A Full Analysis of $GLD and $GDX

Hi everyone,

Precious metals have been one of the main talking points of the market this year. Let’s dive into everything you need to know about GLD and GDX!

ETF Pick: Gold and Gold Miner ETFs (GLD-US, GDX-US)

There are two massive trades in the market right now.

While one garners 99% of headlines these days, the other is only now entering the mainstream.

Gold, the original store of value, has had a massive run, up more than 60% YTD now.

A lot of the trade has been around heightened uncertainty, the currency debasement trade, and now, as of recently, momentum.

But there’s more than one way to play this trade, and one of them is now up 132% YTD.

I’m going to go in a bit of a different direction in this edition, as we will examine two core ETFs in order to capitalize on this asset class.

• Why Now? 👉 Currency Debasement and De-Dollarization

• Overview 👉 The Investment Case for Gold

• Investment Vehicles 👉 GLD vs. GDX

• Nuances of Owning Mining Companies👉 Production and Profit Margins

• Pricing Drivers 👉 Key Metrics

• Historical Context 👉 1970s Echoes or Something New?

• Risks 👉 Potential Pitfalls

Why Now? 👉 Currency Debasement and De-Dollarization

Gold is glittering once again as a safe-haven superstar in 2025. The precious metal recently shot through the psychologically significant $4,000 per ounce level, after surging roughly 60% year-to-date, which is its strongest annual gain since 1979. Investors are flocking to gold amid a perfect storm of economic uncertainty: decades-high government debt, persistent inflation, and a weakening U.S. dollar. Wall Street has even coined this rush into hard assets the “debasement trade.”

The idea is simple: with governments running huge deficits and potentially “printing” money to cover them, paper currencies risk losing value. In response, investors are piling into assets that can’t be printed (most notably gold) to preserve their wealth against any currency debasement.

Crucially, it’s not just hedge funds and retail investors driving the gold rush. Central banks worldwide have been on an unprecedented gold-buying spree since the pandemic. They purchased over 1,000 tonnes of gold in both 2022 and 2023 (record highs) and are on track for another massive haul in 2025. Their motive is to diversify away from the U.S. dollar. In an era of geopolitical rifts and sanctions, many countries (from China to Turkey) view gold as a neutral reserve asset free of U.S. political influence.

The drivers that have underpinned de-dollarization remain firmly in place. The U.S. dollar’s status as the world’s sole reserve currency is being subtly challenged, and gold is the prime beneficiary. When a JPMorgan analyst described the current environment as a “familiar pattern of dollar debasement amid Washington dysfunction,” it underscored why now is such a pivotal moment for gold. A confluence of currency worries, geopolitical tensions, and declining faith in fiat money has turned the spotlight back onto the shiny metal as a trusted store of value.

Overview 👉 The Investment Case for Gold

Gold is a durable real asset with a long record as a store of value. Unlike equities or fiat money, it is tangible and cannot be printed, diluted, or defaulted by policy. It once anchored the gold standard and still underpins central bank reserves. The case is straightforward: hedge inflation, currency debasement, and financial shocks. When prices surge or confidence in paper erodes, investors often move to gold, seeking intrinsic value.

It also acts as crisis insurance, tending to rise in recessions and during geopolitical stress, including 2020, and even the trade headlines from a couple weeks ago. Gold zigs when paper assets zag. In portfolios, gold diversifies because correlations to stocks and bonds are low or negative. That zigzag helps smooth returns and reduce risk. Over two decades, gold has matched or exceeded major equity and bond benchmarks, combining steady gains with periodic spikes. For U.S. investors focused on protection and preservation, gold remains a time tested anchor against persistent inflation, market turmoil, and policy uncertainty.

Investment Vehicles 👉 GLD vs. GDX

Investors can access gold through GLD and GDX, two very different ETFs.

GLD (SPDR Gold Shares) is the largest gold fund and a direct proxy for bullion. It holds vaulted bars, primarily in London, and each share represents roughly one tenth of an ounce. GLD offers simplicity, deep liquidity, and tight tracking to spot prices, less its 0.40 percent expense ratio.

GDX (VanEck Gold Miners ETF) offers a fundamentally different flavor of gold exposure. Rather than tracking the price of the metal itself, GDX holds a basket of gold mining stocks. This means investors in GDX are not buying gold, but rather buying companies that mine and sell gold for profit. The ETF owns shares in 50+ mining firms around the world, including major names like Newmont, Barrick Gold, and Agnico Eagle. These are capital-intensive businesses with assets in politically diverse regions and complex operating environments, which makes GDX far more volatile than pure gold.

GLD offers direct exposure to the price of gold, tracking it almost perfectly with low volatility. GDX, by contrast, offers leveraged, equity-style exposure to the gold mining industry. Investors looking for a more aggressive bet on gold, and who are comfortable with company and sector-specific risks, may prefer GDX. But those seeking stability and pure commodity exposure generally stick with GLD.

Both funds have a place depending on risk tolerance and portfolio goals. One follows the metal, the other follows the businesses that dig it out of the ground.

Nuances of Owning Mining Companies👉 Production and Profit Margins

Investing in gold miners (or miner ETFs) is a different bet than owning bullion. Miners earn by selling extracted ounces at market prices, so results hinge on volume and margin. The key metric is all-in sustaining cost, or AISC, which captures operating, sustaining capex, and overhead per ounce. In 2025 many producers enjoy unusually wide spreads: industry AISC around $1,200–$1,600 versus gold near $3,500–$4,000, implying profits of roughly $1,700 or more per ounce. That operating leverage makes miners a high beta play on gold. When gold rises, cash flow and share prices can climb faster, and dividends often lift as well.

The business is complex and capital-intensive over time. Deposits are finite, so companies must constantly replace reserves through exploration or acquisitions. New mines require years of permitting, construction, and community agreements, which keeps supply inelastic even at high prices. Execution risk is real: cost blowouts, technical issues, labor disputes, political risk, and environmental or social opposition can erode returns or halt projects. After past boom-era missteps, larger miners have emphasized discipline, balance sheets, and cash returns, which has improved resilience. Still, buying miners is a two-part bet: on gold prices and on management’s ability to operate efficiently and reinvest wisely. Wide margins today do not remove the treadmill tomorrow.

Pricing Drivers 👉 Key Metrics

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