How to Invest in Gold

Investing in gold has been a popular option for investors looking to diversify their portfolios and protect their wealth against inflation and economic uncertainty. In this article, we will explore various aspects of gold investment, including how to invest in physical and digital gold, the safest ways to invest in gold, and the best ways for beginners to invest in gold. We will also answer some commonly asked questions about gold investment, such as whether it is a good idea, how much to invest, and how long to hold gold.

There are several options available for investors looking to invest in gold. These options include physical gold, digital gold, gold ETFs, and gold mining stocks.

Each option has its own pros and cons, and investors should choose the option that best suits their investment goals, risk tolerance, and investment horizon.

Physical Gold (Gold Bullion)

Investing in physical gold means purchasing gold coins, bars, or jewelry. Physical gold has been a popular option for investors for centuries, and it remains a viable option for those looking to invest in gold today.

This is one of the more traditional and honestly emotionally satisfying ways to own gold.

You can purchase a gold bullion in bars or coins and although it may be pricier than simply buying an ETF, especially if you pay cash.

But on the other hand, you’ll have the satisfaction of looking at and touching the gold.

We must mention though that owning physical gold is satisfying but it can come with some drawbacks and one of them is that you need to ensure your gold to safeguard it (unless of course you want to run the risk of it being stolen).

Pros of Investing in Physical Gold:

Physical gold can be held in your possession, providing a sense of security and control over your investment.
Physical gold can be used as a hedge against inflation and economic uncertainty.
Physical gold is a tangible asset that can be easily bought and sold.
You can buy physical gold with cash.

Cons of Investing in Physical Gold:

Purchasing and storing physical gold can be expensive.
Physical gold can be stolen or lost, requiring insurance and additional security measures.
When it comes time to sell physical gold, finding a buyer and getting a fair price can be difficult.
You may need to pay taxes on gold, especially if you bought physical gold with cash.

Where to purchase gold bullion?

You can purchase gold bullion in many different ways, here are some listed:

Through your local pawn shop
A certified gold dealer
Through an online brokerage suck as APMEX of JM Bullion to mention some

TIP: Keep in mind gold’s spot price in the markets (this is the price per ounce right now in the market) as you’re buying so you can get the best deal you can with any of the gold brokers mentioned above.

Here are the best gold bullion brokers in a nutshell:

Digital Gold

Also known as gold-backed cryptocurrencies, digital gold is a relatively new option for investors looking to invest in gold. Digital gold is a type of cryptocurrency that is backed by physical gold held in reserve.

Pros of Investing in digital Gold:

Digital gold offers the convenience of trading cryptocurrencies while being backed by physical gold.
Digital gold eliminates the need for physical storage and transportation of gold.
Digital gold can be traded 24/7, making it a more accessible investment option.

Cons of Investing in digital Gold:

Digital gold is still a relatively new investment option, and it is not yet clear how it will perform over the long term.
Digital gold can be subject to cyber-attacks and hacking, posing a risk to investors’ funds.
Digital gold is not yet widely accepted as a form of payment, limiting its utility as an investment option.

Gold ETFs

The way we define Gold ETFs is that they are exchange-traded funds that invest in physical gold. Gold ETFs are designed to track the price of gold and provide investors with exposure to the gold market without the need for physical storage

ETFs or Gold Unit Trusts?

We’ll go into ETF’s a bit deeper in this section. ETFs are Exchange-traded funds and they basically purchase gold on behalf of the investor.

So whenever you buy a share of an ETF you are buying the equivalent of that amount in gold, just not physically of course.

The ETF tracks the commodity price so whenever the underlying asset price (Which in this case is gold) increases, then the value of your ETF increases semi proportionally to the rise of price in said asset.

Pros of Investing in Gold ETFs:

Gold ETFs offer investors a convenient way to invest in gold without the need for physical storage.
ETFs are highly liquid and can be easily bought and sold on stock exchanges.
Securities Gold ETFs can be used as a hedge against inflation and economic uncertainty.

Cons of Investing in Gold ETFs:

ETFs charge management fees, which can eat into investors’ returns over time.
Gold ETFs do not offer investors the same sense of security and control over their investment as physical gold.
These financial instruments can be subject to market volatility, leading to potential losses for investors.

Gold ETFs you can buy

Here are the three of the largest ETFs, these include:

ETF	Expense ratio
SPDR Gold Shares (GLD)	0.4
iShares Gold Trust (IAU)	0.25
Aberdeen Standard Physical Gold Shares ETF (SGOL)	0.17

Gold Mining Stocks

Gold mining stocks are shares of companies that mine for gold. Investing in gold mining stocks is a way to gain exposure to the gold market while also investing in a company that has the potential for growth and profitability.

Pros of Investing in Gold Mining Stocks:

Stocks can offer investors the potential for capital gains and dividends.
Gold Stocks are highly liquid and can be easily bought and sold on stock exchanges.
Mining stocks can provide investors with exposure to the gold market while also offering the potential for growth and diversification.

Cons of Investing in Gold Mining Stocks:

Stocks can be subject to industry risks, such as changes in mining regulations or declining gold reserves.
Gold Stocks can be subject to company-specific risks, such as management issues or production problems.
Mining stocks can be more volatile than physical gold, leading to potential losses for investors.

Gold stocks can be one of the easiest and most lucrative ways to invest in gold, this is a great way to take advantage of rising gold prices because when you buy a gold mining company stock you own the business that produces the commodity itself.

This can be one of the best alternatives for investors who do not want to get hands on physical gold and don’t want to pay the (low) operating cost of gold ETFs.

