XEQT vs Gold ETFs in Canada: Do You Actually Need Gold in Your Portfolio?

My dad has always been a gold guy. Not in a “bunker in the woods” way, but in a quiet, principled way. He’s kept a small stash of gold coins in a safety deposit box since before I was born, and he’s been telling me to “put at least 10% in gold” since I opened my first investment account. When gold blew past $3,000 USD an ounce in early 2025 and kept climbing through 2026, he called me with the unmistakable tone of a man who’d been right all along.

“See? I told you gold always comes back. Are you still buying that ETF thing?”

That “ETF thing” is XEQT, and yes, I’m still buying it. But my dad’s call got me thinking about a question I hear constantly from readers: should I add a gold ETF to my portfolio, or does XEQT already give me everything I need?

Gold is having a moment. Between geopolitical tensions, inflation anxiety, and central bank buying, the yellow metal has been on a tear. Canadian investors can now buy gold exposure as easily as tapping a button on Wealthsimple. And naturally, everyone’s wondering whether they’re missing out.

Let’s dig into this honestly. I’ll compare XEQT to the most popular Canadian gold ETFs, show you the real numbers, and help you decide whether gold deserves a spot in your portfolio or whether it’s just shiny noise.

1. What Gold ETFs Are Available in Canada?

Before we compare anything, let’s lay out your options. Canadian investors have several solid gold ETFs to choose from, all trading on the TSX:

Physical Gold ETFs (backed by real bullion)

• CGL (iShares Gold Bullion ETF, CAD-Hedged) — The most popular gold ETF in Canada. Managed by BlackRock (same folks behind XEQT). MER of 0.55%. Currency-hedged, so you get pure gold price exposure without USD/CAD fluctuations muddying the picture.
• CGL.C (iShares Gold Bullion ETF, Unhedged) — Same fund as CGL but without currency hedging. If the Canadian dollar weakens against the USD, you benefit. If it strengthens, it hurts. MER of 0.55%.
• MNT (CI Gold Bullion Fund) — CI’s gold ETF with an MER of 0.18%, making it the cheapest gold ETF in Canada. Also available in hedged (MNT) and unhedged (MNT.U) versions.
• KILO (Purpose Gold Bullion Fund) — Purpose Investments’ gold offering with an MER of 0.23%. Each unit is backed by allocated gold bullion stored in Canadian vaults by the Royal Canadian Mint.

Gold Miner ETFs

• XGD (iShares S&P/TSX Global Gold Index ETF) — Instead of holding physical gold, this ETF holds shares of gold mining companies like Barrick Gold and Agnico Eagle. MER of 0.61%. Returns don’t track the gold price directly — miners can outperform gold in bull markets but underperform dramatically in bear markets.

Key difference: physical gold vs. gold miners

Physical gold ETFs (CGL, MNT, KILO) track the price of gold bullion directly. Gold miner ETFs (XGD) hold stocks of companies that dig gold out of the ground. Miners add operational risk, management risk, and leverage to gold price movements. For a straightforward gold allocation, most advisors recommend physical gold ETFs. That’s what we’ll focus on for the rest of this comparison.

For our head-to-head, I’ll mainly use CGL as the gold representative since it’s the most widely held and recognized, though MNT deserves a serious look if fees matter to you (and they should).

2. The Head-to-Head Comparison: XEQT vs Gold ETFs

Here’s the side-by-side that everyone wants to see:

Returns are approximate and based on historical data through early 2026. Past performance does not guarantee future results.

Some things worth noting right away:

• Gold has been on a historic run. The 1-year and 5-year numbers look fantastic for gold right now. But zoom out to 10 or 20 years and the picture gets much more even — and arguably tilts toward equities.
• Gold generates zero income. No dividends, no distributions, nothing. Gold just sits there. XEQT pays a modest but growing quarterly distribution that compounds over time.
• Gold’s volatility is actually higher than most people think. People buy gold for “safety,” but its annualized volatility is comparable to (and sometimes higher than) a diversified equity portfolio like XEQT. Gold dropped 45% from its 2011 peak and took almost seven years to recover.
• Fees are a wash. MNT actually beats XEQT on fees at 0.18% vs 0.20%. CGL is pricier at 0.55%, which eats into returns over decades.

