GLD vs. physical gold: costs and trade-offs

Both track the gold price closely over time, but they are not interchangeable — the differences show up in fees, convenience, and what you actually own.

What GLD actually is

SPDR Gold Shares (GLD) is an exchange-traded fund that holds gold bullion in trust and issues shares representing a fractional claim on that gold. It trades on a stock exchange like any other share, during market hours, through an ordinary brokerage account.

What physical bullion actually is

Physical gold — coins or bars bought from a dealer — is direct ownership of a tangible asset. There is no fund structure, no share price, and no brokerage account involved. What you hold is what you own.

Cost differences

GLD charges an ongoing expense ratio, deducted automatically from the fund's holdings — small per year, but compounding over a long holding period. Physical gold has no ongoing fee, but buyers typically pay a dealer premium above the spot price at purchase, and may face a markdown (or a separate buyback spread) when selling. Storage and insurance, if used, are additional and ongoing for physical holders.

Liquidity differences

GLD shares trade continuously during market hours with tight bid-ask spreads typical of a large, heavily traded fund. Physical gold's liquidity depends on the dealer network available to you, and selling in a hurry can mean accepting a wider spread than a patient sale would get.

Custody and counterparty considerations

GLD's gold is held by a custodian on behalf of shareholders, governed by the fund's trust structure — shareholders do not take physical delivery in normal circumstances. Physical gold in your own possession removes that custodial layer entirely, at the cost of taking on personal responsibility for security and insurance.

Tax treatment varies by jurisdiction

Gold ETFs and physical bullion are sometimes taxed differently depending on where you live and how long you hold them — this is genuinely jurisdiction-specific and changes over time, so it is not something a general article can responsibly summarize. Confirm current treatment with a tax professional before assuming either option is more efficient.

Reading GLD's price on this simulator

Because GLD trades as shares, its price level is not directly comparable to spot gold's price per ounce. The simulator's comparison chart rebases both to 100 at the start of the selected range specifically so relative performance can be read without that scale mismatch getting in the way.

This article explains structural differences between an ETF and physical bullion and is not investment, tax, or legal advice.