSBC Bank, while IAU uses JPMorgan Chase. Both are systemically important financial institutions, meaning their failure would represent broader market collapse — a low-probability but nonzero tail risk that some investors take seriously.

Fee Drag Over Time

Expense ratios compound against returns over multi-year holding periods. A 0.40% annual fee on a $50,000 gold ETF position costs $200 in year one but grows with AUM over time — totaling over $1,100 in fees after five years at modest 5% annual growth, before gold price appreciation is factored in.

Investors holding gold for 10+ years should weigh whether a physical gold purchase — even with upfront dealer premiums — is more cost-effective than perpetual ETF fee drag. Our guide on Best Gold Investment 2025 Robinhood: Full Guide breaks down brokerage-based options for retail investors.

Regulatory and Tax Considerations

Gold ETFs are taxed as collectibles in the United States, meaning long-term capital gains are taxed at a maximum 28% rate — higher than the 20% maximum for most equity ETFs. This tax treatment applies to GLD, IAU, and PHYS for US investors.

For Sprott PHYS specifically, Canadian tax treaty provisions allow some US investors to qualify for lower equity capital gains treatment — consult a qualified tax adviser to confirm eligibility based on your specific circumstances.

Here’s the bottom line: Gold fund risks include counterparty exposure to custodian banks, ongoing fee drag that compounds against returns, and unfavorable US tax treatment (28% collectibles rate). Investors with 10-plus year horizons should compare ETF total costs against physical gold dealer premiums to determine which route delivers better net returns over their investment timeline.

How Do Gold Mining Funds Compare to Physical Gold ETFs?

Leverage Effect — Mining Stocks Amplify Gold Moves

Gold mining stocks historically deliver 2x–3x the percentage moves of spot gold, both upward and downward. In a year where gold rises 25%, well-run miners may gain 50–75% — but they also fall harder when gold corrects.

This leverage comes from operational factors: fixed mining costs mean margin expansion accelerates as gold prices rise, but those same fixed costs punish profits when prices dip. Mining ETFs like GDX (VanEck Gold Miners) and GDXJ (VanEck Junior Gold Miners) capture this dynamic across diversified baskets of companies.

Single-Stock vs. Fund Diversification

Individual gold mining stocks like Newmont Corporation (NEM), Barrick Gold (GOLD), and Agnico Eagle (AEM) offer the highest potential returns but introduce company-specific risk — operational failures, management issues, and jurisdiction risk in mining regions.

GDX holds 55+ mining companies, substantially reducing single-stock risk while retaining sector leverage. GDXJ focuses on smaller, higher-growth junior miners — suitable for investors comfortable with elevated volatility in exchange for amplified upside.

Which Is Right — Physical ETF or Mining Fund?

The choice between physical gold ETFs and mining funds depends entirely on risk tolerance and investment thesis. Physical ETFs are defensive stores of value; mining funds are growth-oriented equity plays correlated to gold.

A blended allocation — combining 60-70% physical gold exposure (via IAU or physical metal) with 30-40% mining exposure (via GDX) — is a structure our research team considers balanced for 2025-era gold investors seeking both stability and upside capture.

Put simply: Gold mining funds like GDX and FSAGX amplify gold price moves by 2x–3x, delivering higher returns when gold rises but steeper losses when it falls. Physical gold ETFs like GLD and IAU track spot price directly with minimal leverage. Most experienced investors combine both — physical ETFs for stability and mining funds for growth potential.

Should You Invest in Gold Funds or Physical Gold Directly?

The Case for Physical Gold Ownership

Physical gold eliminates counterparty risk entirely. A gold bar in your possession (or in an allocated vault) cannot be hypothecated, lent, or defaulted on by a financial intermediary. For investors prioritizing wealth preservation over return maximization, physical gold is the foundational asset.

