Physical gold or gold ETFs/ETCs? Costs, risks and differences, including Revolut

Buying gold seems like a very simple decision: if I believe the precious metal can protect wealth during inflation, financial crises or geopolitical tensions, I buy gold and hold it. In practice, the problem comes immediately afterwards, because “buying gold” can mean very different things. I can buy a coin or a bar, purchase a listed instrument tracking the price of gold, or consider the US products GLD and IAU (bearing in mind the access restrictions for European customers). An ETC can be purchased through a broker, including Revolut when the specific security is available. All these solutions provide exposure to gold, but have different costs, risks and purposes. The question is therefore not simply whether gold is a good investment. The more useful question is: if I want a certain percentage of my wealth in gold, what is the best way to own it?

First distinction: in Europe, it is often not actually an ETF

Let us start with an important technical clarification. People commonly refer to “gold ETFs”, but for a European investor, a product directly tracking a single commodity is normally an ETC, Exchange Traded Commodity, rather than a traditional UCITS ETF. UCITS ETFs are collective investment schemes subject to diversification rules, whereas gold is a single underlying asset. That is why many of the best-known European instruments are structured as debt securities backed by physical gold. One example is iShares Physical Gold ETC, ISIN IE00B4ND3602. As of 1 October 2026, the product reported approximately 286 tonnes of gold in custody, physical replication and an annual cost of 0.12%. The availability of individual listings and trading currencies must be checked with your intermediary. BlackRock also clearly states that the product is not UCITS, although it can be used within portfolios compatible with UCITS rules.

This distinction is not simply a matter of being pedantic about names. A traditional equity ETF owns shares in companies. A gold ETC, by contrast, is a debt obligation of the issuer whose value is linked to the metal, often backed by physical gold held with a custodian bank. So when I buy an ETC, I am not simply buying a small nugget stored in a vault in my name.

Buying physical gold means actually owning the metal

Physical gold is the most intuitive form of exposure. I buy a bar or an investment coin, and that metal genuinely belongs to me. I do not depend on a broker functioning to see my investment, I do not own a security issued by a financial company and, if I store it myself, there is not even an intermediary that must acknowledge my economic entitlement to the metal. This is precisely what makes physical gold particularly interesting to people who see gold not just as an investment but as a form of wealth insurance against extreme scenarios. If my goal is to own something that physically exists independently of a securities account, platform or financial system, an ETC is not perfectly equivalent to a gold bar. But this independence comes at a price. Physical gold must be purchased, stored and eventually resold. Each of these steps generates costs.

The first major cost of physical gold is the spread

Suppose the theoretical market price of a given quantity of gold is 100 euros. That does not necessarily mean I can walk into a shop, buy it for 100 and sell it back a minute later for the same 100. The dealer will normally charge a selling price higher than the price at which they are willing to buy the metal back. The difference between the two quotes is the spread; the amount charged above the value of the metal is the premium. These are related but different measures. The problem becomes particularly noticeable with small denominations. A 1-gram bar can carry a much higher percentage premium than a 100-gram or one-kilogram bar, because manufacturing, packaging, certification and distribution costs must be spread over a much smaller amount of metal.

This means that regularly buying small bars may seem like a simple way to build a regular gold investment plan (PAC), but can be much less cost-efficient than buying a low-cost ETC. Once physical gold has been purchased, a very practical question arises: where do I keep it? Keeping it at home means bearing the risk of theft or loss yourself. A safe reduces the risk but still costs money. A bank safe deposit box or professional custody service adds a recurring charge and still involves some dependence on an intermediary. It is therefore too simplistic to say that physical gold has no annual costs. The bar itself does not charge a TER of 0.12%, but storing it may cost much more than 0.12% a year, especially when the amount held is modest.

On 100,000 euros of gold, an annual cost of 0.12% equals 120 euros. A safe deposit box may be entirely comparable with that amount. On 5,000 euros of gold, however, even a relatively modest annual custody fee can represent a much higher percentage.

