Central banks have been purchasing gold at a rate not seen in decades all across the world. Official reserves are switching from paper assets to actual gold from Asia to Eastern Europe. It’s not noise. Although central banks move slowly, their collective actions typically indicate deeper worries about geopolitical risk, persistent inflation, and currency stability. This naturally poses a question for individual investors.
Should you think about including gold in your portfolio right now if central banks start to trust it again? Your intuition is correct if you believe that the “smart money” has been covertly purchasing gold while the media is fixated on AI stocks. With 53 net tonnes, October 2025 saw the biggest monthly central bank gold hoard of the year—a 36% increase from September and the quickest pace since November 2024.
After raising its long-term aim to 30%, Poland alone acquired 16 tonnes, increasing its reserves to 531 tonnes (26% of total holdings). Bars are being added as quickly as refiners can make them in China, Kazakhstan, Brazil, and even newcomer Cambodia. Some of the world’s reserve currencies are being exchanged for bullion by the people who print them. Should average investors do the same? If yes, how can they do it most economically and hygienically?
What central bank’s gold buying really signal to retail investors?
There are three main reasons why central banks purchase gold. First, there is no counterparty risk with gold. It is independent of the pledge to pay made by another government. Second, when currencies depreciate as a result of inflation or excessive money printing, gold preserves purchasing power. Third, gold acts as a geopolitical hedge during wars, sanctions, or financial system stress.
Even when stock markets appear tranquil on the surface, the accumulation of gold by institutions with long time horizons frequently indicates an increase in global hazards. This indicates that diversification is more important than ever, but it does not imply that markets will crash tomorrow.
Reserves for sanction-proofing
Every emerging-market treasury wondered, “Could that happen to us?” after the West froze Russian foreign exchange holdings in 2022. Gold is politically neutral and resistant to seizure when stored in secure vaults or at home.
A reality check on debt-to-GDP
The CBO estimates that by 2055, the U.S. federal debt will have grown from 124% of GDP at the end of 2024 to 155%. Since gold is the only reserve asset that no one can debase by printing more of it, central banks are aware that inflating away debt is the politically convenient way out.
Dedollarization is underway
Competitive currency blocs seek a reserve unit without a counterparty for everything from new payment rails outside of SWIFT to bilateral commerce in yuan. Gold is a better option than SDRs (too bureaucratic) or Bitcoin (too volatile). Underweight structural
Gold still makes up only 19% of global central bank reserves, much less than the 29% post-Bretton Woods average, after eleven years of net purchase. Translation: rather than just months, the bid might extend for years.
| Ticker | Fund Name | Expense Ratio | 2026 Angle | WebP Alt-Text Idea |
|---|---|---|---|---|
| IAUM | iShares Gold Trust Micro | 0.09 % | Cheapest physically-backed ETF; $6 B AUM and climbing | IAUM-lowest-fee-gold-ETF.webp |
| GLDM | SPDR Gold MiniShares | 0.10 % | $25 B liquidity with 1-cent bid-ask spread; great for large tactical trades | GLDM-25-billion-assets-under-management.webp |
| SGOL | abrdn Physical Gold Shares | 0.17 % | LBMA Responsible-Gold sourcing; ESG tilt for green mandates | SGOL-ESG-approved-gold-bars.webp |
| IAU | iShares Gold Trust | 0.25 % | Grand-daddy #2 behind GLD; deep options chain for income overlays | IAU-options-chain-screenshot.webp |
| GLD | SPDR Gold Trust | 0.40 % | The liquidity king (>$60 B); institutional favourite for block trades | GLD-institutional-trading-floor.webp |
Important lesson: IAUM and GLDM provide you the same ounce of gold for around one-third of GLD’s annual fee, with savings that compound over multi-year holding periods, unless you require options or institutional-size blocks.
5 Gold ETFs to Watch Now
SPDR Gold Shares
Spdr gold is one of the biggest and most liquid gold ETFs in the world. It is frequently utilized by institutional investors and closely monitors spot gold prices. Although the expense ratio is somewhat greater than some more recent options, its’ strong liquidity makes it appropriate for active allocation.
iShares Gold Trust
iShares Gold Trust is a well-liked, inexpensive substitute that monitors actual gold. Long-term investors who need efficiency without compromising scale find it appealing since it provides robust liquidity with a marginally reduced expense ratio.
