Gold Investing Made Practical: Bullion, Miners, and Income Through ETFs
This article is sponsored by BMO ETFs
Gold spot prices have roughly doubled from the start of 2024 to Q1 of 2026. That kind of move tends to attract attention on its own, but it is also worth watching because it reflects broader shifts taking place in the global economy.
One of the most commonly cited drivers is what investors often call the debasement trade. At its core, this refers to concerns that many developed economies, most notably the United States, are running persistent fiscal deficits. Governments are spending more than they are collecting in revenue (taxes), forcing it to borrow the difference by issuing debt.1
Over time, rising debt levels lead to higher interest costs, crowding out other public spending and increasing pressure on government finances. The U.S. has also experienced repeated debt ceiling standoffs,2 and its sovereign credit rating has been downgraded by major agencies such as S&P Global.3 All of these factors have supported the debasement trade, where investors are looking for an asset outside of the U.S. dollar that will hold its value. And it’s not just individual investors concerned about debasement—central banks are looking more to gold now too.
According to the World Gold Council, gold plays a role in central bank reserves because it is safe when held in custody, highly liquid when it needs to be sold or pledged, and capable of generating returns over long periods. Today, central banks collectively hold roughly one fifth of all the gold ever mined!4
As a retail investor, your reasons for owning gold may be different, but the motivations often overlap. Gold is commonly used as a hedge against inflation, currency weakness, and geopolitical uncertainty. The question is no longer whether gold belongs in a portfolio, but how to access it in a practical way.
There are several routes available to Canadian investors, and each comes with trade-offs related to cost, storage, taxation, and convenience. You may be thinking about buying gold outright and storing it yourself. That is a valid choice, but it comes with considerations that may be overlooked when compared with exchange-traded funds (ETFs).
Gold remains a go-to refuge for investors, and today there are several straightforward ways to tap into it through ETFs. There are three distinct approaches to investing in gold—holding bullion, investing in gold mining equities, and using income focused strategies—all of which can be accessed through a registered brokerage account using an ETF.
The Hidden Friction Of Buying Physical Gold
Buying physical gold often sounds simple in theory. In practice, it is far more involved. Take the example of an investor living in Vancouver who wants to buy a one-ounce Gold Maple Leaf coin. One of the more reputable options locally is Vancouver Bullion & Currency Exchange. As of January 21, 2026, the cost of a one-ounce coin there was $6,827.5 The first step is payment. Most bullion dealers do not accept credit cards. That means either withdrawing a large amount of cash from your bank or using a debit card with a high daily limit. Carrying several thousand dollars to a physical location introduces security risk that many investors do not factor in. Once the purchase is complete, you then have to get the gold home. At that point, you are again transporting a high value, easily transferable asset. If something goes wrong, there is often no recourse.
After that comes storage. Gold cannot simply be left in a drawer. Many investors opt for a fire resistant safe that can also withstand break ins. Others choose a bank safety deposit box, which comes with ongoing fees and means relying on a third party to hold the asset. Insurance is another consideration. If the value of the gold is meaningful, your home insurance policy may need to be updated, which can increase premiums or require special riders.
Then there is the spread. While the dealer may sell you that coin for $6,827, they would only buy it back for $6,607. That $220 difference is how the dealer is compensated. It also means the gold price needs to rise materially just for you to break even.
Selling reverses the entire process. You retrieve the gold, transport it back to the dealer, receive cash, and then deposit it at your bank. None of these issues make physical gold a bad investment. However, they do explain why many investors only discover the practical drawbacks after the fact.
The Benefits Of Gold ETFs
For most investors, the appeal of a gold ETF comes down to convenience, cost, and flexibility. Unlike physical bullion, gold ETFs can be bought and sold from a brokerage account on a phone or computer. They trade throughout the day like stocks, with transparent bid and ask prices. The spread between those prices is typically far narrower than what you encounter when buying or selling physical gold through a dealer.
Modern ETFs also solve a structural problem that older closed-end gold trusts struggled with. Gold ETFs rely on a process called in-kind creation and redemption. Large institutional firms, known as authorized participants, can exchange baskets of gold for ETF units and vice versa. This arbitrage mechanism keeps the trading price of the ETF very close to its net asset value (NAV). For investors, that means you are generally transacting at a fair price tied closely to the underlying gold holdings.
Finally, gold ETFs can be held in registered accounts such as a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). That alone addresses several of the practical frictions that come with owning bullion directly.
Three Ways To Invest In Gold With BMO ETFs6
Beyond those basics, ETFs allow investors to choose how they want gold exposure to behave inside a portfolio. Broadly speaking, that comes down to bullion, equities, or income-focused strategies.
