A physically backed gold ETF holds gold bars and issues shares that trade on a stock exchange. You can buy exposure to the gold price without buying jewelry or storing gold at home. This guide covers GLD, IAU and GLDM, three US-listed products backed by physical gold. Gold mining funds and funds using derivatives work differently.
Our buying guide walks through funding an IBKR account and placing a gold ETF order.
What a gold ETF actually is
ETF stands for exchange-traded fund. A physically backed gold ETF works like this:
The trust holds real gold: Its custodian stores physical bars. GLD’s current custodians are HSBC and JPMorgan, and the fund publishes a bar list.
The gold is represented by shares: Each share represents a fractional interest in the trust. A GLD share initially represented about one-tenth of an ounce; the gold backing per share declines as gold is sold to pay expenses.
You trade shares like a stock: Gold ETFs are listed on exchanges such as NYSE Arca, so you buy and sell them through a brokerage account during market hours.
The price follows gold: GLD, IAU and GLDM use the LBMA Gold Price PM benchmark. Their returns differ from the benchmark because of fees, and their exchange prices can differ from net asset value.
No dividends: GLD, IAU and GLDM hold gold and pay no regular income. Your return comes from changes in their share prices, less your costs.
Why this matters if you earn in USD
If you earn in USD and spend in taka or rupees, exchange rates affect how much local currency your earnings buy. A gold ETF adds another variable: the gold price can rise or fall while the exchange rate changes.
Suppose you hold an investment worth $1,000. At an illustrative Tk120 per dollar, its value is Tk1.2 lakh (Tk120,000). At Tk125, the same $1,000 is worth Tk1.25 lakh. If the exchange rate stays at Tk120 and the investment falls to $900, its value drops to Tk1.08 lakh. Gold’s USD price and the exchange rate both affect your taka return.
The same principle applies to rupees: the local value of a USD investment depends on both its USD return and the exchange rate when you convert it.
Gold as an investment
Families in South Asia buy gold jewelry for weddings, gifts and savings. Investors also hold gold as an asset alongside cash, bonds and stocks.
Central-bank demand: The World Gold Council reports that central banks bought 863 tonnes of gold in 2025.
Record demand: The World Gold Council reports total 2025 gold demand above 5,000 tonnes, including over-the-counter transactions. Gold set 53 new price highs during that year.
Diversification: Gold and stocks do not always move together. Holding both can spread exposure across assets, but both can lose value.
Gold ETF vs gold jewelry bought locally
The main differences are cost, storage and how you sell.
Factor | Gold jewelry (local) | Gold ETF |
|---|---|---|
Extra cost when buying | Making charges on top of the metal price; taxes and dealer charges also affect the purchase cost | Trading commission, bid-ask spread and annual fund fee; funding, withdrawal, currency conversion and taxes can add costs |
Purity | Depends on the jeweler and hallmark | Funds hold bars meeting LBMA Good Delivery standards |
Storage and theft risk | Your responsibility | Held by the fund’s custodian |
Selling | Sell to a jeweler at its buyback price. Making and design charges are costs paid when buying, separate from the gold’s resale price | Sell through the exchange during trading hours, subject to order execution; withdraw after settlement and account holds |
Minimum amount | Price of a whole piece | Eligible IBKR fractional purchases start at $1; commission applies |
Currency | Priced in local currency | GLD, IAU and GLDM trade in USD; your local-currency return also depends on exchange rates |
Wearable or giftable | Yes | No |
Physical gold funds and gold mining stocks
GLD, IAU and GLDM hold the metal. Gold mining stocks, and funds investing in mining companies, hold businesses that produce gold. Their returns also depend on production costs, debt, management and local politics. The fund’s holdings tell you which exposure you are buying.
Popular US-listed gold ETFs
These three are among the largest physically backed gold ETFs. All three hold gold bars and track the gold price.
ETF | Ticker | Yearly fee | Launched |
|---|---|---|---|
SPDR Gold Shares | GLD | ||
iShares Gold Trust | IAU | ||
SPDR Gold MiniShares | GLDM |
GLD’s 0.40% annual fee costs about $0.40 a year on a constant $100 holding. IAU’s fee is $0.25 and GLDM’s is $0.10 on the same basis. The trust pays these expenses from its assets. Trading and transfer costs are additional.
Gold can lose value
A gold ETF can fall below the price you paid. Selling during a decline locks in that loss. Money needed for rent, taxes or upcoming bills should remain accessible without depending on a recovery in gold prices.
Gold pays no interest. Higher interest rates increase the income available from some cash and bond investments, which can reduce demand for gold. Rates are one influence on its price, alongside currency movements, investor demand and economic conditions.
Annual fund fees reduce the gold backing per share over time. Trading costs also reduce your net return.
US estate tax for non-residents
For people who are neither US citizens nor US-domiciled for estate tax, the IRS sets a $60,000 Form 706-NA filing threshold for US-situated assets plus specified adjusted taxable gifts at death. The tax due depends on domicile, treaties and the assets’ legal structure.
Are gold ETFs Shariah compliant?
Some gold products are. BlackRock states that its iShares Physical Gold ETC is Shariah compliant. It holds physical gold, is domiciled in Ireland and has a 0.12% yearly fee. Its USD listing in London uses the ticker IGLN. IGLN trades on the London Stock Exchange, which IBKR also offers. This is the certified option covered in this guide. Certification applies to the specific product’s custody and trading structure.
How freelancers can access gold ETFs
With Elevate Pay, you can fund an eligible IBKR account from your USD balance through Plaid for free. The transfer stays in USD and avoids currency conversion and an international wire.
Use an approved IBKR account with permission to trade your selected fund. Our Interactive Brokers review explains the account features and costs. The same account supports company shares; our guide to investing in US stocks from Pakistan covers that choice.
Frequently asked questions
Do I own real gold when I buy a gold ETF?
You own shares in the trust, which owns the physical gold. Retail investors sell shares on the exchange. Only authorized participants, firms appointed by the trust, can redeem large blocks of shares for gold.
How much money do I need to start?
IBKR allows purchases from $1 for eligible fractional securities and accounts. Its fractional-share commission is the greater of 1% of trade value or $0.01 under the published US schedule. A $1 purchase therefore has a $0.01 commission before other applicable costs.
Is a gold ETF safer than stocks?
Not necessarily. Gold ETFs can fall in value and pay no regular income. Their value depends on the gold price. A company’s shares depend on the business’s performance as well as market conditions.
Can I buy gold ETFs from Bangladesh or Pakistan?
With an approved IBKR account and permission to trade the selected fund, you can buy its USD-listed shares using USD deposited from your Elevate Pay account. Linking through Plaid verifies the account in your name, and IBKR pulls the deposit by ACH for free.
Funding and placing an order
Our buying guide covers the Plaid deposit, fund comparison, order types and commissions for an eligible IBKR account.
How we checked this
We reviewed the GLD, GLDM and iShares issuer pages, World Gold Council data, IRS estate-tax guidance and IBKR’s US commission schedule on October 2, 2026. Exchange rates in the example are illustrative. No investment was made for this article.
Bloom Financial Technologies Inc, trading as Elevate Pay, is a financial technology company, not a bank. Banking services are provided by Merchants Commercial Bank, Member FDIC.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. All investments involve risk, including the potential loss of principal.
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