ABRDN Physical Gold Shares ETF
ABRDN ETF is notable for its straightforward gold storage standards and lower expense ratio. Cost-conscious investors who intend to retain gold for a number of years rather than trade regularly frequently favor it.
SPDR Gold MiniShares Trust
SPDR Gold Minishares Trust is intended for investors seeking less expensive exposure akin to that of SPDR Gold Shares. It works well for portfolio allocations where reducing recurring costs is important.
Axis Gold ETF
Axis Gold ETF offers Indian investors domestic exposure to gold prices without the hassles of international brokerage. It is easily integrated with Indian demat accounts, trades in rupees, and is subject to local regulation.
Gold as a portfolio hedge in uncertain times
Gold is a portfolio insurance, not a growth engine. Gold has historically assisted in lowering portfolio volatility during times of high inflation or market stress. It is intended to balance growth assets rather than to replace them. However, insurance is useful when inflation doesn’t return to the 2% target. Gold also serves as a hedge against the depreciation of the rupee, particularly for Indian investors.
Even if international prices stay steady, domestic gold prices typically increase as the rupee depreciates against the dollar. Bond yields fluctuate with each speech by the central bank. Bonds and stocks behave differently from gold.
Why Gold ETFs are better than physical gold for most investors
Gold also serves as a hedge against currency depreciation, particularly for Indian investors. Even if worldwide prices stay steady, domestic gold prices typically rise when the rupee depreciates against the dollar. Practical concerns associated with physical gold include liquidity spreads, making costs, storage, and purity inspections. Most of these issues are eliminated by gold ETFs.
They can be bought or traded quickly on the exchange, track the price of gold, and are backed by actual gold held by custodians. The expectation of a “soft landing” underpins equity pricing. The Sharpe ratio of balanced portfolios has traditionally improved with a 5–10% strategic allocation, particularly when equities and bonds decline together.
The simplest vehicle is an exchange-traded fund (ETF), which eliminates storage costs, spread-betting complications, and the 28% U.S. collectibles tax rate on actual bars (most ETFs are treated as 23.8% long-term capital gains).
How to choose the right gold ETF for your portfolio
The first step is to determine the size of your allocation; for most diversified portfolios, gold typically ranges from 5 to 15 percent, depending on risk tolerance; next, compare expense ratios, liquidity, and tracking error; lower costs are more important if you plan to hold for a long time; liquidity is more important if you expect to rebalance frequently.
Indian investors should also take taxation and ease of access into account. Domestic ETFs make compliance and reporting easier than overseas holdings. Returns are entirely dependent on price appreciation. Gold can underperform stocks during periods of strong equity performance and low inflation.
dollar-cost average rather than all-in. Demand from central banks is positive but nonlinear; price declines of 8–12% occur nearly every year.
When a 5% aim slips to 4% or 7%, use a “gold band” to rebalance. This compels you to reduce strength and purchase weakness.
Keep an eye on the dollar (DXY). The correlation between gold and the US dollar is still -0.4; your short-term volatility engine is Fed-pivot talk.
Rumors about storage vaults are important. Use any indicator that Poland or China is slowing down their purchases as a window of opportunity rather than a cause for alarm, since they can cut $40–50 each week.
Final takeaway: Should you follow central banks into gold
Purchasing gold by central bank is a clear indication that risk management is once again a top priority. This does not imply that individual investors should put all of their money into gold , but it does imply that it might be dangerous to completely ignore gold in the current scenario. Central banks are purchasing gold because they think the real value of fiat reserves may decline over the next ten years, not because they anticipate a recession in Q2. Individual investors can profit from this structural, slow-burning stimulus without having to forecast the headline CPI or Fed dots.
Select the least expensive ETF available on your platform, size it to 5–10% of liquid net worth, and let the central bankers handle the geopolitics. You will be the one asset that doesn’t require a board of directors, a bailout, or an earnings call when the next sanctions scandal or debt limit standoff occurs.