Unlocking Tangible Wealth: The Rise of Gold ETFs That Deliver Physical Gold
41min read The global economy is at a crossroads. As inflation, geopolitical tensions, and market volatility redefine investment priorities, a quiet revolution is underway: investors are flocking to gold ETFs that offer physical redemption of their holdings. For those seeking to anchor their wealth in tangible assets, two funds—VanEck® Merk® Gold Trust (OUNZ) and Sprott Physical Gold Trust (PHYS)—are emerging as cornerstones of this trend. Let’s explore why.
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The Gold ETFs Delivering Physical Gold
OUNZ and PHYS stand apart from traditional gold ETFs by enabling investors to claim ownership of actual gold bars or coins. Unlike passive funds like GLD or IAU, which track gold prices but keep physical assets locked away, these two trusts empower investors to take delivery of their gold—a critical advantage in uncertain times.
VanEck® Merk® Gold Trust (OUNZ)
OUNZ’s structure is straightforward: each share represents a proportional claim to physical gold stored in secure, undisclosed vaults. To redeem, investors submit a request through their broker, which triggers a transfer of shares to an authorized participant. The gold is then shipped directly to the investor—though the process may take weeks, depending on logistics.
A key selling point? Tax efficiency. Taking delivery isn’t a taxable event because investors already own the gold they’re redeeming. As of April 2024, OUNZ managed $904.2 million in assets, a figure likely to grow as investors prioritize tangible ownership.
Sprott Physical Gold Trust (PHYS)
PHYS offers similar physical redemption but with distinct features. Its gold is stored in Canadian vaults, audited by third parties to ensure transparency. Investors can choose to hold shares or redeem them for 400-ounce gold bars. While its expense ratio of 0.42% is higher than cost-efficient ETFs like IAU (0.25%), the trade-off for direct ownership appeals to risk-averse investors.
Why Investors Are Rushing In
The surge in demand for physical redemption ETFs isn’t accidental. Three factors are driving this shift:
- Economic Uncertainty: With central banks tightening monetary policies and geopolitical risks rising, gold’s role as a safe haven is resurgent.
- Tax Benefits: OUNZ’s tax-free redemption process contrasts sharply with traditional ETFs, where selling shares triggers capital gains taxes.
- Trust in Transparency: Both OUNZ and PHYS avoid lending their gold—a practice common in other ETFs—which ensures investors’ holdings remain fully backed.
Risks and Considerations
While these ETFs offer unique advantages, they’re not without drawbacks:
- Liquidity Trade-Off: Funds like GLD and IAU dominate in trading volume, making them easier to buy/sell quickly. OUNZ and PHYS may face delays during redemption.
- Storage Costs: PHYS’s 0.42% expense ratio reflects its premium security measures, whereas IAU’s 0.25% appeals to cost-focused investors.
- Delivery Delays: Physical redemption can take weeks, and geopolitical instability might disrupt logistics.
The Bottom Line: Balancing Tangible Ownership with Pragmatism
In 2025, investors are voting with their portfolios. While OUNZ and PHYS cater to those prioritizing physical gold ownership, traditional ETFs like GLD and IAU remain vital for liquidity and cost efficiency.
The data underscores this divide:
- OUNZ’s AUM has grown by 120% since 2020, reflecting rising demand for tangible assets.
- PHYS’s third-party audits and Canadian storage add a layer of geopolitical stability, attracting investors wary of U.S.-centric risks.
For most portfolios, a hybrid approach makes sense: use IAU or GLD for daily trading and allocate a portion to OUNZ or PHYS as a hedge against systemic risks.
Conclusion: The Gold ETF Landscape in 2025
The rise of physically redeemable gold ETFs isn’t just a niche trend—it’s a reflection of investor skepticism toward opaque financial systems. With OUNZ and PHYS providing verifiable ownership of gold, these funds are becoming critical tools for wealth preservation.
While they lack the liquidity of larger ETFs, their growth in AUM and investor interest signal a paradigm shift. In an era of uncertainty, the ability to hold physical gold—without the hassle of owning coins or bars—is proving irresistible. For investors willing to balance convenience with tangible security, these ETFs offer a compelling path forward.
The future of gold investing is here—and it’s tangible.
