When it comes to investing in gold, both gold ETF and physical bullion are top options giving investors exposure to precious metals.
The SPDR Gold Trust is the oldest gold ETFs available to investors. Established in 2004, SPDR Gold Trust allows investors to gain exposure to gold without the need for physical storage, while physical gold offers direct ownership of the metal.
How do gold ETFs stack up against buying physical gold bars? The answer may surprise you.
While many investors prefer the convenience of ETFs because of the quick trades and easy trades via traditional broker apps. However, nothing provides the same financial security of having physical possession of your assets.
How has the SPDR Gold ETF performed in comparison to a similar investment in physical gold bars?
The initial offering price per share for SPDR Gold Trust was $43.90 a share in 2004. Each share represents roughly 1/10 oz of gold. At the time, physical gold was trading at $409.72 per ounce.
Analysis: $1,000 Investment in SPDR Gold Trust vs. Physical Gold (2004-2023)
A $1,000 investment in SPDR Gold Trust in 2004 would net 22.78 share. The same investment in physical bullion would have net roughly 2.44 troy ounces of .9999 fine gold.
The graph below shows the annual value change of a $1,000 investment in SPDR Gold Trust and physical gold from 2004 through 2023:
Orange Line – Physical Gold Performance
Yellow Line – SPDR Gold ETF Performance
SPDR Gold ETF Performance
- Initial Price (2004): $43.90 per share
- Value of $1,000 Investment in 2023: $4,120.27
- Growth Factor: The investment grew approximately 4.12 times over the period.
Physical Gold Performance
- Initial Price (2004): $409.72 per ounce
- Value of $1,000 Investment in 2023: $4,564.09
- Growth Factor: The investment grew approximately 4.56 times over the period.
Key Observations of Gold ETF vs Gold Bars
- Overall Growth: Both investments provided substantial returns, with physical gold bars slightly outperforming the SPDR Gold Trust.
- Volatility: Both investments experienced significant fluctuations, particularly during periods of economic instability and market changes.
- Performance Peaks: Both investments saw notable increases in value during the financial crisis of 2008-2009 and during the COVID-19 pandemic in 2020, reflecting gold’s role as a safe-haven asset.
Conclusion
Investments in either a gold etf or physical gold have proven to be effective at preserving and growing wealth during the period from 2004 to 2023. While physical gold slightly outperformed the SPDR Gold Trust, both showed strong resilience and growth, especially during periods of economic uncertainty. Investors looking for exposure to gold can consider either option, depending on their preference for holding physical assets versus paper assets.
Investment Value Comparison Table
To better understand the year-by-year value changes, the table provided offers detailed insights into the performance of both investments