GLD vs. GLDM: Which Gold ETF is the Main Character in the 2025 Record-Setting Rally?

The story of 2025 is one of a gold market in full, record-breaking flight. The price didn't just climb; it shattered through the ceiling, hitting 53 record highs and delivering its sharpest annual gain in more than 4.5 decades. That surge, a 65.0% total gain, marks the most violent rally since the historic 133.4% jump of 1979. This wasn't a quiet, steady grind. It was a headline-making event that captured global attention and triggered a massive capital shift.

That capital flowed straight into the ETFs. Investors poured unprecedented sums into physically backed gold, driving annual inflows to US$89bn, the largest on record. The result was a doubling of assets, with global gold ETFs' AUM reaching a historic peak of US$559bn. This wasn't just a trend; it was a tidal wave of demand, with holdings climbing to 4,025 tonnes. The setup was clear: a volatile year of trade disputes and geopolitical jitters created a powerful safe-haven pull, which the surging price then amplified through momentum buying.

Yet the narrative behind this rally is more nuanced than a simple "gold for inflation" story. In reality, gold is a volatility hedge more than anything. With the S&P 500 charging higher and inflation still elevated but not spiraling, the traditional risk-off or inflation-hedge drivers were muted. Instead, gold's near-zero long-term correlation with stocks made it a prime tool for portfolio diversification in a turbulent year. It became the ultimate risk mitigator, and that role fueled its explosive performance. For the ETFs, this meant they weren't just tracking a commodity-they were capturing the market's search for stability in a choppier world.

The Core Trade-Off: Scale vs. Cost

The 2025 gold rally has made the ETF choice a central question. At its heart is a classic trade-off: the market's main character, GLD, versus the cost-conscious contender, GLDM. The numbers tell a clear story of scale versus efficiency.

GLD is the giant. With $151.5 billion in assets under management, it dwarfs its rival. That massive size translates directly into liquidity, making it the preferred vehicle for institutions and large-volume traders who need to move in and out of positions with minimal market impact. It is the established, deep-pocketed player.

GLDM, by contrast, is the lean challenger. It manages $26.4 billion in AUM, a fraction of GLD's footprint. Yet its smaller scale is its strength in a different arena: cost. GLDM charges a mere 0.10% annual expense ratio, a 75% discount to GLD's 0.40%. For every dollar invested, that difference compounds over time, making GLDM a more efficient tool for pure gold exposure.

Performance, the ultimate test, shows they are nearly identical twins. Over the past year, GLDM's return of 66.2% trailed GLD's 67.0% by just 0.8 percentage points. The near-perfect correlation, with both funds having a beta of 0.09, confirms they track the gold price with remarkable fidelity. The tiny gap is almost entirely attributable to the expense ratio difference.

The bottom line is a choice between two powerful advantages. GLD offers unmatched liquidity and institutional gravitas. GLDM delivers superior cost efficiency with ample liquidity of its own. For the investor chasing the headline, the question is whether the scale of the main character justifies the higher fee, or if the leaner, cheaper option is the smarter bet for the rally's next leg.

Performance & Risk: The Cost of the Headline

The premium for GLD's scale is a tangible one. While both funds are pure gold plays, the five-year numbers reveal a clear winner in efficiency. Over the past five years, GLDM delivered an annualized return of 10.48%, edging out GLD's 10.30%. That 0.18-percentage-point gap is the direct result of its lower cost. In the world of ETFs, where performance is measured against a pure index, this is the tracking difference in action: lower fees mean less drag on returns over time.

Risk profiles tell a similar story. The downside is nearly identical. GLDM's maximum drawdown over five years was -20.92%, compared to GLD's -21.03%. This shows both funds are equally effective at capturing gold's volatility, whether up or down. The risk of holding either is the same.

The bottom line is that GLD's massive size buys you liquidity, not a better risk-adjusted return. For the investor focused on pure gold exposure, the cost of the headline is the higher fee. GLDM's lower expense ratio translates directly into higher net returns over the long haul, making it the more efficient vehicle. In a market where every basis point counts, that efficiency is the real edge.

Catalysts & What to Watch: The 2026 Narrative

The 2025 rally has set the stage, but the 2026 story will be written by a new set of catalysts. The market's attention will now shift from the headline-grabbing price surge to the efficiency of the vehicle capturing it. Three key factors will determine which ETF gains more capital flow.

First, watch the flow of capital itself. The record US$89bn in annual inflows that fueled the 2025 rally was driven by a wave of investor enthusiasm. As that initial momentum matures, a potential shift could emerge. The main character in 2026 may be the ETF with the lowest cost of entry. With GLDM's expense ratio of just 0.10% offering a clear efficiency advantage, cost-conscious investors and retail traders may increasingly favor it over the higher-fee leaders like GLD and IAU. The narrative could pivot from chasing the biggest name to chasing the most efficient one.

Second, the gold price's ability to sustain its momentum is the ultimate headline driver. The metal ended 2025 with a 65.0% annual gain and a record of 53 new highs. A new record high in 2026 would reignite the entire safe-haven and momentum narrative, likely drawing fresh headline-driven flows. In that scenario, the established leaders like GLD, with their massive liquidity and brand recognition, would be the primary beneficiaries. The market's search for stability in a turbulent world could once again make the main character the most visible player.

The bottom line is a battle between two narratives. One is the efficiency play: as the 2025 rally matures, the cost-conscious investor may favor GLDM. The other is the momentum play: if the gold price breaks higher, the established giants will likely see a surge in flows. The ETF that best captures the market's current search interest-whether for stability or efficiency-will be the main character in 2026.