iShares Gold Trust ETF (NYSEARCA:IAU) had significantly outperformed SPDR S&P 500 ETF Trust (NYSEARCA:SPY) this year. While SPY has posted impressive gains of nearly 15% year-to-date—making this a stronger-than-average year for the S&P 500 with almost three months remaining—gold spot prices have made iShares Gold Trust a better investment so far in 2025.
A new gold rush is brewing
Spot gold prices have been explosive this year and have trounced even big-name tech stocks like Nvidia (NASDAQ:NVDA) year-to-date. For the long-term, cost-conscious investor, iShares Gold Trust ETF is a great bet. It has $61.5 billion in total assets and low fees at just 0.25%, or $25 per $10,000.
Each share of IAU constitutes a fractional undivided interest in physical gold held in secure vaults by JPMorgan Chase Bank as the custodian. The gold is allocated, meaning it is specifically identified and held in the name of the trust.
It’s ideal for investors who want direct gold price exposure without the hassle of buying, storing, or insuring bullion.
IAU may not even be at its peak potential, as trends say that gold is set to continue going up. As of this writing, gold broke through $4,000/oz. Two years ago, this was a fantasy.
Why a gold surge can continue for years
There is a “perfect storm” underway for the yellow metal. First, the Federal Reserve is restarting interest rate cuts, with one already going through last month. Two more rate cuts are expected by the end of this year. Each tick lower in real yields automatically makes non-coupon gold more attractive as it lowers the opportunity cost for holding growth.
Second, the U.S. dollar has softened significantly this year. This translates over into a higher price and then demand for gold. Central banks worldwide are expected to buy over 1,000 tonnes of gold in 2025 in a bid to diversify away from dollar-heavy reserves. Central banks have bought over 1,000 tonnes of gold for three consecutive years.
On top of that, geopolitical fog, tariffs, and a U.S. government shutdown and hot conflicts in two regions have revived gold’s oldest use-case: the asset you own when nothing else feels safe.
Reserve diversification is a multi-year theme, mine supply is flat despite the price incentive, and recycling flows have actually fallen as consumers hold old jewellery in anticipation of even higher quotes. Add the fact that global debt-to-GDP is still rising and real yields are still modest, and the floor under bullion looks more solid than usual.
Can IAU keep trouncing the SPY?
Analysts are constantly upping their price targets to follow the uptrend. UBS says $4,200 by year-end, with some having their price targets at $4,500 or more. Goldman Sachs says $5,000 next year. This implies a 25% gain from here, something that the S&P 500 is unlikely to match.
For holders of IAU, the implication is that the ETF may still be in the early innings of a structural repricing rather than the late stages of a cyclical burst.
Gold can and likely will correct sometime in the future, but holding cash and waiting for it to happen is not a smart idea today.
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