Should You Invest in Gold Miners or Gold Itself? An In-Depth Look at ETFs

As the allure of gold continues to rise in 2025, many investors are left wondering whether they should invest in gold miners or the gold itself. Recent trends indicate that U.S.-listed exchange-traded funds (ETFs) that track companies involved in the exploration, mining, and processing of gold are on a steep upward trajectory. The price of gold has recently shattered the key $3,000 barrier, which has sparked interest in the performance of gold mining stocks compared to physical gold and gold-related funds.

Gold Prices Surge in 2025

According to FactSet data, the price of gold (GC00) (GCJ25) has not only broken through $3,000 but has also managed to stabilize above that point. This significant price surge has positively impacted gold-focused ETFs this year. The VanEck Gold Miners ETF (GDX) has seen a remarkable increase of over 32% in 2025, while the VanEck Junior Gold Miners ETF (GDXJ) and the iShares MSCI Global Gold Miners ETF (RING) have risen by more than 30% and 33%, respectively. In sharp contrast, traditional gold-related funds such as the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU) have only gained around 15.5% each during the same period. This disparity raises the question of which investment vehicle offers better long-term returns.

Investment Opportunity in Gold Miners

Market analysts suggest that the underperformance of gold-mining stocks, which has traditionally mirrored the price of gold, may be shifting. Chris Mancini, a metals and mining analyst at Gabelli Asset Management, stated, “I believe the price of gold will continue to rise, though that’s a broader discussion tied to macroeconomic factors.” Economic concerns, including tariffs, trade wars, and slowing growth, are leading to expectations of further monetary easing from the Federal Reserve, which could boost gold prices.

Investing in gold miners instead of gold gives investors not only exposure to the metal itself but also potential dividend income and leverage to so-called safe-haven assets. Steve Schoffstall, director of ETF product management at Sprott Asset Management, explained, “Even if gold prices remain steady, miners have a strong opportunity for a solid run.” Earnings-per-share expectations for gold miners have risen by approximately 67% for 2025 and 99% for 2026, creating what many see as a potential investment opportunity.

Risks of Investing in Gold Miners

However, potential investors should also be aware of the risks associated with investing in gold miners. As Schoffstall mentioned, there is a serious equity risk to consider. “Gold miners could be caught up in a broader market selloff,” he noted, highlighting that shareholders may experience significant variance between top and bottom performers in the mining sector—with average performance dispersion around 170% over the past five years.

Moreover, most gold mining companies, such as Newmont Corp. (NEM), do not solely operate as gold producers. Newmont also mines copper, silver, zinc, and lead. Consequently, while investing in gold mining stocks can offer potential returns, it is important to remember that these stocks may not correlate directly with gold price movements.

The Case for Active Management

To navigate these complexities, some financial experts recommend an active investment approach. The Sprott Active Gold and Silver Miners ETF (GBUG), recently launched, is an actively managed fund targeting gold and silver companies that derive at least 50% of their revenue or have a similar percentage of their assets engaged in exploring or mining these precious metals.

With an expense ratio of 89 basis points, GBUG provides an alternative to more traditional ETFs like GDX, which has an expense ratio of 51 basis points, and GLD, which is at 40 basis points. Investors may find that a focused, actively managed approach could yield more promising returns amidst an environment of rising gold prices.

Conclusion

In conclusion, whether to invest in gold miners or physical gold will depend on individual risk tolerances and investment objectives. With gold prices continuing to soar and mining stocks potentially presenting substantial upside, it may be an opportune time to consider allocating portfolios to gold-related investments. As the economic landscape remains unpredictable, the demand for gold and the performance of mining stocks may represent promising avenues for investors seeking traditional hedges against inflation and market volatility.

For further insights on market trends and portfolio strategies, stay tuned to our financial resources and newsletters tailored to help you navigate your investment journey.

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Investing in Gold Miners vs Gold: Which Offers Better Returns in 2025?