Gold ETFs allow Australian investors to gain exposure to the gold price through the ASX — without physically buying, storing, or insuring gold. Two main options are available to ASX investors: GOLD (Perth Mint Physical Gold ETF) and QAU (BetaShares Gold Bullion ETF). This article explains how gold ETFs work, their costs, and how gold fits into an investment portfolio.
What Is a Gold ETF?
A physically backed gold ETF holds actual gold bullion in secure storage on behalf of investors. When you buy units in a physical gold ETF:
- The fund purchases and stores actual gold
- Each unit you hold represents a specific quantity of gold (typically a fraction of a troy ounce)
- The unit price moves in line with the gold spot price (in AUD)
- You never take physical delivery of gold — the ETF does it on your behalf
Gold ETFs are not the same as gold mining ETFs (which hold shares in gold mining companies and move differently to the gold price).
The Main Gold ETFs on the ASX
| ETF | Provider | Gold backing | MER | Currency |
|---|---|---|---|---|
| GOLD | Perth Mint (ASX: ASX) | Perth Mint physical gold | 0.15% | Unhedged (USD/AUD) |
| QAU | BetaShares | Gold bullion, physically backed | 0.59% | AUD-hedged |
GOLD — Perth Mint Physical Gold ETF
GOLD is backed by gold held at the Perth Mint — a AAA-rated, state-guaranteed precious metals facility in Western Australia. Key features:
- Backed by gold guaranteed by the Government of Western Australia
- MER 0.15% (one of the cheapest physically backed gold ETFs globally)
- Unhedged — the AUD unit price moves with both the gold price and AUD/USD exchange rate
- Can be redeemed for physical gold bars (in specific circumstances)
- Listed on ASX, CBOE (Chicago), Hong Kong, Borsa Italiana
QAU — BetaShares Gold Bullion ETF (AUD Hedged)
QAU is physically backed by gold bullion held in HSBC’s vaults in London. Key features:
- MER 0.59% (higher than GOLD, includes hedging cost)
- AUD-hedged — the unit price moves with gold in AUD terms but is insulated from AUD/USD currency movements
- Suitable for investors who specifically want gold exposure without currency exposure
GOLD vs QAU — Which to Choose?
| Feature | GOLD | QAU |
|---|---|---|
| MER | 0.15% | 0.59% |
| Currency | Unhedged (AUD floats vs USD) | AUD-hedged |
| Gold storage | Perth Mint (Government of WA) | HSBC, London |
| Redeemable for physical gold? | Yes (certain thresholds) | No |
| Price driver | Gold price + AUD/USD | Gold price only |
GOLD is the more popular option primarily due to its lower MER and the Perth Mint’s sovereign backing. QAU suits investors who specifically want to remove AUD/USD currency risk from their gold position.
The Role of Gold in a Portfolio
Gold is often discussed as:
- Inflation hedge — gold has historically retained purchasing power over very long periods
- Safe haven — gold often rises during periods of market fear, economic uncertainty, or geopolitical stress
- Portfolio diversifier — gold’s correlation with shares is low to negative at times, potentially smoothing portfolio volatility
However, gold also:
- Does not produce income (no dividends, no interest)
- Has extended periods of underperformance relative to shares (e.g., 2012–2018)
- Is driven by sentiment, supply/demand, and USD movements — not earnings
Gold is typically treated as a small satellite allocation (5–10% of portfolio) rather than a core holding in most professionally managed diversified portfolios. Individual circumstances vary significantly.
Gold ETF Tax Treatment
For Australian investors:
- Gold ETFs are taxed as capital assets — CGT applies on sale
- The 50% CGT discount applies to units held for more than 12 months
- Gold ETFs do not typically pay distributions (gold doesn’t produce income)
- If using QAU (AUD-hedged), the hedging contracts may create additional tax complexity
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Frequently Asked Questions
Is a gold ETF the same as owning physical gold? No. A gold ETF gives you financial exposure to the gold price — you do not hold physical gold yourself. You cannot take delivery of gold bars from a gold ETF in most cases. GOLD (Perth Mint) does allow redemption for physical gold under certain conditions, but this is not how most investors use it. For investors who want to hold physical gold at home (coins, bars), a gold ETF is a different product.
Is gold a good investment in Australia? Gold has performed well during certain periods of global uncertainty (GFC 2008–2009, COVID 2020, geopolitical tension). Over the long term, its returns have been more variable than broad share market indices. Gold’s primary role in a portfolio is typically as a diversifier and hedge — not as a primary growth asset. Whether gold suits your portfolio depends on your investment goals and risk tolerance.
Do gold ETFs pay GST? Physical gold bullion is GST-free in Australia (it is an investment precious metal). Gold ETFs hold gold bullion — as an investor, you are not purchasing physical gold directly, so the GST treatment depends on the specific product. Your share of the gold is effectively an investment product — capital gains rules apply on disposal, not GST.
This article provides general financial information only. Gold investments involve market risk. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.