The Differences in Investing in Gold IRA vs Gold ETF

As an investment opportunity, gold is a versatile multi-dimensional commodity. Looking at the options, you can purchase ETFs if you plan to trade, open a Gold IRA if you want the protection of your retirement fund, or buy physical gold as a haven.

Still, not all gold investment options have the same upside. So we’re going to dissect the differences between Gold IRAs and ETFs to help you make an educated decision.

Gold IRA: A specific retirement account focused on gold

Gold IRA retirement accounts allow investors to invest in gold coins, bullions, or other precious metals. You can set up a gold IRA with pre-tax or after-tax dollars by collaborating with a custodian and/or broker.

Gold IRA types

Traditional Gold IRAs

You use pre-tax funds to finance these retirement accounts.

Roth Gold IRAs

 You make contributions with after-tax funds to Roth Gold IRAs but don't get immediate tax benefits.

SEP gold IRAs

 Intended for self-employed and small business employees. During retirement, you get taxed on withdrawals, not contributions.

Benefits of a gold IRA

  • Protect and Diversify: 

    A gold IRA diversifies your holdings and preserves your savings

  • Gold is an Inflation Hedge: 
    As the dollar’s worth decreases, gold's value rises
  • Profit Potential: 

    Gold has a high-profit potential, and historical data proves that.

  • Tax Deferred: 

    Contributions and gains are tax-free since gold IRAs are tax-deferred accounts

  • Enduring: 

    Gold IRAs usually stay untouched until retirement. The holding has long-term potential.

  • Self-Managed: 

    Because gold IRAs are self-directed, you control management and investment choices.

When to invest in a gold IRA 

  • When you want to save money for retirement, you can diversify your retirement portfolio with gold IRAs and make your retirement plan more reliable. Nobody should hinge all their savings on one investment. It's also a stellar idea to start saving for retirement during your working years to secure the future of your retirement. In addition, investors can use gold as a hedge against inflation issues, high gas prices, and unpredictable marketplaces.

Gold ETF: A stock-like pooled investment security

An exchange-traded fund, such as a gold ETF, is a pooled investment that allows investors to gain access to gold without actually buying, holding, or selling it. Trading on the market changes the price of an ETF share throughout the trading day. Gold ETFs can track gold prices directly or can help you invest in gold-mining companies. 

Commodity ETFs, like gold ETFs, help diversify a portfolio and protect against economic slowdowns. Furthermore, since a gold ETF does not require storage or insurance, owning an ETF is less expensive than owning physical gold. Since its price frequently increases as stock markets decline, gold is considered a safe investment option.

Also, there are fewer broker commissions because investors have one transaction to purchase and one to sell. Brokers charge a commission per trade. Some provide commission-free trading on affordable ETFs.


  • Opportunity to invest in various gold exchange-traded funds
  • Broker charges reduced
  • No expense for storage or insurance
  • Utilizing diversification to hedge inflation

When to invest in a Gold ETF

  • They say when you want to play the market and make more money keep a watch for gold prices. Similar to stocks, you may wish to buy gold ETFs at a bargain price and then sell them when the price increases. Dollar-cost averaging is a brilliant technique for spreading your asset by investing in stocks or funds periodically. With that said, a word of caution: gold ETFs are inappropriate for the buy-and-hold approach many investors use to save for retirement.

The Bottom Line

Generally, gold is regarded as a hedge against inflation and enables investors to spread their holdings. Which option suits you best? 

Each type of gold investment fulfills a specific goal. Therefore, your purpose will determine the best investment for you. 

Gold ETFs are a low-cost approach to accessing a diverse portfolio of gold-related investments. 

Taking this into account, a gold IRA is an excellent option for people who want to diversify their retirement savings and profit from hedging. Several financial professionals advise holding 5% to 10% of an investment portfolio in gold.

About the author Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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