GLD vs IAU: Which Gold ETF Is Better in 2025?

Both GLD (SPDR Gold Shares) and IAU (iShares Gold Trust) hold physical gold bullion in secure vaults. Each share represents a fractional ownership of real gold bars. Neither ETF pays dividends since gold generates no income. When you buy these ETFs, you're getting pure gold price exposure without the hassle of storing physical metal yourself.

GLD charges 0.40% annually; IAU charges 0.25%. That 0.15% gap seems small but compounds over time. On a $50,000 gold position held for 20 years, you'd pay roughly $4,000 more in GLD fees versus IAU, assuming 7% annual gold returns. For buy-and-hold investors, IAU's lower expense ratio is the deciding factor. GLD's only advantage is liquidity, which matters primarily for institutional traders.

Gold ETFs are taxed as collectibles, meaning long-term gains are taxed at 28% rather than the typical 15-20% capital gains rate. This applies to both GLD and IAU equally. For this reason, consider holding gold ETFs in tax-advantaged accounts (IRA, 401k) where the unfavorable tax treatment doesn't apply. Neither ETF has an advantage here-it's a structural issue with gold investing.

Most financial advisors suggest 5-10% of a portfolio for gold exposure, if any. Gold provides diversification and crisis protection but doesn't generate income or earnings growth. Too much gold drags on long-term returns during normal markets. Whether you choose GLD or IAU, the allocation decision matters more than the fund choice. Start with 5% if you're unsure.