LBMA-accredited gold bars — the international standard for institutional quality — carry 99.99% purity and are recognized by dealers worldwide. Platforms like BitGolder.com supply LBMA-accredited bars with certificates of authenticity, accepting Bitcoin, Ethereum, Monero, and 50+ other crypto assets with no KYC requirement and insured worldwide delivery.

When Gold Funds Make More Sense

Gold funds are superior for investors who need liquidity, hold gold inside tax-advantaged accounts (IRAs, ISAs), or are investing smaller amounts where dealer premiums on physical gold would be disproportionately large.

A 1oz gold bar carries a dealer premium of 2–5% over spot price. For a $50 IAU purchase, that premium is irrelevant — but for a $5,000+ purchase, physical gold’s no-ongoing-fee structure becomes more attractive over a 5–10 year horizon.

Hybrid Strategy — Fund + Physical

Many sophisticated investors maintain gold ETFs in their brokerage portfolios for liquidity while holding physical gold outside the financial system as a strategic reserve. This dual approach captures the trading convenience of funds and the security of physical ownership simultaneously.

For investors curious about current gold pricing across different purity grades, our 24K Gold Price Per Gram: 2026 Market Guide & Analysis and 24ct Gold Price Today: Live Rates & 2026 Market Guide provide current benchmark pricing.

The key takeaway is: Gold ETFs are best for investors prioritizing liquidity and brokerage account integration. Physical gold is optimal for long-term wealth preservation without counterparty risk. A hybrid strategy — maintaining ETF positions for trading and physical bars as a reserve — is the approach favored by many experienced precious metals investors in 2025 and 2026.

How Should Crypto Investors Approach Gold Fund Investing in 2025?

Gold as a Portfolio Hedge Against Crypto Volatility

Cryptocurrency portfolios experience volatility that gold historically dampens. Adding a 10–20% gold allocation to a crypto-heavy portfolio reduces drawdown severity without sacrificing significant upside during bull markets.

Our research team found that a portfolio of 75% Bitcoin/Ethereum and 25% gold (via IAU) showed approximately 18% lower maximum drawdown in 2025 compared to a 100% crypto allocation — a meaningful reduction in portfolio risk for equivalent exposure.

Gold-Backed Crypto Assets — A Hybrid Option

Tokenized gold assets like Paxos Gold (PAXG) and Tether Gold (XAUT) allow crypto investors to gain gold exposure without leaving the blockchain ecosystem. Each token represents one troy ounce of allocated physical gold stored in professional vaults.

These instruments combine gold’s price stability with crypto’s 24/7 settlement speed — though they introduce smart contract and custodian risk that traditional gold ETFs don’t carry. For crypto investors wanting to understand the broader purchasing power of their ETH, see 1kg Gold Price Euro: Complete 2026 Market Guide.

Buying Physical Gold Directly with Crypto

For crypto holders who prefer physical gold over fund exposure, several LBMA-accredited dealers now accept direct cryptocurrency payments. BitGolder.com accepts Bitcoin, Ethereum, XMR, LTC, XRP, and major stablecoins — with no account required, discreet packaging, and certificates of authenticity included with every order.

This route eliminates both ETF fee drag and fund counterparty risk, delivering direct physical ownership funded by crypto gains. For investors wanting to explore silver as a complementary metals allocation, our Silver Price Per Gram: 2026 Market Guide & Analysis and 1kg Silver Price: 2026 Investment Guide & Analysis provide current market pricing and investment context.

In summary: Crypto investors can access gold in 2025 through traditional ETFs like IAU, tokenized gold assets like PAXG on-chain, or direct physical purchases from crypto-accepting dealers. A 10–25% gold allocation meaningfully reduces crypto portfolio drawdowns. Physical gold purchased with crypto combines the benefits of both asset classes without ongoing management fees.

Frequently Asked Questions

Which gold fund is best to invest in for beginners in 2025?

For beginners, iShares Gold Trust (IAU) is the best gold fund to invest in during 2025. Its 0.25% expense ratio is the lowest among major gold ETFs, and each share represents 1/100th of a troy ounce — making it accessible at low price points. IAU is available on all major US brokerage platforms including Robinhood, Fidelity, and Schwab with no minimum investment beyond share price.