Gold stocks can be (depending on the company of course) one of the most stable long growth stocks you can buy on the market.

Things to watch out for when buying gold mining stocks

Management

With great management comes greater profits. A gold mining company with great management can reduce production costs and increase the company’s profitability.

Gold Mining Stock’s PE ratios

One way to look at this is through the PE ratio of gold mining companies.

You want to make your due diligence when buying assets like gold mining stocks (or just any other financial asset) but for the purpose of this guide we will focus on the PE ratio.

What is a good PE ratio on a gold stock?

The P/E ratio is calculated by dividing the stock’s current price by its latest earnings per share. A high P/E ratio suggests that investors’ expectations regarding that stock are high, however if the P/E ratio is too high is may also mean that the stock is overvalued.

Usually a good P/E ratio for gold stocks is between 25 and 50, anything below and you might be looking at an undervalued stock, but anything above the 50 may mean that the stock price is overvalued with regards to its earnings.

Comparison table on ways to Invest in Gold

Investment Option	Pros	Cons	Risk Level
Physical Gold	Tangible asset, provides a sense of security, can be used as a hedge against inflation and economic uncertainty	Requires storage and insurance, can be difficult to buy and sell, may be subject to counterfeiting and theft	High
Digital Gold	Convenient and easy to buy and sell, offers a low-cost alternative to physical gold, no storage or insurance costs	Counterparty risk, not backed by physical gold, potential for fraud and hacking	Medium to High
Gold ETFs	Provides exposure to gold prices without physical ownership, easily traded on stock exchanges, low fees	Subject to market fluctuations, not backed by physical gold, ETF sponsor counterparty risk	Medium
Gold Mining Stocks	Potential for high returns, provides exposure to gold industry, allows for diversification in the stock market	Vulnerable to industry and company-specific risks, not directly tied to gold prices, may not track gold prices closely	High

Some Common Questions about investing in Gold

Safest Ways to Invest in Gold

Investing in gold can be a safe way to diversify your portfolio and protect your wealth, but choosing the safest investment options is essential. The safest ways to invest in gold include:

Physical Gold from Reputable Dealers

Investing in physical gold from reputable dealers is a safe way to invest in gold. Reputable dealers can offer high-quality gold products, reliable customer service, and secure storage options.

ETFs from Established Providers

Investing in gold ETFs from established providers is a safe way to invest in gold. Established providers have a track record of managing gold ETFs and can offer investors reliable investment options.

Gold Mining Stocks from Established Companies

Investing in gold mining stocks from established companies is a safe way to invest in gold. Established companies have a track record of profitability and can offer investors the potential for growth and diversification.

What is the Best Way to Invest in Gold?

The best way to invest in gold depends on your investment goals, risk tolerance, and investment horizon.

Physical gold is a good option for investors who value security and control over their investments, while digital gold is a good option for investors who value convenience and accessibility.

ETFs backed by Gold and gold mining stocks are good options for investors who want exposure to the gold market without the need for physical storage.

How Can a Beginner Invest in Gold?

Beginners can invest in gold by starting with small amounts and choosing investment options that match their investment goals and risk tolerance.

Investing in gold ETFs or gold mining stocks can be a good option for beginners who are looking to gain exposure to the gold market without the need for physical storage.

Aditionally you can check out our detailed guide for those of you who want to invest in gold but are beginner investors.

Is Investment in Gold a Good Idea?

Investment in gold can be a good idea for investors looking to diversify their portfolios and protect their wealth against inflation and economic uncertainty.

However, it is important to choose safe and reliable investment options and to understand the risks and potential returns associated with investing in gold.

How Much to Invest in Gold?

The amount to invest in gold depends on your overall investment portfolio and investment goals. Experts recommend investing between 5% and 10% of your portfolio in gold.

How Long Should I Hold Gold for?

The length of time to hold gold depends on your investment goals and investment horizon. Experts recommend holding gold as a long-term investment and using it as a hedge against inflation and economic uncertainty. This means at least 3-5 years.

Can You Get Rich from Buying Gold?

Buying gold can provide investors with potential returns, but it is not a get-rich-quick scheme. The potential returns from gold investment depend on the market conditions and the performance of the investment option chosen.

Can You Lose Money Investing in Gold?

Investing in gold can be subject to market volatility and investment risks, leading to potential losses for investors.

It is important to choose safe and reliable investment options and to understand the risks and potential returns associated with investing in gold.

Is Gold Worth Investing in 2022?

Gold is still considered a viable investment option in 2022, as it can provide investors with a hedge against inflation and economic uncertainty.

However, it is important to choose safe and reliable investment options and to understand the risks and potential returns associated with investing in gold.

How Much Gold Should I Hold?

The amount of gold to hold depends on your overall investment portfolio and investment goals. Experts recommend investing between 5% and 10% of your portfolio in gold, but the exact amount will depend on your individual circumstances.

Bottom Line

Investing in gold can provide investors with a safe and reliable way to diversify their portfolios and protect their wealth against inflation and economic uncertainty.

There are several ways to invest in gold, including physical gold, digital gold, gold ETFs, and gold mining stocks.

Each investment option has its own advantages and disadvantages, and it is important to choose the safest and most reliable investment option that matches your investment goals and risk tolerance.

Investors should also understand the risks and potential returns associated with investing in gold and should consider the amount of gold to hold in their portfolios based on their individual circumstances.

Whether you are a beginner investor or an experienced investor, investing in gold can be a valuable addition to your investment portfolio when done in a safe and strategic manner.

How to Invest in Gold | A detailed In-Depth Guide