AAAU vs. SGDM: Direct Gold Exposure or Gold Mining Companies?
The Motley Fool
by newsfeedback@fool.com (Adé Hennis)February 15, 2026
AI-Generated Deep Dive Summary
Investors seeking exposure to gold without the need for physical storage now have two primary ETF options: the Goldman Sachs Physical Gold ETF (AAAU) and the Sprott Gold Miners ETF (SGDM). While both allow indirect investment in gold, their approaches differ significantly. AAAU offers direct exposure by holding physical gold, ensuring its value tracks closely with the metal's price fluctuations. Conversely, SGDM invests in shares of gold mining companies, which can be influenced by factors like mining costs and operational performance.
For those prioritizing stability, AAAU’s direct approach aligns closely with gold prices, making it a hedge against market volatility. Its expense ratio reflects this straightforward strategy. On the other hand, SGDM may offer higher returns if mining companies perform well, but it also carries added risks due to industry-specific challenges like cost overruns or regulatory issues.
Understanding these nuances is crucial for investors in today’s financial landscape. Gold remains a key asset for diversification and risk management, with ETFs providing accessible alternatives. Choosing between AAAU and SGDM depends on individual financial goals and risk tolerance: direct exposure through AAAU suits those seeking pure gold price correlation, while SGDM may appeal to those willing to take on additional risks for potentially higher rewards.
This distinction underscores the importance of aligning investment strategies with market conditions. As global economic uncertainties persist, investors are increasingly turning to these ETFs as reliable tools for wealth preservation and strategic growth. Whether opting for direct physical gold or the potential gains from mining companies, informed decisions can significantly impact financial outcomes in a volatile market.
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Originally published on The Motley Fool on 2/15/2026