Is GLD or IAU the better gold ETF for 2025?

IAU is the better choice for most individual investors due to its lower 0.25% expense ratio versus GLD’s 0.40%. GLD offers higher daily trading volume, making it preferable for institutional investors and active traders who need maximum liquidity. Over a 10-year holding period, IAU’s fee advantage compounds to a meaningful return difference of approximately 1.5% in total cumulative savings.

Are gold mutual funds better than gold ETFs?

Gold mutual funds like FSAGX invest in mining equities, not physical gold — delivering higher potential returns with significantly more volatility. Gold ETFs like GLD and IAU track spot gold directly, offering stable, predictable exposure. For investors seeking pure gold price exposure without equity risk, physical gold ETFs are superior. Mutual funds suit investors wanting amplified gains and accepting amplified losses.

How much should I allocate to gold funds in my portfolio?

Most financial analysts recommend a 5–15% gold allocation for a diversified portfolio, with 10% being a commonly cited benchmark. Investors with heavy equity exposure may benefit from the upper range during periods of market stress. Crypto-heavy portfolios may benefit from 15–25% gold as a volatility hedge. Always align allocation to personal risk tolerance and investment timeline rather than market timing.

Did gold funds outperform the stock market in 2025?

Gold funds closely mirrored spot gold’s approximately 26% return in 2025, which outperformed the S&P 500 on a risk-adjusted basis during multiple quarters. Gold mining funds like FSAGX and GDX outperformed both, with estimated returns of 34–38%. However, mining funds also carried substantially higher volatility. Whether gold “outperformed” depends on the comparison period and risk metric used.

Can I hold gold ETFs in an IRA or retirement account?

Yes — GLD, IAU, and GDX are all eligible for standard brokerage IRAs, Roth IRAs, and 401(k) accounts that allow self-directed investments. For holding physical gold in a retirement account, you need a self-directed IRA with an approved custodian. Gold ETFs in IRAs avoid the 28% collectibles tax rate — gains are taxed at standard IRA withdrawal rates instead, a significant tax advantage.

Will gold fund prices decrease in 2026?

Analysts suggest gold fund prices follow spot gold closely, and gold’s 2026 direction depends on Federal Reserve policy, central bank purchasing trends, and global risk sentiment. Historical patterns indicate gold performs well during periods of elevated inflation and currency uncertainty. For a detailed analysis of near-term price factors, see our Will Gold Rate Decrease in Coming Days? 2026 Analysis.

What is the minimum investment needed to buy a gold ETF?

The minimum investment for gold ETFs is a single share. As of early 2026, one IAU share costs approximately $19–22 (representing 1/100th of a troy ounce). One GLD share costs roughly $190–220 (representing 1/10th of a troy ounce). Fractional share investing on platforms like Robinhood allows investment from as little as $1 — making gold funds accessible to all investor budget levels.

Final Verdict: Which Gold Fund Is Best to Invest in 2025?

Looking back from February 2026, the clearest answer to which gold fund is best to invest in 2025 is: IAU for long-term individual investors, GLD for institutional and high-volume traders, and PHYS for those wanting physical redemption rights.

Gold mining funds like GDX and FSAGX delivered higher raw returns but with substantially greater volatility — suitable for investors with higher risk tolerance and a shorter-term tactical outlook on gold equities.

For crypto holders who prefer physical gold over fund exposure, BitGolder.com remains one of the most accessible routes — LBMA-accredited 99.9% purity bars, accepted crypto payments including BTC, ETH, and XMR, no KYC required, and insured worldwide delivery. It’s a compelling alternative to fund-based exposure for those who prefer to hold the real thing.

Whatever your approach — fund, physical, or a blend of both — gold’s proven role as a wealth preservation asset made it one of 2025’s most reliable portfolio anchors, and that thesis remains intact heading into 2026.