The most straightforward option is bullion exposure. A simple example is the BMO Gold Bullion ETF (ZGLD). It holds physical gold bullion in 400 troy ounce international standard bars7 and does not use derivatives or active trading strategies. The cost is modest. The management expense ratio is 0.22% (as of June 30, 2025). On a $10,000 investment, that works out to about $22 per year. Compared with dealer spreads, insurance costs, or safety deposit box fees, that is a relatively low price for ongoing exposure. The ETF currently holds roughly $1.25 billion in assets.7 Remember, the price of gold is always quoted in U.S. dollars. Therefore, one point to note is currency exposure. ZGLD is unhedged, which means changes in the Canadian dollar relative to the U.S. dollar will affect returns alongside the gold price itself. Investors who want to reduce currency effects can use the currency-hedged version, ZGLD.H (BMO Gold Bullion Hedged to CAD ETF). Those with U.S. dollars can also access ZGLD.U (BMO Gold Bullion ETF USD Units).
The second way to invest in gold is via the gold miners, which is an equity market exposure to the gold price. Gold mining companies explore for, extract, refine, and sell gold. Many are Canadian, reflecting the country’s long history in the sector. Well-known names include Barrick Gold and Agnico Eagle Mines. Gold miners equity performance tends to be correlated with the gold price, but they are not a perfect substitute for bullion. Their share prices are often more sensitive to changes in gold prices because of operating leverage and equity market risk. Mining has large, fixed costs. Once those costs are covered, additional increases in the gold price can flow through to margins and earnings at a faster rate. However, the reverse is also true. When gold prices fall, miners can be hit hard. Owning individual mining stocks introduces company-specific risks. A single mine may face operational problems, geopolitical risks, or declining ore reserves. That concentration risk is difficult to manage without diversification. An ETF can help address that.
The BMO Equal Weight Global Gold Index ETF (ZGD) holds 40 gold mining and streaming companies from around the world, with a heavy weighting toward Canada. The equal weight structure gives each holding the same influence in the portfolio, rather than letting the largest companies dominate. Over time, this creates a natural rebalance effect that trims winners and adds to laggards. Gold producers also tend to pay modest dividends, which gives the ETF a small distribution yield of roughly 0.18%. BMO recently lowered its management fee on ZGD to 0.40%.8
Some investors, however, want cash flow from their gold allocation. Physical gold does not pay a dividend, and mining company dividends are relatively small. For those investors, there is a third option. The BMO Covered Call Spread Gold Bullion ETF (ZWGD) is designed to generate monthly distributions. It holds gold bullion through ZGLD and overlays a covered call spread strategy.
The mechanics work in two steps. First, the ETF sells call options on gold at a lower strike price to collect a premium. Selling calls limits some upside, which is the trade-off for receiving that cash flow. To regain part of the upside potential, the ETF uses a portion of the premium to buy call options at a higher strike price. Any remaining proceeds can be distributed to unitholders.
The level of monthly distribution varies. It depends on option strike prices, time to expiry, and the volatility of gold markets. The management expense ratio is higher at 0.73%, reflecting the complexity of the strategy.
Each of these ETFs serves a different purpose. Bullion ETFs offer clean exposure to the gold price. Gold equity ETFs add leverage and modest dividend distributions. Covered call strategies trade some upside for enhanced cash flow.
The advantage of ETFs is that they allow Canadian investors to choose the version of gold exposure that best fits their goals, without the logistical complications of directly owning physical gold.
Tony Dong is a Canadian ETF analyst and financial writer based in rural British Columbia. He is the founder of ETF Portfolio Blueprint and the lead ETF analyst for ETF Central, a partnership between Trackinsight and the NYSE, and has contributed to publications including U.S. News & World Report, Kiplinger, MoneySense, The Motley Fool, and USA Today. Before becoming a full-time writer, Tony advised public sector executives on enterprise risk management and holds a Master of Science in ERM from Columbia University.
1 https://sprott.com/insights/the-debasement-trade-broadens-across-precious-metals/
2 https://economics.td.com/us-debt-ceiling
3 https://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades
4 https://www.gold.org/goldhub/data/gold-reserves-by-country
5 https://www.vbce.ca/gold-silver
6 https://www.bmogam.com/ca-en/products/exchange-traded-funds/gold-etfs/
7 BMO Global Asset Management, December 31, 2025.
8 Effective after close of business on January 23, 2026, the management fees on BMO Equal Weight Global Gold Index ETF (ZGD) and BMO Junior Gold Index ETF (ZJG) were reduced from 0.55% to 0.40%.
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