3. The “Gold as Inflation Hedge” Story: Is It True?

This is the big one. The number-one reason people buy gold is because they believe it protects against inflation. “When the money printer goes brrrr, gold goes up.” It’s a compelling narrative, and like most compelling narratives, it’s partly true and partly misleading.

Where the narrative holds

• Over very long periods (50+ years), gold has roughly kept pace with inflation. An ounce of gold bought roughly the same amount of goods in 1920 as it does today.
• During extreme inflationary crises (think 1970s stagflation, post-2020 money printing), gold has tended to perform well.
• Gold does well during periods of negative real interest rates — when the rate of inflation exceeds the interest rate you can earn on cash. We had this environment from 2020-2023, and gold responded accordingly.

Where the narrative breaks down

• Gold’s inflation-hedging ability is unreliable in the short and medium term. From 1980 to 2000, gold lost more than 50% of its value in real terms — a period that included multiple inflationary episodes. If you bought gold in 1980 expecting it to protect against inflation, you waited over 25 years just to break even.
• From 2011 to 2016, gold declined roughly 45% while inflation was positive. That’s the opposite of an inflation hedge.
• Stocks are actually better inflation hedges over long periods. Companies can raise prices, increase revenues, and grow earnings during inflationary periods. A company like Costco simply raises its prices — its stock adapts. Gold just sits there and hopes people will pay more for it.

XEQT holds 9,000+ companies across 40+ countries. Those companies collectively have enormous pricing power. When inflation pushes up the cost of everything, companies adjust. Their revenues, earnings, and stock prices adjust too. That’s a dynamic, adaptive inflation hedge — far more reliable than a metal that generates no cash flow.

The bottom line: Gold is a decent inflation hedge over very long periods, but it’s wildly unreliable over 1-10 year horizons. XEQT gives you better inflation protection in most realistic time frames.

4. Correlation: Does Gold Actually Diversify Your Portfolio?

Here’s where gold proponents have their strongest argument. Gold has historically had a low correlation to stocks, meaning it often moves independently of or in the opposite direction from equity markets.

The correlation between gold and global equities has historically averaged around 0.0 to 0.15 — essentially uncorrelated. In some crisis periods, gold has moved in the opposite direction of stocks, providing genuine portfolio diversification.

When this works beautifully

• 2008 Financial Crisis: Global stocks fell roughly 40%. Gold rose about 5% that year and continued climbing into 2011. If you had a 10% gold allocation alongside your equity portfolio, it cushioned the blow.
• Early 2020 COVID crash: While stocks initially dropped alongside gold (everything sold off in the liquidity panic), gold recovered faster and hit new highs by mid-2020.
• 2022 rate-hike bear market: Stocks and bonds both fell. Gold was roughly flat — not great, but better than watching both your stocks and bonds decline simultaneously.

When it doesn’t

• During liquidity crises, gold initially sells off alongside everything else. In the March 2020 crash, gold dropped ~12% before recovering. When investors need cash, they sell whatever they can — gold included.
• Gold’s diversification benefit is most valuable for portfolios that already include bonds. XEQT is a 100% equity fund, so you’re not getting the classic “stocks and bonds both fall” scenario that gold protects against. If you held a balanced fund like XBAL (80/20 stocks/bonds), gold’s diversification role becomes more interesting.

For a pure equity investor holding XEQT, gold’s low correlation is a real advantage — but you need to weigh it against gold’s lack of income and lower long-term expected returns. Diversification is only useful if the asset you’re diversifying into actually pulls its weight over time.

5. The Long-Term Growth Comparison

Let’s talk about the number that matters most for wealth building: long-term compound growth.

Assume you invest $500/month for 25 years. Here’s what each path looks like:

A few observations:

• At realistic long-term return assumptions, XEQT beats gold by a significant margin. Even using a generous 7% assumption for gold (which is above its true long-term average of around 5-6% nominal), XEQT comes out ahead.
• The blended portfolio (90/10 XEQT/Gold) performs slightly worse than pure XEQT on total returns. The diversification benefit has a cost, and that cost is lower expected returns.
• Gold’s recent run has been exceptional, but periods like 1980-2000 (two decades of flat-to-negative gold returns) are a reminder that gold can go through very long droughts.
• XEQT also pays dividends along the way. Those quarterly distributions can be reinvested through DRIP, adding shares automatically. Gold gives you nothing to reinvest.

