Is a gold IRA better than a gold ETF?

Neither is universally better — it depends on your priorities. A physical gold IRA provides direct ownership of tangible metal with no counterparty risk, but costs more and is less liquid. A gold ETF (like GLD or IAU) offers lower costs, instant liquidity, and simpler management, but you own shares of a trust — not physical gold. If you value tangible asset ownership and long-term wealth preservation, a gold IRA may be the better choice. If you prioritize low costs and trading flexibility, a gold ETF in a standard IRA is likely more practical.

Can I hold gold ETFs in a regular IRA?

Yes. Gold ETFs like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) can be held in a standard brokerage IRA — no self-directed IRA or special custodian is required. This makes gold ETFs the simplest and lowest-cost way to add gold exposure to a retirement account. You can buy and sell gold ETF shares just like stocks, with no storage fees or dealer markups.

What is the expense ratio of gold ETFs compared to gold IRA fees?

The SPDR Gold Shares ETF (GLD) has an expense ratio of approximately 0.40% per year, while the iShares Gold Trust (IAU) charges about 0.25%. On a $50,000 investment, that translates to $200 or $125 per year, respectively. A gold IRA typically costs $330-$425 per year in custodian and storage fees, plus a one-time setup fee and dealer markups of 3-5% on metals purchases. On a percentage basis, gold ETFs are significantly cheaper, especially for smaller accounts.

Do I actually own gold with a gold ETF?

No. When you buy shares of a gold ETF like GLD, you own shares of a trust that holds gold. You do not have a direct claim on specific gold bars. You cannot request delivery of the physical gold (only Authorized Participants — large institutional investors — can redeem shares for physical gold). In contrast, a gold IRA gives you direct ownership of specific, identifiable bars or coins stored in a depository in your name.

What is counterparty risk and how does it differ between gold IRAs and ETFs?

Counterparty risk is the risk that a third party involved in a transaction fails to meet its obligations. With a gold ETF, your counterparty risks include the ETF sponsor (e.g., State Street for GLD), the custodian bank that holds the gold (HSBC for GLD), and the financial system more broadly. With a physical gold IRA, counterparty risk is limited to the depository storing your metals — and that risk is mitigated by insurance, auditing, and the fact that you own specific, identifiable metals. In a severe financial crisis, physical gold advocates argue that direct ownership provides superior protection.

How are gold ETFs taxed in a retirement account vs. outside one?

Inside a traditional IRA or 401(k), gold ETF gains are tax-deferred regardless of how long you hold them — distributions are taxed as ordinary income. Inside a Roth IRA, qualified distributions are tax-free. Outside of a retirement account, gold ETFs are taxed at the 28% collectibles rate for long-term gains (not the lower 15-20% capital gains rate), because the underlying asset is gold. This collectibles tax treatment is one of the reasons holding gold (whether physical or ETF) inside a retirement account is advantageous.

Physical Gold IRA vs Gold ETF: Which Is Right for You?

Investors looking to add gold to their retirement portfolio face a fundamental choice: hold physical gold in a self-directed IRA, or buy shares of a gold ETF in a standard brokerage account. Both provide exposure to gold prices, but they differ dramatically in cost structure, ownership rights, liquidity, tax treatment, and the level of protection they offer during financial stress.

This comparison is not about declaring a winner. It is about understanding the trade-offs clearly enough to choose the option that aligns with your investment goals, risk tolerance, and practical preferences.

Physical Gold vs. Paper Gold: What Are You Actually Buying?

Physical Gold IRA

You own actual, identifiable gold coins or bars stored in an IRS-approved depository. The gold is held in your name (or your IRA’s name) and is segregated or allocated to your account. You can eventually take physical possession through an in-kind distribution. The gold exists independent of any financial institution’s solvency.

Gold ETF (e.g., GLD, IAU)

You own shares of a trust that holds gold in vaults. The trust is managed by a fund sponsor (State Street for GLD, BlackRock for IAU) and the gold is custodied by a bank (HSBC for GLD, JPMorgan for IAU). You have an economic interest in gold price movements but no direct claim on specific gold. Shares trade on stock exchanges like any other security.

Side-by-Side Comparison

Feature	Physical Gold IRA	Gold ETF (in IRA)
What you own	Physical coins/bars in your name	Shares of a gold-backed trust
Annual fees	$330-$425/year (flat)	0.25-0.40% of assets/year
Setup cost	$0-$80 + dealer markup (3-5%)	$0 (most brokers)
Liquidity	Days to liquidate	Instant — trades during market hours
Counterparty risk	Minimal (depository + insurance)	Moderate (fund sponsor + custodian bank)
Physical delivery	Yes (in-kind distribution)	No (retail investors cannot redeem)
Account type needed	Self-directed IRA with specialized custodian	Any standard brokerage IRA
Minimum investment	$2,000-$50,000 (varies by company)	Price of one share (~$170-$250)
Complexity	Higher (custodian, dealer, depository)	Low (buy/sell like a stock)
Insurance	Depository insurance (Lloyd's of London typical)	SIPC protection on brokerage account
Tax treatment in IRA	Tax-deferred (traditional) or tax-free (Roth)	Tax-deferred (traditional) or tax-free (Roth)
Best for	Long-term wealth preservation	Cost-efficient gold exposure

Ownership Structure: The Fundamental Difference

The most significant distinction between a physical gold IRA and a gold ETF is the nature of ownership. In a gold IRA, you own specific, identifiable pieces of gold. Your custodian maintains records of the exact coins or bars allocated to your account. If you choose segregated storage, those items are physically separated from other investors' metals. When you eventually take a distribution, you can receive the actual gold.