The major advantage of an ETC: efficiency

Now consider the alternative. With a physically backed ETC, I can buy gold exposure just as I would buy a share: open my broker's platform, enter an order and buy the security. A product such as iShares Physical Gold ETC tracks the gold price through metal actually held in custody and currently charges a TER (Total Expense Ratio, an indicator of the product's annual costs) of 0.12% per year. This means that, on an investment of 10,000 euros, the product's theoretical annual cost would be around 12 euros, plus any broker commissions and the bid-ask spread (the difference between buying and selling prices). The overall deviation from the gold price, called tracking difference, also reflects the product's cost and should not automatically be added again.

Operationally, it is very difficult for physical gold to compete with this efficiency. I can buy even a few hundred euros' worth, sell quickly during market hours, make regular purchases and avoid having to deal personally with safe deposit boxes, certifications or dealers. So if I see gold primarily as a financial component of my portfolio, I believe an ETC starts with a very strong advantage.

But if I buy an ETC, do I own the gold?

With physical gold, I own the bar. With an ETC, I own a financial security that gives me certain rights against the issuer and whose structure, in the case of physically collateralised ETCs, is backed by gold held with a custodian. For iShares Physical Gold ETC, for example, BlackRock reports a physically replicated structure with JPMorgan Chase Bank as custodian. The presence of the metal significantly reduces risk compared with a simple unsecured certificate, but does not make the structure identical to direct ownership of gold. There is still a legal structure, an issuer, a custodian, financial markets and operating procedures. For an ordinary investor, this risk may be perfectly acceptable. But if I buy gold specifically to protect myself against a scenario in which I no longer trust the financial system, placing 100% of my gold exposure in a financial security is somewhat contradictory.

Physically backed ETCs are not all alike

Another common mistake is simply searching for “gold ETF” on a broker's platform and buying the first result. Instead, you should check at least the replication method, collateral, annual cost, product size, liquidity, trading currency and issuer. Personally, for a long-term strategic holding, I would prefer a simple, physically backed product to synthetic, leveraged or inverse instruments. Revolut itself, in its ETC documentation, distinguishes between physically backed and synthetic products and warns that the latter introduce additional counterparty risk. A 2x leveraged gold ETC is not simply “gold that rises twice as much”. It is a product with a completely different structure, involving rebalancing and the compounding of daily returns, and I would not regard it as a substitute for gold within a long-term portfolio.

Does buying an ETC listed in euros eliminate dollar risk?

The international gold price is normally quoted in dollars. Buying an ETC denominated in euros does not necessarily eliminate the relationship between the euro and the dollar. The currency in which a security trades and its economic currency exposure are two different things. If I buy an unhedged ETC tracking gold in euros, the return for a European investor will depend both on the dollar price of gold and on movements in the euro/dollar exchange rate. There are, however, ETCs with currency hedging, such as iShares Physical Gold EUR Hedged ETC. This product uses an exchange-rate hedge and currently has a TER of 0.25%, higher than the unhedged version's 0.12%. Hedging is therefore available, but it is not free. Its economic effect also depends on the interest-rate differential between the currencies and on rolling the contracts: the TER difference alone does not measure all the costs or benefits of hedging.

The “American ETFs”: GLD and IAU

In the United States, the two best-known names are probably SPDR Gold Shares (GLD) and iShares Gold Trust (IAU). GLD is a large product with an expense ratio of 0.40% per year. Its objective is to track the price of physical gold after expenses. IAU is cheaper: iShares reports a sponsor fee of 0.25% . This instrument also seeks to follow the price of the physical gold held by the trust. An obvious question may arise: why should I pay 0.25% for IAU, or even 0.40% for GLD, when I can buy a physically backed ETC in Europe for 0.12%? For many European investors, indeed, there is not necessarily an advantage.

GLD has exceptional liquidity and is a very important instrument for institutional investors and traders, but if my aim is simply to hold gold for ten or twenty years, an annual difference of 0.28 percentage points between 0.40% and 0.12% becomes significant over time. There is also another issue: many US products cannot normally be distributed directly to European Union retail investors because PRIIPs rules require a KID, Key Information Document, complying with European legislation. Without a KID, the intermediary cannot normally sell them to a European retail customer. Seeing GLD online therefore does not automatically mean you can buy it through your European account.

What about Revolut gold?

