Resting on ETF shoulders

The gold price rose more than 60% last year and has already climbed an additional 20% so far in 2026, passing $5,300/oz this week. This was a surprise, given that the biggest buyers of gold - central banks - cut their gold purchases by 20% in 2025, to 863.3 tonnes, according to the latest figures from the World Gold Council (WGC).

This marked slowdown in central bank gold buying - collectively they had bought more than 1,000 tonnes in each of the three previous years - was offset by a whopping increase in investment demand, which rose by 84% to 2,175 tonnes in 2025. This investment demand was predominantly driven by exchange traded funds (ETFs). Holdings of "gold-backed ETFs surged to an all-time high of 4,025 tonnes in 2025", according to the WGC; that was a record $89 billion inflow .

Poland's central bank was the biggest official gold buyer for the second successive year, with 102 tonnes. However, it may not be the actual biggest buyer, as much of China's gold buying is not monitored by the WGC.

Illusory investment demand

ETF gold demand may be huge - in 2025 more than half of world ETF demand was swallowed by North American funds - but is it an intelligent way of owning gold?

There are several drawbacks with gold-backed ETFs, perhaps the most important being that you don't have physical possession. If you buy a gold-backed ETF, you will own shares representing gold. That means you are trusting the fund manager and custodian. Instead of owning the metal, ETF gold buyers hold units in a trust that promises the gold.

Custody of these ETF funds are often highly complex and can cross multiple jurisdictions. Investors may not know where the metal they supposedly own is stored, how often it is audited, or whether it may be temporarily lent to other institutions. While gold ETFs are subject to financial regulation, this oversight focuses on the management of the fund, not the physical integrity of the metal.

Some ETFs rely on unallocated storage, meaning holdings of metal are pooled and not individually assigned. In such cases investors technically own no more than a share of the collective claim. Given that every ETF depends on a tangled web of financial intermediaries - trustees, custodians, clearing agents and market makers - if any of them encounters distress then investor value can be at risk.

None of these drawbacks are inherent with Glint. Holders of gold through Glint know where their metal is - in a vault in Zurich; they know that this gold is allocated, i.e is owned by you 100%; and is not vulnerable to counter-party risk.

ETFs, even those dealing in allocated gold, deal in 'paper' gold. If the institution behind the ETF becomes insolvent, then lawyers will spend years arguing about the ownership of the gold. Holders of an ETF in gold may face serious delay - or worse - in trying to get 'their' gold.

Why hold gold?

With the price this high, there is an inescapable temptation to own gold in the hope/belief that further dramatic price rises will happen. Even if true, and many experienced analysts claim that it is true, that's not the most important reason for holding gold.

Physical gold is the only asset that is external to the financial system. If the financial system collapses, paper gold ETFs could be vulnerable. For example, when in 2008 Lehman Brothers collapsed that could have been devastating for paper gold ETFs if the US government hadn't come to the rescue of the financial system.

Holding gold is not simply about trying to profit from its rising price. It's about obtaining some self-defense against the risk of a banking or financial collapse. It also is a protection against fiat currency devaluation.

And with Glint, it is about demonstrating that gold can be used as money, in any circumstance.

For UK clients: At Glint, we make every effort to demonstrate a balanced conversation between gold, silver, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

For US clients: Graphic representations of value are for illustrative purposes only. The Glint debt card is issued by Sutton Bank, member FDIC. The sale, purchase and storage of precious metals are offered by Glint and not Sutton Bank. Your investment in precious metals through Glint is

·        Not insured by the FDIC.

·        Not a deposit or other obligation of, or guaranteed by, Sutton Bank.

·        Subject to investment risks, including the possible risk of loss of the principal amount invested.

All investments involve risk, including possible loss of principal. The value of precious metals is affected by many economic factors, including but not limited to the current market price, demand, perceived scarcity, and quality of the precious metal. Precious metals can increase or decrease in value. Past performance is not a guarantee of future results. As such, investing in precious metals may not be suitable for everyone.