What's the difference between owning physical gold and a gold ETF?

Physical gold means coins or bars you store yourself or in a vault, which involves storage costs, insurance, security concerns, and dealer markups when you buy and sell. A gold ETF holds gold on your behalf and trades like a stock, so it's far more liquid, cheaper to transact, and easy to hold in a brokerage account, though it charges a small annual expense ratio. For most investors, a gold ETF is the practical choice for portfolio exposure. Physical gold makes sense mainly for people who specifically want to hold the metal itself. Note the IRS taxes gains on gold ETFs backed by physical metal at the higher collectibles rate of up to 28 percent, not the standard long-term capital gains rate, so factor taxes into your decision.