Looking for a Hedge? These 2 Gold ETFs Offer Very Different Ways to Invest
2026-10-23 09:30
•Rj Fulton •The Motley Fool
•••• ••• Axe Cap view
Gold ETFs: A Tale of Two Risks on the JSE
Choose between steady, simple gold exposure or a riskier ride via miners when hedging with gold.
South African investors are often drawn to gold as a defensive asset, especially amid rand weakness and local economic uncertainty. The iShares Gold Trust (IAU) holds physical gold, offering a straightforward hedge with low costs and limited surprises. In contrast, the VanEck Gold Miners ETF (GDX) owns shares in mining companies like Newmont and Agnico Eagle, which can amplify returns but also spike losses when miners struggle operationally. Mining stocks naturally have higher volatility — important in South Africa where miners like AngloGold Ashanti play a big role. For most JSE investors, physical gold via IAU or the locally traded AngloGold Ashanti stock itself provides a cleaner hedge against rand depreciation and inflation. GDX may suit those with a higher tolerance for risk and belief in a strong gold rally, but understand you’re betting on mining management and not just the metal price. The rand’s moves and South African mining conditions are wildcards that could easily unsettle returns here. this is just our opinion and not financial advice
Prefer buying physical gold exposure through IAU or AngloGold Ashanti for steady protection. Trim or avoid GDX unless you have appetite for volatile mining stocks with uncertain operational risks.
- IAU
- GDX
- AngloGold Ashanti
- USD/ZAR
- Rand weakness impacting foreign ETFs
- Operational risks in mining companies
- Volatility spikes in gold miners during market stress
7/10
The article compares two gold investment ETFs: iShares Gold Trust (IAU), which holds physical bullion with a lower 0.25% expense ratio, and VanEck Gold Miners ETF (GDX), which invests in mining company stocks with a 0.51% expense ratio. While GDX has delivered higher 5-year returns ($2,868 vs $2,331 on $1,000), it carries significantly higher volatility and risk. For long-term investors seeking simple gold exposure, IAU is recommended due to its lower costs and direct commodity exposure, though GDX may offer greater upside under favorable conditions.
Our take is based on reporting first published by The Motley Fool.