Should you buy gold stocks or paper gold?

• Gold exchange-traded commodities have higher returns and lower risk than gold stocks. • Gold stocks are more sensitive to oil price changes than gold ETCs. • Gold ETC returns are higher under greater economic policy uncertainty (EPU). • Investment in gold stocks can be useful for short-term investments. • Gold ETCs have better safe-haven properties than gold stocks. We analyze which type of gold investment is better for investors by studying the determinants of returns on gold mining stocks (gold stocks) and gold exchange-traded commodities (gold ETCs) over the period from March 2012 to February 2024. We find that gold ETCs outperform gold stocks in both returns and risk, and respond significantly more positively to economic policy uncertainty (EPU), offering investors more favorable safe-haven properties. Gold stocks are also more sensitive to oil price increases than are gold ETCs, and their relative price performance is negatively related to both oil price changes and Gold VIX. We conclude that investing in gold stocks is less suitable for investors who buy gold as a safe-haven asset.