With a gold ETF, you own shares representing a fractional interest in a pool of gold held by a trust. The SPDR Gold Trust (GLD), for instance, holds roughly 860 metric tons of gold in HSBC vaults in London. As a shareholder, you benefit from gold price appreciation, but you have no claim on any specific gold bar. Only “Authorized Participants” — large banks and broker-dealers — can redeem shares for physical gold, and they do so in blocks of 100,000 shares (roughly $25 million at current prices).

For many investors, this distinction is philosophical. For others — particularly those who view gold as insurance against systemic financial risk — the difference between owning gold and owning a claim on gold is the entire point.

Fee Comparison: The Numbers

Cost is where gold ETFs have the clearest advantage. The gap narrows for larger accounts but remains significant.

Account Size	Gold IRA (Annual)	GLD ETF (0.40%)	IAU ETF (0.25%)	IRA Premium
$25,000	$380	$100	$63	$280-$317
$50,000	$380	$200	$125	$180-$255
$100,000	$380	$400	$250	$0-$130
$250,000	$380	$1,000	$625	ETF costs more

An important crossover point: at approximately $100,000, the flat-fee structure of gold IRAs becomes competitive with the percentage-based ETF expense ratios. For accounts above $250,000, a gold IRA is actually cheaper in annual fees than a GLD ETF holding. This math is why gold IRAs are most cost-efficient for larger accounts. See our full fee comparison for more detail.

Tax Treatment Differences

Inside a retirement account (traditional or Roth IRA), both physical gold and gold ETFs receive the same tax treatment — deferred (traditional) or tax-free (Roth). The tax differences between these two vehicles matter most outside of retirement accounts.

Outside of an IRA, both physical gold and gold ETFs are classified as collectibles by the IRS and subject to a maximum 28% long-term capital gains rate — higher than the 15-20% rate for most other investments. This is one of the strongest arguments for holding gold exposure inside a retirement account, regardless of whether you choose physical or ETF form.

For a complete breakdown of gold IRA tax rules, contribution limits, and distribution treatment, see our Gold IRA Tax Rules guide.

Liquidity: How Quickly Can You Access Your Investment?

Gold ETFs trade on major stock exchanges during market hours. You can sell shares of GLD or IAU instantly at the current market price, just like selling shares of any stock. Settlement occurs in one business day (T+1). For investors who may need to react quickly to market movements or liquidity needs, this is a significant advantage.

Selling physical gold from an IRA is a multi-step process: contact your custodian, receive a buyback quote from the dealer, accept the price, wait for the sale to settle (typically 1-3 business days), and then request a distribution of the cash proceeds. End to end, the process can take several business days to over a week. While this is not a concern for planned distributions or long-term investors, it does limit your ability to make time-sensitive decisions.

Counterparty Risk Analysis

This is where the philosophical divide between physical gold and paper gold is most pronounced.

Physical Gold IRA: Counterparty Risks

Depository: Risk that the depository is mismanaged or fails. Mitigated by insurance (typically Lloyd's of London), regulatory oversight, and regular third-party audits.
Custodian: Risk that the custodian mishandles accounts. Mitigated by regulatory requirements and the fact that the custodian does not hold your gold — the depository does.
Your gold is your gold: In a bankruptcy of the custodian or dealer, your physical metals at the depository are not part of their estate.

Gold ETF: Counterparty Risks

Fund sponsor: Risk that the trust sponsor (State Street, BlackRock) faces operational issues.
Custodian bank: Risk that the bank holding the gold (HSBC, JPMorgan) faces solvency issues. In a severe financial crisis, this is a real concern.
Sub-custodians: GLD's prospectus permits the use of sub-custodians, adding additional layers of counterparty exposure.
Brokerage: Risk that your brokerage account is compromised. SIPC insurance covers up to $500,000 but may not cover the full value of large positions.

When a Physical Gold IRA Makes More Sense

✓You have $100,000+ in retirement savings to allocate to gold, where the flat-fee structure becomes cost-competitive with ETF expense ratios.
✓You view gold as financial insurance against systemic risks and want direct ownership independent of the financial system.
✓You plan to hold for 10+ years, minimizing the impact of initial dealer markups and setup costs.
✓You want the option to eventually take physical delivery of your gold through an in-kind distribution.
✓You are focused on generational wealth transfer and want to pass tangible assets to heirs.

When Gold ETFs Are the Better Choice

✓You have a smaller account (under $50,000) where gold IRA fees represent a disproportionate cost.
✓You want maximum liquidity and the ability to buy or sell gold instantly during market hours.
✓You prefer simplicity and want to manage your gold exposure alongside your other investments in a single brokerage account.
✓You want to minimize costs and are comfortable with the counterparty structure of an ETF trust.
✓You may want to tactically adjust your gold allocation based on market conditions.