Quick verdict
The cheapest gold fund is the one with the lowest relevant total ownership cost for your amount, platform and trading pattern—not necessarily the smallest ongoing charge. Long-term holders should pay attention to tracking difference and platform custody fees; frequent or small buyers may be dominated by commission, spreads and foreign-exchange charges. Skip a comparison that mixes different dates, currencies or benchmarks. A precise shortlist uses the same investment amount, trading line and holding period, while recognising that future spreads and tracking cannot be guaranteed.
Translate the annual charge into cash
Start with the product’s ongoing charge or total expense measure and note how it is deducted. In a bullion-backed ETC, the metal entitlement per security may gradually decline to fund charges, so there may be no separate cash bill. Multiply the percentage by your planned average holding to estimate pounds per year, while remembering the value changes. Add the platform’s custody fee and any minimum or cap, because the same product can cost different amounts in two accounts. Some platforms charge a percentage, others a flat subscription or no custody fee but higher dealing costs. Compare at your realistic balance, not a round number chosen by an advertisement. Then extend the estimate across your expected holding period without pretending future fees, prices or platform tariffs are fixed.
Treat the spread as an immediate cost
The bid is what a buyer is currently willing to pay; the offer is what a seller asks. Purchasing at the offer and immediately selling at the bid would crystallise the spread before commission. Record both prices, not the last traded price, and calculate the percentage difference around the midpoint. Spreads can vary with trade size, market hours, volatility and the activity of underlying gold and currency markets. Compare candidates at the same time during normal London trading, preferably when relevant underlying markets are active. Use limit orders when appropriate so you control the worst acceptable execution price. A low-fee security with a persistently wide spread may be unattractive for short holding periods or frequent rebalancing, while a one-time spread matters less when spread across many years.
Use tracking difference as the reality check
Tracking difference is the gap between a product’s return and the return of the benchmark it says it follows over a period. It can reflect the ongoing charge, operational cash balances, transaction effects, entitlement calculations and other frictions. Tracking error describes how variable that gap is; the terms should not be used interchangeably. Use issuer reports or reliable data, match the date range and currency, and confirm whether the benchmark already includes any costs. A historical gap can help test whether the published fee tells the whole story, but it is not a forecast. For a gold ETC with multiple currency lines, avoid comparing a sterling return with a dollar benchmark without accounting for currency. If the documents do not make the benchmark and calculation clear, the product is difficult to compare responsibly.
Build a cost table around your behaviour
Create three scenarios: one lump-sum purchase held for several years, monthly contributions, and an eventual sale. Include commission, spread, FX, platform fees and product costs in each. A fixed dealing fee can make monthly £50 trades inefficient, whereas a platform’s regular-investment service may reduce it. A percentage platform fee can become significant as the holding grows. Add transfer-out or account closure charges only when applicable and verified. Cost is important, but apply a structure screen first: compare only products whose backing, custody and investor rights meet your requirements. The final buying decision should balance clarity, liquidity and total cost. Recheck tariffs before placing an order and annually afterwards, since brokers and issuers can change charges even though an old comparison article remains online.
Often a better fit when
- A buyer comparing two physically backed ETCs on one UK platform.
- A regular investor deciding whether trade frequency makes small purchases inefficient.
- A long-term holder reviewing whether platform charges overwhelm product-fee savings.
Pause or skip when
- You are ranking products from annual charges alone.
- Your comparison uses stale quotes or mismatched currencies and periods.
- You have not yet checked backing, custody and ordinary retail exit rights.
Buying checklist
- Convert every percentage and minimum fee into pounds at your intended balance.
- Record the live bid and offer for comparable products at the same market time.
- Match product returns and benchmarks by dates, currency and methodology.
- Model lump-sum, monthly and exit scenarios using your platform’s current tariff.
- Exclude structurally unclear products before selecting the lowest-cost survivor.
Compare the route before the provider
Use our neutral framework to compare ownership, total cost, safeguards and exit terms.
Questions readers ask
How do I calculate a bid-offer spread?
Take the difference between offer and bid, then divide it by their midpoint to express an approximate percentage. Your platform may already show it, but verify which prices are live. The realised cost depends on execution, commission and how the market changes between buying and selling. Use the calculation for like-for-like snapshots, not as a promise of the future spread.
Is tracking difference just the annual fee?
No. The annual fee is an explicit input, while tracking difference is the realised return gap versus the stated benchmark over a period. Operational effects, entitlement mechanics and other frictions can influence it. Confirm benchmark, dates and currency before comparing. A consistent historical gap may be informative, but it neither guarantees future tracking nor replaces reading the current product documents.
Are monthly purchases too expensive?
They can be when a fixed commission or FX minimum consumes a meaningful part of each contribution. Some platforms provide cheaper scheduled dealing, which changes the calculation. Compare monthly, quarterly and lump-sum routes while considering that delaying investment also changes market exposure. Do not increase the contribution merely to justify a fee; choose a frequency compatible with your budget and plan.
Sources and further checks
Sources were last reviewed on 2026-08-22. Rules and provider terms can change.
