What you own
Physical gold means coins or bars that you hold yourself or store with a vault. A gold ETF is a fund share. Large physically backed funds such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) hold bullion in vaults and each share represents a part of that gold. You own a share of the fund, not the metal itself.
Costs
Physical gold is bought above the spot price (a premium) and sold below it (a dealer spread), and storage and insurance cost money. An ETF charges a yearly expense ratio, which differs between funds, plus a small trading spread. Check the current figures before you buy.
Convenience and liquidity
ETFs trade on a stock exchange during market hours, can be bought in a brokerage account and need no storage. Physical gold takes longer to sell and must be verified, but it can be held outside the financial system.
Risks
ETF holders depend on the fund structure and custodians. Physical holders carry the risk of loss, theft and fakes. Both carry the price risk of gold itself, which can fall as well as rise.
Taxes
Tax treatment of gold funds and physical gold differs by country and sometimes by product, so check the rules that apply to you before deciding.
Comparing funds
GLD and IAU track the same gold price. The difference is mainly the expense ratio and the size of each share, so the cheaper fund tends to keep slightly more of the return over time.
Related:Live gold priceGold calculatorWays to invest in gold
Educational content, not investment advice.