PHYS ETF Review: Is Sprott Physical Gold Worth Buying?

Sprott Physical Gold Trust holds fully allocated gold bars stored at the Royal Canadian Mint with a unique redemption feature allowing large holders to take physical delivery — the preferred vehicle for investors who distrust custodial arrangements at major banks.

What Is PHYS?

The Sprott Physical Gold Trust holds physical gold bullion stored in secure vaults, offering investors direct exposure to gold prices without the hassle of storage and insurance. Managed by Sprott Asset Management, PHYS tracks the price of gold by holding the actual metal, not derivatives or mining stocks. Unlike many gold ETFs that use unallocated gold, PHYS stores allocated, segregated bars that investors can theoretically take delivery of.

The trust charges a 0.45% expense ratio and holds $17.5 billion in assets under management since its 2010 inception.

Current Snapshot

Why It Matters for Real Asset Investors

PHYS serves as the ultimate insurance policy in the Energy Macro framework—pure monetary metal that performs when confidence in paper currencies wavers. Gold historically shines during periods of fiscal irresponsibility, currency debasement, and geopolitical instability. With central banks adding $70+ billion in gold reserves annually and dedollarization accelerating globally, physical gold provides portfolio ballast when traditional assets fail.

The trust addresses a critical gap in most portfolios: protection against monetary regime change. While infrastructure and energy assets hedge against inflation and deglobalization, gold hedges against the breakdown of the monetary system itself. PHYS becomes particularly relevant as government debt-to-GDP ratios reach unsustainable levels and central banks face the impossible choice between fighting inflation and funding deficits.

Unlike gold mining stocks that carry operational risk, PHYS moves purely with the metal's price. This makes it ideal for investors who want gold exposure without betting on specific companies' ability to extract it profitably. The physical backing also matters during systemic stress—when counterparty risk rises, owning the actual metal beats owning promises to deliver it.

Top Holdings

PHYS holds physical gold bullion bars stored primarily at the Royal Canadian Mint in Ottawa. The trust owns:

• 400-ounce Good Delivery Bars: The London Bullion Market Association standard for institutional gold trading
• 1-kilogram Bars: Smaller denomination bars for potential retail delivery
• Royal Canadian Mint Storage: Secure, insured government facility with regular audits

Each bar is individually identified, weighed, and assayed. The trust publishes detailed bar lists on its website, showing serial numbers and exact weights—transparency most gold ETFs lack.

How It Fits the Portfolio

PHYS functions as portfolio insurance, not a growth vehicle. I typically watch for 5-10% allocations during periods of monetary stability, potentially scaling to 15-20% when currency debasement accelerates. The key is buying during gold's unloved periods—when real yields are rising and dollar strength punishes commodities.

The trust pairs well with income-generating real assets like pipeline MLPs and utility stocks. While those assets provide yield and inflation protection, PHYS provides pure monetary hedge without operational risk. Consider it the ultimate portfolio anchor when paper assets face systemic stress.

Regime Signals

PHYS outperforms during specific macro conditions: falling real interest rates, currency crisis fears, and geopolitical instability. Gold typically bottoms when the Federal Reserve pivots from tightening to easing, as lower real yields reduce the opportunity cost of holding non-yielding assets.

Watch for gold strength when central banks resume aggressive monetary expansion, fiscal deficits widen beyond sustainable levels, or international confidence in the dollar system cracks. Conversely, PHYS struggles when real yields rise and dollar strength reflects genuine economic outperformance rather than safe-haven flows.

The recent 68% annual gain likely reflects anticipation of easier monetary policy and growing concerns about U.S. fiscal sustainability. The current 11% year-to-date decline suggests profit-taking or shifting expectations about Federal Reserve policy.

Related Research

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• GLD: SPDR Gold Shares
• IAU: iShares Gold Trust
• PSLV: Sprott Physical Silver Trust

Frequently Asked Questions

What makes PHYS different from GLD and IAU?

PHYS stores its gold at the Royal Canadian Mint, a sovereign government facility, rather than commercial bank vaults. Large unitholders can redeem for physical gold delivery — a feature GLD and IAU do not offer retail investors. PHYS also trades as a closed-end trust, meaning it can trade at a premium or discount to its net asset value, creating both opportunities and risks.

Can you redeem PHYS for physical gold?

Yes, but only in large quantities. Holders of sufficient units (typically worth several hundred thousand dollars) can request physical redemption of London Good Delivery bars. This is a meaningful differentiator for high-net-worth investors and family offices who want the option to take possession. Smaller investors benefit indirectly because the redemption mechanism helps keep PHYS trading close to NAV.

What is the expense ratio of PHYS?

PHYS charges a management fee of 0.40% annually, similar to GLD. While not the cheapest gold vehicle available, the sovereign mint storage, physical redemption rights, and closed-end trust structure appeal to investors willing to pay for the additional security features. Canadian tax treatment may also benefit certain investors, as PHYS gains can qualify for long-term capital gains rates.

Does PHYS trade at a premium or discount to gold?

As a closed-end trust, PHYS can trade at a premium or discount to its net asset value. During periods of high physical gold demand or market stress, PHYS sometimes trades at a premium, reflecting investors' willingness to pay extra for sovereign-mint custody. During calm markets, it may trade at a slight discount. Monitoring the premium/discount can help with entry timing.

For our complete allocation framework across real assets, infrastructure, and income strategies, see The Blackout Fortune Playbook.

Last updated: February 1, 2026 | Data: Yahoo Finance, Sprott Asset Management filings