An important distinction is needed here because Revolut has offered different products over time. The Commodities feature, separate from the securities account, which allowed users to buy direct exposure to gold, silver, platinum and palladium within the app, is no longer available to Italian and German customers. Revolut states that customers can no longer make new purchases or increase existing positions, and that existing holdings could be sold until 15 June 2026. So, in October 2026, if you are an Italian or German customer, it makes no sense to compare Revolut's old “Gold” feature with a bar as though it were still an available purchase option. The Commodities service's buying and selling commissions and an ETC's TER are not directly comparable: the former apply to transactions, the latter over time. Comparing alternatives requires considering the holding period, purchase frequency, spread and all service costs together. Nor should Commodities' historical terms be attributed to the Revolut securities account.

Obtaining metal exposure through Commodities was one thing. Buying a gold ETC through a Revolut investment account is another. Revolut Securities Europe explicitly includes ETFs, ETNs and ETCs among the financial instruments it may make available on its platform, and states that ETCs can be bought and sold on the market like other listed instruments. So if you find a product such as a physically backed gold ETC in the Revolut app today, the correct comparison is no longer: physical gold versus “Revolut gold”. It becomes: physical gold versus a gold ETC purchased through Revolut or any other broker. In this case, Revolut is the intermediary through which you buy the instrument. Its documentation covers ETCs, but does not prove that every ISIN mentioned in this article is available to every customer: the catalogue must be checked in the app.

As far as the underlying gold is concerned, there is no difference if we are discussing the same ISIN. If I buy the same iShares Physical Gold ETC through Revolut, Fineco, Directa or another broker, the financial product remains the same. What changes is trading commissions, the spread actually achieved, the tax regime, availability of the security, administrative handling and the broker's services. This is important because people sometimes compare “Revolut” with “ETFs” as if they were two different investments. Revolut may simply be the broker that allows me to buy the ETC.

Physical gold and ETCs do not carry exactly the same risks

Putting everything together shows that the two alternatives address different problems. With physical gold, I mainly take on custody, theft and authenticity risks, and trading costs. With an ETC, I almost entirely eliminate these personal operational issues, but introduce risks relating to the issuer, custodian, legal structure and functioning of financial markets. For a large, physically backed ETC, these risks may be very limited, but they do not become zero. That is why I do not necessarily consider a mixed approach unreasonable.

The tax issue with physical gold in Italy

For an Italian tax resident, there is another difference that should not be overlooked. Capital gains realised on the disposal of precious metals in raw or coined form, a category that normally includes physical investment gold, fall within the miscellaneous financial income (redditi diversi) specified in Article 67 of the Italian Income Tax Code (TUIR). The most important point concerns documentation of the purchase price. Since 2024, the rules have become much less favourable to anyone unable to prove how much they paid for the metal. Previously, without a documented cost, the gain was conventionally deemed to equal 25% of the selling price. Article 1, paragraph 92, letter c), of Law 213/2023 amended Article 68, paragraph 7, letter d), of the TUIR: without cost documentation, the capital gain is determined by effectively treating the entire disposal proceeds as the gain.

This makes keeping invoices, receipts and purchase documentation extremely important. If I buy a bar today for 5,000 euros and sell it fifteen years later for 8,000, I must be able to prove that 5,000-euro cost. Losing the documentation can have very serious tax consequences.

What about ETCs and ETFs?

Gains on financial instruments such as ETCs and ETFs are also normally subject to tax on investment income for an individual resident in Italy acting outside a business activity. In the ordinary cases considered here, the rate is 26%. The Italian Revenue Agency confirms the 26% rate on capital gains and other miscellaneous financial income covered by Article 67 of the TUIR. However, the actual taxation of ETCs can depend on the instrument's structure and the regime applied by the intermediary, so I would not use the label “gold ETF” to infer the tax treatment automatically without checking the specific ISIN. There is also an enormous practical difference between using an Italian broker under the intermediary-administered tax regime (regime amministrato), which normally calculates and pays taxes on the customer's behalf, and using a foreign intermediary or a service requiring you to handle the tax return yourself.

Physical gold versus an ETC: a comparison

This table shows precisely why there is no universally correct answer.