This is the core reason I’m biased toward XEQT: over the time horizons that matter for building wealth (15-30 years), equities have historically outperformed gold. And XEQT gives you that equity exposure in the simplest, cheapest, most diversified way possible.

6. Does XEQT Already Give You Enough Diversification?

This is the question at the heart of the debate. XEQT holds:

• ~45% US stocks (S&P 500, mid-caps, small-caps)
• ~25% Canadian stocks (TSX)
• ~22% International developed stocks (Europe, Japan, Australia)
• ~8% Emerging market stocks (China, India, Brazil, etc.)

That’s 9,000+ companies across every major sector — technology, healthcare, financials, energy, consumer goods, industrials — in 40+ countries. If one country or sector underperforms, others can pick up the slack. That’s diversification at a massive scale.

So what does gold add that XEQT doesn’t already provide?

Gold adds asset-class diversification. XEQT is diversified across geographies, sectors, and company sizes, but it’s still 100% equities. Gold is a different asset class entirely. It behaves differently than stocks, which means combining the two can reduce overall portfolio volatility.

But here’s the counterargument: if you have a long time horizon (10+ years) and a high risk tolerance, you probably don’t need reduced volatility. The whole point of being 100% equities is to accept short-term volatility in exchange for maximum long-term growth. Adding gold smooths the ride but also slows it down.

If you’re already comfortable with XEQT’s volatility and you’re not tempted to sell during market downturns, you arguably don’t need gold at all. The diversification is a solution to a problem you might not have.

Where it gets trickier is if you’re closer to retirement, have a lower risk tolerance, or have a shorter time horizon. In those cases, gold’s low correlation to stocks might genuinely help you sleep at night. But honestly, if you’re in that situation, you might be better served by a balanced ETF like XBAL or XGRO, which adds bonds rather than gold for ballast. For a deeper look at this, check out XEQT vs GICs where I cover how to think about safety in a portfolio.

7. When Gold MIGHT Make Sense (The Honest Assessment)

I promised to be fair to gold, so here’s my honest take on when a small gold allocation could make sense alongside XEQT:

Scenario 1: The “sleep at night” allocation (5-10%)

If you hold 100% XEQT and you find yourself anxious during corrections, adding 5-10% in a low-fee gold ETF like MNT could reduce your portfolio’s drawdowns by a small but meaningful amount. The cost is slightly lower expected returns. The benefit is you’re less likely to panic-sell during the next crash.

Who this is for: Investors with $100,000+ in XEQT who have some anxiety about market downturns but don’t want to switch to a balanced fund.

Scenario 2: The “tail-risk insurance” allocation (5%)

If you’re concerned about extreme scenarios — currency crises, extended geopolitical conflict, or a sustained loss of confidence in fiat currencies — a small gold position acts as a form of insurance. You hope you never need it, but it’s there if things get truly ugly.

Who this is for: Investors who think deeply about macro risks and want a small portfolio hedge without dramatically changing their strategy.

Scenario 3: Late-career or early retirement (10-15%)

If you’re within 5-10 years of retirement and starting to think about capital preservation, adding gold alongside bonds can create a more resilient portfolio. Gold and bonds often respond differently to economic conditions, so combining both with equities gives you three layers of diversification.

Who this is for: Investors in their 50s and 60s transitioning from pure growth to a blend of growth and preservation.

When gold does NOT make sense

• As a core holding. Gold should never be 20%+ of a long-term growth portfolio. It doesn’t generate income, and its long-term returns lag equities.
• As a get-rich-quick play. If you’re buying gold because it’s up 35% this year and you want to ride the wave, you’re speculating, not investing. Gold’s recent run could easily reverse.
• As a substitute for equities. If your investment timeline is 10+ years, you want to own productive assets (companies that earn profits and pay dividends), not an inert metal.
• If you’re just starting out. If you’re building your first portfolio and have less than $25,000 invested, keep it simple. 100% XEQT. Don’t overcomplicate things with satellite allocations until your core is solid.

8. How to Add Gold to an XEQT Portfolio (If You Decide To)

If you’ve read everything above and still want a small gold allocation, here’s how to do it sensibly:

Step 1: Decide on your allocation

I’d recommend 5-10% maximum for most investors. If you’re unsure, start with 5%. You can always add more later.

