With the gold price hovering near all-time highs, should you buy S&P/ASX 200 Index (ASX: XJO) gold stocks or gold exchange-traded funds (ETFs)?

We'll dig into that million-dollar question below.

But first…

What's been sending the gold price flying?

ASX 200 gold stocks and gold ETFs alike have been shining bright as the yellow metal has charged from one record high to another.

On Monday, gold was trading for US$3,283 per ounce. That's down some 4% from the recent high of US$3,432 per ounce, notched on 6 May. But it still sees the gold price up more than 40% since the US$2,336 per ounce that bullion was fetching this time last year.

Gold has been charging higher amid ongoing strong demand from central banks, falling interest rates (gold doesn't offer any yield itself and tends to perform better in low or falling interest rate environments), and its haven status amid plenty of geopolitical uncertainty.

As for what's ahead for ASX 200 gold stocks and gold ETFs, I believe all three factors will likely stay in play for the next year or more. This should see the gold price continue to break into new record territory.

Which brings us back to our headline question.

ASX 200 gold stocks or ASX ETFs?

The answer to this question largely depends on your risk tolerance.

Historically, ASX 200 gold stocks tend to move significantly more than any changes in the gold price. That's why you may hear it said that they're 'leveraged' to the gold price. This is because the miners' costs to dig the yellow metal from the ground are fairly fixed. Meaning any increase or decrease in the gold price will have an expanded impact on their profits and share prices.

So, if you're looking for a lower-risk option to invest in gold in the present environment, you could buy the ETFS Metal Securities Australia Limited (ASX: GOLD). This ETF is intended to track the price movements of physical gold in Aussie dollars. This ASX ETF has returned 42% over 12 months (as at 31 March).

Another option is to invest in a basket of global gold miners (including ASX 200 gold stocks) via a gold miners' ETF. If that greater level of diversity is of interest, you could buy the VanEck Vectors Gold Miners ETF (ASX: GDX). GDX has returned a total of 42% over 12 months (as at 31 March).

The riskier, but potentially more rewarding option, is to dive in and buy a few ASX 200 gold stocks you think could outperform both the gold price and a group of their peers. If you're not comfortable doing the research yourself, be sure to reach out for some expert advice.

Now, here's what I mean on the risk and reward front.

While most of the 10-plus ASX 200 gold stocks are up around 30% to 50% over the past 12 months, some have shot far higher, while a few have underperformed.

The Bellevue Gold Ltd (ASX: BGL) share price, for example, is down 46% in a year.

On the other side of that golden coin, Gold Road Resources Ltd (ASX: GOR) shares have surged 103% in a year, while the Evolution Mining Ltd (ASX: EVN) share price has rocketed 116%.

So, should you buy ASX 200 gold stocks or ASX gold ETFs?

For some decent diversity, you may wish to consider doing both.