When I would choose physical gold

For me, physical gold makes particular sense when the objective is not purely financial. If I view a small part of my gold as a store of wealth outside the financial system, physically owning some coins or bars can have a clear rationale. In that case, however, I would avoid continually buying tiny denominations with very high premiums. I would prefer standardised, easily recognisable and readily resalable products purchased from reputable dealers, carefully retaining all documentation. The advantage of physical gold is not that it is the most efficient investment. Its advantage is precisely being physical. If that characteristic does not matter to me, much of the reason to accept its higher operational costs disappears.

When I would choose an ETC

If instead I simply want 5%, 10% or another percentage of my portfolio to track the gold price, I would be far more inclined to use a large, liquid, low-cost, physically backed ETC. I can rebalance my portfolio with one click, invest small amounts, avoid custody problems and keep annual costs very low. For a financial portfolio consisting of shares, bonds and cash, this solution is generally much easier to administer. If I were a US investor, the comparison would be more open. For a European retail investor, however, I personally see no particular reason to pursue GLD just because it is the world's most famous product. It has extraordinary liquidity, but its 0.40% cost is significantly higher than that of several physically backed European ETCs. IAU is cheaper at 0.25%, but is still more expensive than European products currently available at around 0.12%. Add to this the PRIIPs restrictions for European retail customers. The fact that an American product is huge and famous does not automatically make it the best choice for an Italian resident.

What about one available through Revolut?

Here, the answer depends on the specific product. I would not choose an ETC simply because it appears in the Revolut app. I would look at its ISIN and check exactly what I am buying. In particular, I would examine these aspects:

• Replication and collateral: establish whether the product is physically backed or synthetic and read the collateral terms.
• Leverage: distinguish straightforward instruments from leveraged or inverse ones.
• Overall costs: TER, broker commissions, spread and any currency conversion.
• Structure and liquidity: issuer, custodian, size, trading and redemption arrangements.
• Documentation and taxation: KID, prospectus, ISIN and applicable tax regime.

If Revolut offers me a product with these characteristics and competitive trading costs, using it may be perfectly reasonable. But the correct statement would be: “I bought a gold ETC through Revolut.” Not: “I bought gold from Revolut.” Economically, these are two different things.

What if I wanted both?

In my view, this is one of the most rational solutions for someone who assigns gold two functions simultaneously. Imagine wanting to hold 10% of your wealth in gold. You could decide, for example, to hold: 2% in physical gold, as a component genuinely outside the financial system; 8% through a physically backed ETC, to preserve efficiency, liquidity and ease of rebalancing. I am not saying these percentages are right for everyone. They simply show that choosing between the two extremes is not compulsory. Physical gold can serve the insurance function. The ETC can serve the financial function.

Gold itself produces nothing

Before deciding how to buy gold, remember the main limitation of the asset itself. A share represents ownership in a business that can generate profits. A bond pays interest. A property can generate rent. Gold held directly produces no cash flows. Its return essentially depends on someone being willing to pay more for it in the future than we paid, alongside exchange-rate effects for a European investor. This does not mean gold is useless. It can offer very attractive diversification characteristics and perform well in certain economic conditions. It does mean, however, that I would not personally make gold the dominant component of my wealth simply because its price has risen in recent years.

Which solution I would choose

If my objective were to obtain financial exposure to gold at low cost and with ease of trading, I would mainly consider a physically backed ETC after reading its documentation. If instead I wanted to own a tangible reserve directly, I would consider coins or bars, accepting the costs of purchase, custody and resale. Physical ownership does not, however, guarantee protection in every crisis: gold can lose value and, in extreme situations, even selling or using it can be difficult. A mixed approach can serve different purposes without automatically making any particular portfolio allocation suitable for everyone. As a European customer, I would not choose GLD solely for its fame, nor an ETC merely because it appears on Revolut. What matters is the exact instrument, the rights it grants and the overall cost for your own way of investing. The same gold can be held through very different structures: gross returns may depend on a similar underlying asset, but net results and access to your wealth vary. Before asking which alternative offers a higher return, I would therefore clarify why I want to own gold and what trade-off I accept between independence, convenience and risk.

Data and documentation consulted on 4 October 2026. Costs, product availability and intermediary terms may change; portfolio percentages and calculations are illustrative examples.