Cutting Through the Noise: IAUM vs. Other Gold ETFs (GLD, IAU) — All the Differences That Actually Matter

What Problems Does This Article Solve?

Maybe you, like me, have fallen into an ETF research rabbit hole. I started just wanting to "hedge with gold" (classic), but ended up overwhelmed: Why does everybody seem to mention IAUM fees? Is GLD really more liquid, or is that just hype? Is there a difference in how much gold they actually store? Turns out, making the right choice isn’t about brand names. Instead, it’s about the fine print: cost, storage, tracking error, and how your trades play out in the real world.

Let’s Unpack the Practical Differences, Step by Step

1. ETF Structure — What’s Under the Hood?

All three ETFs (IAUM, GLD, IAU) are physically backed — as in, they buy and hold real, allocated gold bars that are stored in vaults on behalf of share owners.

• IAUM: iShares Gold Trust Micro — like a "mini" version of IAU. Also structured as a Grantor Trust. Legally, it means your shares represent a direct undivided beneficial ownership in the actual gold held.
• GLD: SPDR Gold Trust — actually the first big US gold ETF (since 2004). Same essential structure, with HSBC acting as the primary custodian, storing gold in its London vaults.
• IAU: iShares Gold Trust — just the larger, older sibling of IAUM, also using the Grantor Trust approach. Gold custodied at JPMorgan Chase in London and various subcustodians worldwide.

What tripped me up is that most U.S. gold ETFs follow this Grantor Trust model (not mutual fund structure), so the big differences aren’t really in structure, but in size and scale — which impacts fees and liquidity, as we’ll see. Reference: SEC Form S-1 IAUM Prospectus

2. Fees & Expenses — The Real Cost Difference

Honestly, this is where IAUM first caught my eye. GLD has historically dominated the market (over $50bn AUM at one point!), but with prominence comes a heavier price tag. As of mid-2024:

• IAUM: 0.09% annual expense ratio (source: iShares official)
• IAU: 0.25% — recently reduced to 0.15% (as per BlackRock)
• GLD: 0.40% (source: State Street)

Feels like an incremental thing, but do the math on a $10,000 investment over five years. IAUM racks up $45 in fees, GLD $200+. That spread adds up fast. FWIW, that’s pretty much the main reason younger investors or fee-sensitive folks are flocking to IAUM now.

Official screenshots comparing expense ratios (as of May 2024)

3. Holdings — Does Each ETF Actually Hold What They Promise?

Okay, this isn’t just trivia. Despite similar marketing, there are small differences in transparency and how regularly the holdings are updated. Legally, per SEC regulations, all major US-listed ETFs must report holdings daily.

• GLD publishes its full bar list daily, including serial numbers, refineries, weights — you can literally pore over the whole thing. Their official bar list here.
• IAU & IAUM also report daily holdings on BlackRock’s holdings page. Sometimes the micro-ETF updates can lag by a business day, but it’s still pretty robust.

In practice, I tried comparing the gold value per share over a two-month span and saw basically zero tracking error for all three. The mechanisms and oversight (see CFTC and SEC regulatory regime) really do work.

Actual gold bar holding breakdown (GLD official, May 2024)

4. Liquidity: Real-World Trading Matters

This gets overlooked by first-timers, but matters enormously when you actually place trades. Here’s what I learned (after botching a few limit orders on IAUM during a low-volume spell):

• GLD: Ridiculously liquid. Average daily volume over 6 million shares. Bid/ask spreads are super tight, even in wild markets.
• IAU: Also very liquid — about 7-8 million shares/day. Spreads are usually just 1-2 cents.
• IAUM: Much smaller, so trading can be a little thinner (sometimes 300-700,000 shares/day). Spreads are tight most of the time but can widen in off hours or volatile periods.

What tripped me up was putting in a big buy on IAUM during a Fed meeting — it executed at 1 cent above ask. No disaster, but if you’re trading big lots, GLD or IAU is less stressful.

Random order book snapshot: IAUM volume thinner midday, spreads wider vs. GLD (Source: IBKR, 2024-05-02)

A Case That Still Haunts Me: The Day Fed Policy Spiked Gold — IAUM or GLD?

Back in March 2023, Jerome Powell’s surprise interest rate comments sent gold prices into a jump. I thought I was clever, diving into IAUM to avoid the higher fee of GLD. Placed a large market order — but IAUM’s thin midday liquidity meant I got filled across a 3-cent spread. Friends trading GLD? Zero problem, penny-perfect fills. Lesson learned: For quick trades when the market is wild, bigger ETFs like GLD or IAU may be safer, even if they cost fractionally more.

What’s Special About IAUM? Industry Expert’s Take

Legal, Regulatory, and International Comparison Table: How “Verified Trade” Applies

Since gold ETFs involve global vaulting and trade cross-border, let’s quickly contrast “verified trade” and auditing standards. Different countries apply varying due diligence requirements — the U.S. follows strict SEC/CFTC rules; Europe has ESMA; Asia-Pacific standards are more mixed.

These aren’t just bureaucratic hurdles. For instance, if you plan to hold and potentially redeem large baskets of ETF shares directly in gold (rare, but possible), the US and EU processes differ in what documentation and proof you need — the US requires strict DTC transfer and warehouse audit, while the EU goes through UCITS local regulator reporting.

Quick Recap and What I’d Do Next Time

In summary, here’s what really sets IAUM apart from GLD and IAU:

• Lower cost — IAUM’s expense ratio is the lowest (0.09%), which is a big deal for long-term holdings.
• Micro-sizing — You can buy super small lots, good for fine-tuning exposure.
• Slightly less liquidity — Not usually an issue, unless you trade in size or during volatility.
• Same solid regulatory backing — SEC/CFTC rules force all 3 funds to stay transparent.

If you want low fees and trade occasional small lots, IAUM is honestly hard to beat. If you’re a big trader, or need max liquidity when markets freak out, stick with GLD/IAU.

My personal reflection? I’d go lighter on market orders in IAUM after that Fed day, and always peek at the actual order book first. Also, don’t feel bad about paying up for GLD’s insane liquidity if a trade matters more than a few basis points.

Fact is, there’s no universal “best” — it’s just matching each ETF’s strengths to your own needs, habits, and, let’s be honest, patience with T+2 settlement weirdness. If you want to geek out more, State Street, BlackRock, and the World Gold Council all post detailed methodology docs for further reading (see their official websites).