Understanding the difference between gold and gold miners

The world’s central banks may need to consider building bigger safes. In a report released in June, the European Central Bank noted that gold has supplanted U.S. Treasuries as a primary reserve asset for central banks around the world.

Over the past few years, central banks have been stockpiling the yellow metal as a hedge against rising geopolitical unrest and as a safeguard against inflation. That surge in demand – from governments and investors – has caused prices to rise in recent years, inflating the value of central bank holdings beyond that of Treasuries.

Gold always has its die-hard proponents, but investors – from pros to newbies – tend to pile on whenever the price surges, which can push prices even higher. The question at these times is always the same: Is the best way to own the precious metals through the physical asset or by buying shares of companies that mine it?

While the two approaches are often lumped together when talking about gold, they can behave differently. Understanding the differences between these strategies can help investors how the two exposures may behave under different market conditions.

Physical gold is a tangible commodity, while gold miners are businesses that have operational costs and company-specific risks.

You can buy physical gold in the form of coins or bars through banks, coin dealers, online dealers, the Royal Canadian Mint or even Costco. You can also gain exposure through exchange-traded funds (ETFs) that track the price of gold.

Buying gold provides exposure to the metal’s spot price – the current price of one troy ounce – making its performance relatively straightforward to track. For instance, if gold’s spot price rises 10%, the intrinsic value of bullion rises the same amount. However, when buying gold bars or coins, investors are typically charged a fee on top of the base price of the investment  to cover things like refining, minting, transportation, packaging and dealer fees, which can vary depending on where you buy. Investors generally don’t pay the same dealer premiums associated with buying coins or bars when investing through a gold ETF, although ETFs charge management fees that reduce returns over time.

In contrast, buying gold miner stocks means purchasing shares in companies that explore, mine and sell gold. Investors can buy individual gold-mining stocks or gain exposure to a basket of companies through an ETF.

Gold prices and gold miner stocks often move in tandem, but not always. Even though miners often see their profits rise during gold rallies (the higher gold prices are, the more money they can make by mining and selling it), they carry operational, labour, geopolitical and company-specific risks that physical gold doesn’t. For instance, if labour costs rise due to skill shortages, the company’s profit margins could come under pressure, potentially weakening investor sentiment and causing shares to decline, or at least not rise at the same pace as the metal itself.

In other instances, gold miners can see their profits grow at a much faster rate than gold prices. Because many mining costs are relatively fixed in the short term, rising gold prices can have an outsized impact on profitability. This phenomenon is often referred to as operational leverage: a relatively small move in gold prices can produce a much larger change in a miner’s profits and, potentially, its share price. As a result, gold mining stocks may at times exhibit greater sensitivity to changes in gold prices than physical gold itself, although they also carry additional equity and operational risks.

Some companies also pre-sell their production to lock in prices or secure financing to build a mine. In those cases, they may not see the full benefit of rising gold prices.

As of June 15, 2026, both gold prices and miners have declined. The metal is down about 0.5%  to date, while the S&P/TSX Global Gold Index, which tracks major gold mining companies, is down 2.7%. The divergence may reflect concerns about mining costs, operational risks and broader equity market sentiment, all of which can affect gold producers independently of movements in the metal itself.

Traders can track movements in gold prices and gold miner stocks, and any divergences, by comparing the performance of gold prices with indexes or ETFs that track mining companies.

Common catalysts for gold price increases include rising inflation and growing geopolitical tensions, as investors seek safe-haven assets. For instance, gold prices often come under pressure when interest rates rise, particularly when real yields move higher, as investors may shift toward interest-bearing assets.

A similar logic applies to geopolitical conflicts, although the relationship is not always straightforward. While uncertainty can boost demand for gold, competing forces – such as a stronger U.S. dollar, higher interest rates or risks already priced into markets – can limit or offset those gains. For example, gold’s response to the U.S.-Iran conflict has been largely muted. In addition, after initial rallies, investors may take profits or rebalance portfolios, which can weigh on prices even amid ongoing uncertainty.

Monitoring news, economic data and market developments can help traders identify potential entry and exit points. Gold mining stocks can rise and fall during these events as well. But, of course, they can be impacted by things like disappointing earnings results or operational setbacks. For sophisticated daily traders seeking tactical exposure to short-term gold price movements, the BetaPro suite has two ETFs that could be considered:

For those looking for gold miners exposure:

Whether traders prefer direct exposure to the metal or the potential operational leverage of mining companies, understanding the differences between the two can help them identify opportunities when market conditions change.

Because these ETFs provide 2x gold daily exposure, both gains and losses can be magnified. These ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. Like with any investment, sophisticated daily traders should understand these products and how they fit with their risk tolerance and overall investment strategy before making any moves.

Disclaimers

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Published July 2, 2026