Step 2: Pick your gold ETF

My ranking for Canadian investors:

1. MNT (CI Gold Bullion Fund) — Lowest fees at 0.18%. Hard to beat.
2. KILO (Purpose Gold Bullion Fund) — Slightly higher at 0.23%, but backed by Canadian-vaulted gold at the Royal Canadian Mint. Nice if you want that extra layer of domestic custody.
3. CGL (iShares Gold Bullion ETF) — The household name, but at 0.55% you’re paying a premium for the BlackRock brand. Unless you specifically want iShares, MNT is the better deal.

Step 3: Decide on hedged vs. unhedged

• Hedged (CGL, MNT): You get pure gold price exposure. The currency movements between CAD and USD are neutralized.
• Unhedged (CGL.C, MNT.U): You get gold price exposure PLUS currency exposure. If the CAD weakens, you benefit. If the CAD strengthens, it hurts.

For simplicity, I’d recommend the hedged version so you can evaluate your gold position purely on the gold price without currency noise.

Step 4: Rebalance once a year

Set a date — your birthday, January 1st, whatever — and rebalance back to your target allocation. If gold has run up to 12% of your portfolio, sell a bit and buy more XEQT. If gold has dropped to 3%, sell some XEQT and buy more gold. This forces you to systematically buy low and sell high.

Step 5: Don’t watch the gold price daily

Gold’s daily price movements are noisy and stressful. If you’ve decided on a long-term allocation, commit to it and check in quarterly at most. Gold is a strategic holding, not a trading vehicle.

9. What About Holding Gold in Your TFSA vs. RRSP?

Since gold ETFs generate no dividends, the tax treatment is simpler than most investments. All of your return comes from capital gains (the price going up).

TFSA: Great choice for gold ETFs. All capital gains are completely tax-free. If your gold ETF doubles, you keep every penny. Since there are no dividends to worry about, and no foreign withholding tax issues (physical gold ETFs don’t hold foreign stocks), the TFSA is clean and simple.

RRSP: Also fine. Capital gains are tax-deferred. You’ll pay income tax when you withdraw in retirement. No foreign withholding tax complications since you’re holding Canadian-listed gold ETFs backed by bullion.

Non-registered account: Capital gains are taxed at the 50% inclusion rate when you sell. This is more tax-efficient than interest income (like GICs) but less efficient than having the gold in a registered account.

My suggestion: If you’re adding a small gold position, there’s no strong reason to prefer TFSA over RRSP or vice versa from a tax perspective. Just keep XEQT as the primary holding in all your accounts and add the gold where it’s most convenient.

10. My Recommendation: XEQT First, Gold Maybe Later

After looking at the returns, the volatility, the correlation data, and the real-world math, here’s what I’d tell any Canadian investor asking about gold:

For most people, XEQT alone is enough. It gives you global diversification across 9,000+ stocks, it costs 0.20% per year, it pays dividends, and it has historically delivered 8-10% annualized returns over long periods. That’s all you need to build serious wealth. Keep it simple, automate your contributions, and let compounding do its work.

If you want gold, treat it as a small satellite — not a core position. A 5-10% allocation in a low-fee gold ETF like MNT can slightly reduce portfolio volatility and provide some diversification against extreme scenarios. But it comes at the cost of lower expected returns and zero income generation.

Don’t buy gold because it’s up. Gold has been on a historic run, and the temptation to chase performance is real. But buying any asset after a huge run-up is usually a recipe for disappointment. If you decide gold belongs in your portfolio, it should be a permanent strategic allocation that you hold through both gold bull and bear markets — not a trade.

Don’t skip equities in favor of gold. If you’re choosing between XEQT and a gold ETF for your core portfolio, it’s not even close. XEQT wins on long-term returns, income generation, and adaptability to inflation. Gold is a complement, not a substitute.

My dad’s gold coins have done fine over 30+ years. But if he’d put that same money into a global equity index fund, he’d have significantly more today — and he’d have collected dividends the entire time. I love my dad, and I respect his conviction. But I’m sticking with XEQT.

This post is for informational purposes only and does not constitute financial advice. All returns cited are approximate and based on historical data — past performance does not guarantee future results. Always do your own research before making investment decisions.