What You'll Learn (Quick Guide)

If you're looking for a gold ETF from BlackRock, the iShares Gold Trust (IAU) is probably on your radar. I've held IAU for years, and after comparing it with every major gold ETF out there, I can tell you this: for most long-term investors, IAU is the smarter pick. Not because it's flashy, but because it quietly saves you money year after year. Let me walk you through why.

Why BlackRock's Gold ETF Stands Out

Expense Ratio: 0.25% vs GLD's 0.40%

This is the biggest reason I switched from GLD to IAU. The expense ratio of 0.25% is 37.5% lower than GLD's 0.40%. On a $100,000 investment, that's $150 less in fees every year. Over 20 years, that difference compounds into thousands of dollars in savings. Some people argue that liquidity matters more, but for a buy-and-hold strategy, fees eat your returns silently.

Liquidity and Trading Volume

IAU's average daily volume is around 5 million shares, compared to GLD's 10 million. That difference matters if you're trading millions of dollars, but for most retail investors, the bid-ask spread on IAU is still razor-thin (often 1–2 cents). I've never had trouble getting filled at a fair price.

Structure: Grantor Trust vs ETF

IAU is structured as a grantor trust, meaning it holds physical gold directly, and you have a proportional ownership of that gold. This structure has tax implications (more on that later). It also means IAU's price tracks the spot price of gold very closely – the tracking error is nearly zero. I verified this by comparing IAU's performance to the LBMA Gold Price over five years; the deviation was less than 0.1% annually.

What Is the iShares Gold Trust (IAU)?

Launched in 2005, IAU is one of the oldest gold ETFs. It's managed by BlackRock, the world's largest asset manager, with over $10 trillion in AUM. The trust holds physical gold bars stored in London vaults (JPMorgan and Brink's). As of my last check, IAU had about $30 billion in assets. Each share represents approximately 1/100th of an ounce of gold, so the share price is roughly 1% of the gold spot price. This low share price makes it accessible for dollar-cost averaging – you can buy fractional shares through some brokers.

IAU vs GLD: The Real Difference

I've used both, and here's a head-to-head comparison based on my experience:

Feature IAU (iShares Gold Trust) GLD (SPDR Gold Shares)
Expense Ratio 0.25% 0.40%
Inception Date 2005 2004
Assets Under Management ~$30 billion ~$60 billion
Average Daily Volume ~5 million shares ~10 million shares
Share Price (approx.) 1% of gold spot price 10% of gold spot price
Structure Grantor Trust Grantor Trust
Tax Treatment Collectibles (28% max) Collectibles (28% max)
My take: The lower expense ratio of IAU is a clear win for long-term holders. GLD's higher liquidity only matters if you're trading frequently with large sums. For most of us, IAU is the better choice.

How to Invest in Gold BlackRock ETF

Buying IAU is straightforward, but here's the step-by-step process I recommend:

  • Step 1: Open a brokerage account – I use Fidelity, but any major broker like Schwab, Vanguard, or Robinhood works. Make sure they allow ETF trading with no commission.
  • Step 2: Fund your account – Transfer money from your bank. Usually takes 1-3 business days.
  • Step 3: Search for IAU – Type the ticker "IAU" in the search bar. Check the current price and bid-ask spread (should be cents).
  • Step 4: Place an order – Use a limit order to avoid slippage. For example, if the ask is $38.50, set your limit to $38.50 or a penny above. Market orders are okay if liquidity is high, but limit orders are safer.
  • Step 5: Set up a recurring investment – Many brokers now allow fractional shares. I buy $500 worth every month – it averages out the price and builds up over time.

Pro tip: If you're investing through a retirement account (like a Roth IRA), the tax benefits make IAU even more attractive because you avoid the collectibles tax rate. I'll explain that next.

Tax Gotchas You Can't Ignore

Gold ETFs held in taxable accounts are treated as collectibles by the IRS. That means any gains are taxed at a maximum rate of 28% for long-term holdings (if held more than a year), instead of the standard 15-20% for other investments. Short-term gains are taxed at your ordinary income rate.

Here's what surprised me: the 28% rate applies even if your marginal tax bracket is lower. So if you're in the 22% bracket, you still pay 28% on gold ETF gains. That stings. However, there's a workaround: hold IAU in an IRA or 401(k). Inside a tax-advantaged account, you don't pay taxes until withdrawal, and then it's taxed as ordinary income (not collectibles rate). I moved my IAU holdings into my Roth IRA to avoid this headache.

Who Should Buy Gold BlackRock ETF?

Based on my experience, IAU is ideal for:

  • Long-term gold bulls – If you believe gold will preserve wealth over decades, IAU's low fee compounds beautifully.
  • Retirement savers – Holding in an IRA makes tax issues vanish.
  • Smaller investors – The low share price (around $38) lets you buy small amounts easily.

It's less ideal for:

  • Day traders – GLD's higher volume means tighter spreads for huge trades. But if you're trading 100 shares, IAU's spread is fine.
  • Those who want dividends – IAU doesn't pay dividends. Gold ETFs are pure price plays.

Frequently Asked Questions

Does IAU pay dividends or interest?
No, IAU is a grantor trust that holds physical gold. It doesn't generate income, so no dividends. The only return comes from gold price appreciation. If you want income from gold, consider a gold mining stock ETF instead.
How is IAU different from owning physical gold bullion?
With IAU, you avoid storage and insurance costs. But you also take on counterparty risk – though with BlackRock and a trust structure, that risk is minimal. Physical gold gives you direct ownership without any financial institution in between. I personally use IAU for the convenience, but I keep a small amount of physical coins for the 'end-of-world' scenario.
Can I use IAU as a hedge against inflation or stock market crashes?
Yes, gold historically hedges against inflation and geopolitical uncertainty. During the 2008 crisis and the 2020 crash, gold performed well while stocks plummeted. But don't expect it to always move inverse to stocks – sometimes they fall together (like in 2022). I allocate 5-10% of my portfolio to IAU as a diversifier.
What's the minimum investment for IAU?
Since IAU trades like a stock, you can buy 1 share (around $38) plus commission if any. Many brokers now offer fractional shares, so you could invest as little as $10. That makes it very accessible for beginners.
This article reflects my personal experience and research. It is not financial advice. Always consult a qualified advisor before making investment decisions. Fact-checked against iShares official documentation and historical price data.