Even in this age of cryptocurrency trading, gold remains an important – and refreshingly tangible – tradeable commodity. On this page you’ll learn about the different avenues you can take if you want to invest in gold.
For those of you ready to invest, check out the links below. If you need more coaching first, keep reading.
Buy physical gold, right now
Gold is tangible, finite, and liquid, making it a popular investment choice even in an era when so many other choices exist. Ready to make your first gold purchase? We’ve reviewed some of the top websites for buying gold coins and bars.
Trade gold online, right now
Want to trade gold rather than buy it? We’ve got you covered, with a breakdown of the best brokers for trading gold.
How to buy gold online in 6 simple steps
Before you get started buying gold online, you’ll want to read up on the different available investment types, so you can pick which one you want to go with. Here’s a run-through of the steps you’ll want to take on your way to buying.
- Choose your broker or seller. Picking a gold broker/seller you can trust is vital. Some of the attributes to look for in a gold broker/seller include the ability to offer many different kinds of physical gold, reliable storage options, and reasonable commission rates for sales.
- Choose your gold. Gold is most commonly made into two different products – bars and coins. Individual bars and coins can come in different weights, thus generating different amounts of value. Choose the configuration that you like best before making your purchase.
- Select your storage options. There are two main options you can use when it comes to storing your gold: Have your broker/seller store it for you, or have the gold delivered to you, then pay for your own storage and insurance. Seller storage fees will vary but, as an example, one major gold seller charges $125 per year if the value of the gold is less than $20,000. Choose the storage method that makes sense for you, always keeping in mind the need to have secure storage and proper insurance in place, no matter which method you choose.
- Lock price and confirm. Gold prices fluctuate all the time. So when you’re preparing to buy gold, you’ll need to lock in your buy price before making the actual purchase.
- Select payment method. There are many different payment methods you can use when purchasing gold. There are more traditional methods such as bank transfers, debit cards, and credit cards, as well as newer methods, such as PayPal or in some cases, cryptocurrency. When screening for the best gold seller, you’ll want to keep your preferred payment method in mind and make sure your seller of choice accepts it.
- Buy your gold! You’ve done all the necessary due diligence. Now just click Buy. Congratulations, you’ve just made a gold purchase.
Types of gold you can buy
Here’s a rundown of the different mechanisms you can use to buy gold.
Here are the pros and cons of building your gold investment in the form of bars.
- Pros: Since there’s no elaborate manufacturing or packaging process involved in forming them, gold bars offer the least expensive price per ounce to invest in gold. A gold bar also takes up less storage room on a per-ounce basis, no surprise given that gold bars were initially designed specifically for ease of storage. Gold bars offer a long-term store of value, making them a good asset to hold on to, especially as a hedge against economic turmoil and stock market crashes.
- Cons: Physical gold is always vulnerable to theft. Also, if you buy a larger gold bar you might have trouble selling it, simply because you’ll need to find a buyer who can afford it. Bigger bars come with the added expense of requiring an official assay before they can be sold, which makes sense since counterfeiters tend to prefer big bars, since they’re worth a lot more.
Gold coins and collector coins
Gold coins are minted in a number of different places, including the United States, Canada, Mexico, and Australia. Here are the pros and cons associated with this type of investment:
- Pros: Gold coins are value-dense, easy to store, portable, and can be liquidated anywhere in the world. They’re low maintenance, impossible to hack or erase, and a great hedge against market volatility.
- Cons: Coins have a more intricate design, making them prettier than plain bars…but also more expensive to produce and thus more expensive on a per-ounce basis to buy. They’re also more vulnerable to theft, and don’t produce interest or dividends.
A gold futures contract is an agreement between an investor and a seller in which the investor agrees to purchase gold from the seller at an agreed-upon price based on a future date.
- Pros: Investors gain the ability to pay a certain amount when the deal is made, then pay the rest on the agreed-upon date. So if you choose to make this a short-term investment, you might never pay for all the gold you purchased, instead paying just a percentage up front. Also you don’t need to keep gold futures stored anywhere.
- Cons: The gold futures market can be volatile, making significant losses a possibility. Since you’re betting on future results, gold futures have a built-in price differential. If you buy a futures contract at $1.50 above the current gold price on a 30-day term, the value of the contract ostensibly drops 5 cents a day until the closing date.
Where to buy and store gold – physical vs digital
There are a few options to buy and sell gold online, depending on your specific strategies and preferences.
Physical – Online storage
If you don’t want to deal with the hassle and security risk that comes with storing gold yourself, you can entrust the task to a reputable online gold seller that also offers storage services. The downside is that you’ll have to pay an annual fee for that storage, usually more than $100 a year and sometimes a fair bit more. So if your total gold investing budget is, say, less than $1,000, a significant chunk of it would be spent paying the seller to store the gold for you.
Physical – Home delivery
You can also choose to store gold yourself, receiving home delivery of gold, then finding a secure storage space in your home. Some investors feel better knowing that their gold is always within arm’s length. Plus if you plan to hold gold long-term, you only need to invest once in a vault, rather than paying storage fees year after year. On the downside, if you’re loose-lipped about storing gold in your home, you could make your home and your gold a potential target for burglars. You can (and should) buy insurance to guard against theft, but of course that will carry with it additional cost.
