Core Viewpoint - Gold is not considered a true financial asset due to its lack of cash flows, as emphasized by valuation professor Aswath Damodaran and supported by Warren Buffett's long-held skepticism [1][2][3] Gold Valuation - Damodaran classifies gold as a "collectible," with its price driven by market sentiment rather than intrinsic value, contrasting it with financial assets like stocks and bonds that generate cash flows [2][4][6] - The value of gold is determined by demand and supply, similar to rare collectibles, rather than being based on fundamental analysis [4][6] Market Dynamics - The recent surge in gold prices, which reached $4,300 an ounce in 2025, is attributed to factors such as mistrust in central banks and global uncertainty, expanding the niche of gold buyers [5][6] - Gold has seen a significant price increase of 24.31% over the last six months and 57.74% over the last year [7] Gold ETFs Performance - Several gold-linked ETFs have shown strong performance, with year-to-date returns exceeding 54% for multiple funds, indicating investor interest in gold as a potential investment vehicle [8][9]

Core Insights - Investors are presented with a choice between the SPDR Gold Shares, which has significant assets under management, and the Goldman Sachs Physical Gold ETF, which offers lower costs for similar gold exposure [1][9]. Cost and Size Comparison - The Goldman Sachs Physical Gold ETF (AAAU) has an expense ratio of 0.18%, while the SPDR Gold Shares (GLD) has a higher expense ratio of 0.40% [3][11]. - As of October 31, 2025, AAAU has a one-year return of 45.4%, slightly outperforming GLD's return of 45.2% [3]. - Assets under management (AUM) for AAAU stand at $2.2 billion, compared to GLD's $134.0 billion, indicating a significant size difference [3][11]. Performance and Risk Metrics - Over a five-year period, the maximum drawdown for AAAU is -20.94%, while GLD's is -21.03%, showing comparable risk profiles [4]. - The growth of an initial investment of $1,000 over five years would yield $2,092 for AAAU and $2,069 for GLD, indicating similar performance despite the size difference [4]. Fund Structure and Holdings - Both ETFs are designed to track the price of physical gold and hold only gold bullion, ensuring straightforward exposure to gold's performance [5][6]. - SPDR Gold Shares is categorized as 100% Basic Materials, while Goldman Sachs Physical Gold ETF is classified as 100% Real Estate, which is a labeling quirk rather than actual exposure [5][6]. Market Context - The price of gold has increased by over 50% in 2025, driven by geopolitical tensions and economic factors, leading central banks to increase their gold reserves [7].