Owning shares in a gold ETF is not the same as owning physical gold, and ETFs cannot reproduce the security offered by physical gold. As if there weren't enough issues to consider, gold ETFs represent a significant market risk for investors. Bullion ETFs are a good idea, but risks are a very real and current danger. Worse, the reason you own gold is to protect yourself from financial and economic uncertainty, and you could lose that advantage if you own a form of gold on paper that involves all kinds of counterparty risks.
There are several ways to invest in gold, such as actually buying the physical commodity, buying shares in companies in the gold business, buying gold futures, or investing in gold exchange-traded funds (ETFs). Investing in gold ETFs is a cost-effective and easy way to expose yourself to gold, and the SPDR Gold Shares (GLD) ETF is one of many ETFs that offer this exposure. iShares Gold Trust is one of the most attractive options when it comes to securing gold ETFs, and yet it puts investors at risk. On March 4, BlackRock, the sponsor of the iShares Gold Trust (IAU) gold ETF, announced that it had temporarily suspended the issuance of new shares in the fund.
This means that it may be cheaper to have physical gold stored in a private vault compared to the fees of owning a gold ETF. While gold ETFs may seem like a good option considering the historical value of gold for more than a century, they're actually not the best decision when it comes to allocating money to investments. Although gold ETFs work more like stocks than real investments in gold, the government doesn't consider them stocks when it comes to taxes. This creates a scenario in which investors basically expect the statement they receive about their investment in gold ETFs to be true, mainly because they will never see any of the gold they have supposedly invested in.