Physical – High street brokers
If you want to store your gold somewhere that’s not your home but also prefer not to transact online, you can visit your local high street broker. This way, you get to talk to a person face-to-face, explaining your storage needs. As with online seller/storage firms, high street brokers will process your gold purchase, then take care of storage for you, removing the hassle and security worries that come with stashing gold in your home.
If you want a more indirect way to invest in gold, you can buy shares in a gold mining stock. If you buy the right gold mining stock right before that company makes a big discovery in one of its mines, your gains could far outpace that of physical gold itself. On the other hand, a spike in gold prices doesn’t guarantee a commensurate spike in gold mining stock prices; in 2001, gold mining stocks fell sharply despite robust gold prices, due to the bankruptcy of two major mining companies. Rising labor and production costs damaged gold mining stock prices in 2005 and 2007, even as the price of gold remained high.
Gold mutual funds and ETFs
When buying a gold mutual fund or Exchange Traded Fund, you’re investing in many different gold mining stocks at once. By diversifying your gold mining stock holdings, you can smooth out the rough edges that can come with putting all your eggs in one or two baskets. But there’s a downside. When you buy a collection of gold mining stocks it’s not as pure a gold investment as buying gold bars or coins. Consequently, your investment could end up underperforming a straight-up purchase of physical gold.
ETC – Gold contract
An Exchange Traded Commodity (ETC) contract offers traders exposure to various commodities, including gold. Traded in shares on exchanges like shares of stock, the ETC gold contract’s price fluctuates in value based on gold’s price changes. Whereas an ETF invests directly in physical commodities or futures contracts, an ETC is a debt note backed by an underwriter. The commodities in the ETC collateralize that note.
A relatively traditional way to buy, sell and store gold is to do so through a bank. Banks already come with their own vaults, so they have storage covered, but they might charge more to sell you gold than an online broker typically would. Note that you can’t use banks for gold transactions in the UK but it is something you can do in the U.S. and certain other countries.
We suggest reading our educational guides and courses to learn more about various investment and storage methods. That said, if you’re ready to invest, just click on the links above.
How to sell your gold
When selling your gold, there are multiple factors to consider. Ask yourself these questions:
- Is the gold seller/dealer reputable? A long history of satisfied customers, as well as positive online reviews, will help you confirm the quality of the dealer’s reputation.
- Is the gold seller/dealer’s commission competitive? There are many different entities that will sell you gold. So there’s no need to overpay for transaction costs. Find a dealer that offers reasonable fees.
- What’s your timeframe for selling? Is your goal to try to make a quick profit, or are you planning to hold for the long haul? This will significantly influence when you sell, regardless of whether the asset you buy is physical gold, a gold contract or a collection of gold-related assets such as an ETF or mutual fund.
- What is the current price of physical gold? It could be way off its recent highs. That could lead you in one of two directions: You could choose to hold for longer and hope for a bounceback, or you recognise the opportunity cost associated with holding gold instead of investing your money in assets that are performing better, prompting you to sell.
- What is your hedging strategy? Gold is often used as a way to hedge against economic downturns and stock market slumps. But those can come in two forms. You could spot a bear market for stocks – watch gold shoot up in price – and opt to cash in right away and bank a healthy profit. Or you could simply hold your gold for decades, using it as more of a break glass in case of emergency asset.
Our top tips for investing in gold
You now have a broad overview of how to invest in gold. Here’s a quick tip sheet to review before you make your move:
- Select the type of gold you want: Bars or coins, for instance. Within each type there are typically many subtypes, ranging from different-sized bars to all manner of different coins, including new or antique coins and coins hailing from different countries.
- Have a sound plan for when you want to sell. Whether you’re looking for a quick turnaround or a long-term hold, know your investment goals before you actually invest.
- Select your storage options and location. Do you prefer to outsource the hassle and worry of storage to a gold seller? Or are you willing to find a secure place in your home, buy insurance, then store the gold yourself? Ask yourself what works best for your needs.
- Assess the quality of the gold. The benchmark for high-quality gold for investors is typically greater than 90%. That makes 22k gold something of a gold standard, because it’s 91.7% pure (22 out of a possible 24 karats = 91.7%)
- Know how much you’re paying in premiums, commissions and prices. Gold bars are cheaper than gold coins on a per-ounce basis, because there’s less manufacturing and packaging labor involved. Different gold brokers offer different commission structures. Ascertaining how much of a premium a seller will charge on top of the gold spot price is a vitally important detail to establish before you dive in.
- Don’t let emotions cloud your judgement. Gold is a famously intoxicating asset to hold. But it’s still just a form of investment asset, like a stock, bond, or forex contract. Make your gold investing decisions based on sound logic and don’t let fear, greed or infatuation with a shiny metal enter into your decision making.
Try some of our investment courses for beginners
Not quite ready to invest in gold? That’s OK. Start here to learn the fundamentals of buying, selling, and storing gold via our easy-to-understand courses. By learning and following the latest gold news, you’ll be better equipped to become a gold trader or gold investor.