GLD vs. GLDM: A Value Investor's Guide to Gold ETF Costs and Scale

For the patient investor, gold's enduring appeal lies in its role as a fundamental store of value. Across centuries, it has served as a hedge against uncertainty and a symbol of enduring wealth, a function reaffirmed through multiple economic cycles. In recent years, this role has solidified into a structural necessity in diversified portfolios, driven by a powerful dual engine of demand. On one side, central banks are buying at record levels, with emerging economies like China and Turkey leading a consistent accumulation streak that signals a long-term diversification away from the US dollar. On the other, Western investor participation has surged, creating a structurally stronger market base than in previous bull cycles. This combination fueled a remarkable rally in 2025, with gold shattering records and delivering its strongest performance since 1979.

The financial metrics for a gold ETF, however, are straightforward and critical. The primary cost is the expense ratio, which directly erodes returns over time. For instance, the SPDR Gold Shares (GLD) charges a 0.40% annual fee, while the SPDR Gold Minishares Trust (GLDM) charges a lower 0.10%. Over a long holding period, this difference compounds significantly. Equally important is liquidity, measured by Average Daily Volume (ADV). High liquidity ensures that investors can execute large trades without causing a significant price impact. GLD, with an ADV of over 12.6 million shares, offers deep liquidity, whereas GLDM's ADV of around 6.7 million shares is more modest. For a value investor, these are not minor details but fundamental components of the investment's cost of ownership.

Comparing the Titans: Scale, Cost, and Performance

The two leading gold ETFs present a classic value trade-off: massive scale versus minimal cost. SPDR Gold Shares (GLD) is the undisputed market leader, with $159 billion in assets under management. This colossal size translates directly into deep liquidity, with an Average Daily Volume of over 12.6 million shares. For institutional investors or those executing large trades, this is a critical advantage, ensuring minimal price impact.

SPDR Gold Minishares Trust (GLDM) takes the opposite tack. It charges a significantly lower 0.10% annual expense ratio, a full 0.30% cheaper than GLD's 0.40%. This cost advantage is the fund's core value proposition, directly boosting net returns over time. Yet, its scale is a fraction of GLD's, with $26.4 billion in AUM and a more modest ADV of around 6.7 million shares.

The performance data reveals an interesting dynamic. Despite the stark cost difference, both ETFs have delivered nearly identical results. As of early January 2026, GLD was up 67.0% over the past year, while GLDM was up 66.2%. This near-perfect tracking underscores that both funds are pure, low-cost proxies for the gold price. The slight underperformance of GLD is a direct, quantifiable drag from its higher fees.

For the value investor, this comparison is instructive. It shows that in a simple, transparent asset like gold, the cost of ownership is the primary variable that can be controlled. GLD's scale offers a liquidity moat that may be essential for certain investors. GLDM's lower cost is a clear advantage for those focused on maximizing every percentage point of return. The choice ultimately hinges on whether liquidity or cost is the more valuable asset in one's portfolio.

Valuation and the Long-Term Compounding Effect

For the value investor, the choice between GLD and GLDM comes down to a fundamental principle: minimizing frictional costs to maximize compounding. The 0.30% annual expense ratio difference is not a minor detail; it is a direct, quantifiable drag on long-term wealth accumulation. Over a decade, that gap compounds into a meaningful erosion of returns. For a disciplined investor, the lower total cost of ownership of GLDM aligns with the patient, compound-focused mindset.

GLD's massive scale creates a powerful network effect. Its $159 billion in assets and deep liquidity make it the default vehicle for institutional flows and large trades. This scale minimizes tracking error and ensures that even substantial orders can be executed with minimal price impact. It is a classic case of a liquidity moat that can be valuable for certain market participants.

Yet, for the long-term holder focused purely on the gold price, this advantage comes at a premium. GLDM's 0.10% expense ratio is a full 0.30% cheaper than GLD's. The fund's prospectus explicitly notes it is intended to provide a lower total cost of ownership over longer periods of time. In a simple, transparent asset like gold, where the goal is to track the metal's price minus fees, this cost advantage is the primary variable that can be controlled.

The math is straightforward. Over a 20-year horizon, the compounding effect of that 0.30% fee difference can translate into a significant percentage point gap in net returns. While GLD's scale offers a liquidity moat, GLDM's lower cost is a direct boost to the investor's capital. For a value investor, the principle is clear: avoid paying more for a service you can get just as well elsewhere. In this case, the lower total cost of ownership of GLDM is the more efficient path to wealth accumulation over the long cycle.

Practical Takeaways: A Value Investor's Recommendation

For the long-term, buy-and-hold investor with a moderate-sized portfolio, the recommendation is clear: SPDR Gold Minishares Trust (GLDM) is the preferred choice. Its 0.10% expense ratio provides a direct, quantifiable advantage over GLD's 0.40% fee. This lower cost of ownership is the core value proposition, directly boosting net returns over the decades-long compounding period that defines patient investing. Both funds offer identical exposure to the gold price, as evidenced by their nearly identical 1-year returns of 67.0% and 66.2%. For an investor focused on the metal itself, the lower total cost of ownership of GLDM is the more efficient path.

GLD's massive scale, with $159 billion in assets, creates a powerful liquidity moat. This depth is essential for institutional flows and large, infrequent trades where minimizing price impact is critical. For those making frequent, large-scale moves, GLD's liquidity may justify its higher expense ratio. However, for the typical long-term holder, this liquidity advantage is a service they do not need to pay for.

The broader gold market supports both vehicles. Record inflows in 2025, with global gold ETFs seeing annual inflows surge to US$89 billion and assets double, demonstrate the structural demand that underpins the asset. Central bank buying and investor enthusiasm are driving a durable market. As a value investor, your job is to capture this trend efficiently. Choosing GLDM is about aligning your cost structure with your long-term horizon.

Monitor the gold price and central bank buying patterns, as they are the fundamental drivers that will support the underlying demand for both ETFs. But for the disciplined investor, the choice between GLD and GLDM is a straightforward one: minimize cost where you can, and let compounding do the rest.