iShares Gold Trust (IAU)

What the fund owns and how it works

The iShares Gold Trust, ticker IAU, holds physical gold under the custody framework in its prospectus. Its objective is to reflect generally the performance of the price of gold before payment of trust expenses and liabilities. The LBMA Gold Price serves as a principal market reference, but IAU is a bullion trust rather than an index-tracking stock fund.

IAU is not registered as an investment company under the Investment Company Act of 1940. Authorized participants transact in basket quantities under the creation and redemption process. Ordinary shareholders trade shares through the exchange and do not have a routine right to exchange one share for physical gold.

Why readers compare or use it

IAU is usually compared with GLD because both trusts seek to translate physical-gold ownership into exchange-traded shares. IAU's current sponsor fee is lower than GLD's reported gross expense ratio. That difference affects the long-run rate at which trust costs reduce the metal represented by each share, assuming the terms remain unchanged.

The trusts also use different share denominations. IAU's price per share reflects its own fractional claim on trust assets and should not be compared with GLD's nominal price as though a higher-priced share contained better gold. Exposure should be evaluated per invested dollar, along with spread and transaction conditions.

Because the sponsor fee is charged against trust assets, a fee comparison is most meaningful over the intended holding period. Shorter transactions may be influenced more by spreads, execution, and brokerage terms than by a small annual fee difference.

Trade-offs to understand

IAU does not generate operating income. The trust uses gold as needed to pay its sponsor fee and other permitted liabilities, gradually reducing gold per share. Gold itself can be volatile and does not have earnings or contractual cash flows that anchor valuation. ETF trading introduces spreads and possible premiums or discounts.

Custody arrangements do not eliminate the risks described in the prospectus, including operational, subcustodian, market-access, and extraordinary-event risks. Tax treatment can also differ from a conventional equity ETF. The trust documents discuss proportionate ownership and possible collectibles treatment for U.S. federal tax purposes. Individual circumstances require qualified tax guidance.

Closest alternatives

GLD holds physical gold through a separate trust with different fees, share units, service providers, and market activity. Gold-miner funds own corporate equities rather than bullion. Futures-based exposure depends on derivatives, collateral, and contract rolls. Direct bullion removes the fund wrapper but introduces storage, insurance, authenticity, transport, and dealer-spread issues.

What can change

Sponsor fee, custody terms, basket size, service providers, and trust procedures can change through official documents. Net assets, gold ounces, bar inventory, shares outstanding, spread, and premium or discount are dated. Net assets and bullion holdings are reported by the sponsor on specific dates. The trust holds bullion rather than a portfolio of securities, so a conventional holding count does not apply, and bullion produces no income, so the trust reports no yield.

Evidence and links

Primary evidence: the official iShares IAU page, current fact sheet and trust prospectus, current bullion holdings, and LBMA Gold Price materials.

Editorial sources

• SEC ETF glossary
• Supporting source
• Fund documents
• Fund documents
• Issuer page
• Benchmark source

Related reading

• EFA
• GLD
• IEMG
• VEA
• VNQ
• VT
• VTI
• VWO
• VXUS
• Diversification
• Expense ratio
• Net asset value NAV
• What is an ETF
• What is an index fund