Historically, there’s also a low or even negative correlation between gold and other markets like stocks, real estate, and crypto. Those haven’t exactly done well lately, so let’s take that as another vote in favor of gold.

Because of all this, I recently bought some gold myself. This isn’t investment advice though. Please do your own due diligence and don’t make a decision based on this intro alone. With that said, if you are going to invest in gold, here are your best options.

1. Physical gold (aka bullion)

Your first option is to simply buy the actual, physical gold itself, aka gold bullion. The term “bullion” refers to precious metal that’s been melted into bars, ingots, or coins.

Gold bullion is the most direct way to invest in gold and also provides the emotional value of letting you see and hold the shiny metal. If you’re intrigued by this idea, you have a few options to consider.

Option A: Gold bars

If you’re a true baller and have a few million dollars to spare, look no further than straight-up gold bars. The classic trapezoid-shaped ones, known as “ingots”, are the ones you want. And enough of them for you to make a nice pyramid-shaped stack.

Seriously though, gold bars are a legit option for any investor. But they do have a rather steep entry point.

While they come in various sizes, they’re most commonly available as one- and 10-ounce bars. With gold’s current spot price of ~$1,820 per ounce, dollar-cost-averaging into bars isn’t really an option for most investors.

And a one-ounce bar isn’t exactly a “brick” either. Measuring just 0.95 x 1.65 inches (24 x 42 mm), it’s more like a piece of Lego. Good luck impressing your friends with that thing. Luckily for us, we have some lower-priced alternatives.

Option B: Gold coins

If your vibe is a little less drug lord and a little more Scrooge McDuck, gold coins are worth a closer look. While the most common gold coins weigh one or two ounces, some weigh just a half or even a quarter of an ounce.

Some of the most popular bullion coins are the South African Krugerrands, the Canadian Maple Leafs, the Chinese Gold Pandas, and the American Gold Eagles. These also have the most liquid markets.

A 1-ounce American Gold Eagle coin

The “problem” with these coins is that they’re also bought as collectible items. Many people prize them for their history, scarcity, or aesthetics. This means that they typically trade at a premium to their actual gold content and aren’t a pure bet on the commodity itself.

But if you like the idea of gaining exposure to both gold and a collectible at the same time, gold coins might be right up your alley. While I don’t own any myself, I’m personally much more intrigued by the idea of owning a cool-looking coin than a Lego-sized bar.

Option C: Gold jewelry

Since any piece of gold jewelry at +14 karats is considered an investment in gold, it deserves a quick mention. The investment case isn’t nearly as straightforward as coins though, let alone bars.

First up, there’s the question of purity. Pure gold is 24 karats and obviously demands a premium over less pure alternatives. Most jewelry belongs in the latter category. Because of this, it’s essential that you only buy gold jewelry from a reputable dealer/seller.

Lastly, as most women will know, there’s a lot more to a piece of jewelry than its raw materials. Even in the rare case where the piece itself is only made of gold and no other materials, its price is also based on the design, history, brand, and sentimental value.

All of this means that the retail price of gold jewelry will usually far exceed the meltdown value. As an investor seeking exposure to gold, I don’t see a compelling reason to buy jewelry. And now you know why.

Pros and cons of buying physical gold

Taking possession of literal gold is clearly your most direct way to invest in it. That’s a big plus. It’s also relatively easy to buy through reputable online dealers like APMEX or JM Bullion. You may even be able to source your gold at a local dealer or collector, or even a pawn shop.

One potential downside to consider is storage and security. You’d maybe want to get your gold insured, whether you decide to store it yourself or at a third-party storage facility. What’s right for you will depend on the size of your investment (i.e., your pile of gold).

You might also find it difficult to sell your gold if you’d ever want to. Even with new online marketplaces, the market for bullion bars and coins is still relatively illiquid. Especially when you’re trying to sell as an individual. You may need to accept a discount if you want it done quickly.

All in all though, owning physical gold is fairly hassle-free. Especially compared to other commodities. Good thing we’re not buying and storing oil, wheat, or soybeans for instance!

It’s still not seamless though. So let’s now turn to some options that provide most of the benefits of buying physical gold without any of the drawbacks.

2. Gold bullion funds

If I didn’t manage to sell you on the idea of having gold bars shipped, stored, and insured, I’ve got good news for you. Certain exchange-traded funds (ETFs) or exchange-traded commodities (ETCs) in the EU exist with the sole purpose of investing in gold bullion.

In other words, investing in a gold bullion ETF or ETC is essentially the same as buying physical gold. At least from an investment perspective, which is what we care about. And you won’t have to worry about any of the logistics around handling the gold bullion itself.

Gold is up more than 500% since 1999 but was a terrible investment from 2012 to 2016 (ref.: Markets Insider)

The “exchange-traded” part means that they’re just as easy to buy (and sell) as any other stock. The share price of these ETFs and ETCs simply track the spot price of gold.

What’s more, most of them trade at much more affordable share prices than gold bars and coins. This enables you to gain exposure to gold with a small amount of money. Many of them are highly liquid as well so you’ll always be able to sell your position if you need to.

The funds available to you depend on your jurisdiction so you’ll need to do some research on your own. They all compete on fees, trustworthiness, brand recognition, and share price (for accessibility).

On the North American market, these are some of the largest and most trusted funds:

• SPDR Gold Shares ETF (GLD) is the largest physically backed gold fund in the world. Each share of GLD is the equivalent of one-tenth of an ounce of gold, so owning 10 shares is technically the same as owning an ounce. The annual fee is 0.40% (e.g., $40 on a $10,000 investment).
• SPDR Gold MiniShares (GLDM) is run by the same company as GLD and tracks the same gold deposits. GLDM simply has a lower share price, a smaller amount of assets under management, and a lower daily trading volume. Its annual fee is also significantly lower at 0.10%.
• iShares Gold Trust (IAU) is managed by BlackRock and has become a very popular alternative to GLD. It’s still not quite as liquid as GLD though. The annual fee is 0.25%.
• iShares Gold Trust Micro (IAUM) is the smaller sibling of IAU, just as GLDM is to GLD. It’s known as the “cheapest U.S. gold ETF” with an expense ratio of 0.09%.
• Aberdeen Physical Gold Shares ETF (SGOL) stores its gold in Zürich and London vaults. Every single gold bar is accounted for individually by an independent auditor. The annual fee is 0.17%.
• GraniteShares Gold Trust (BAR) is another highly transparent fund. Its vault is located in London and with ICBC Standard Bank PLC as the custodian. It’s audited twice a year by the independent auditor Bureau Veritas. The annual fee is 0.17%.

3. Gold miners and other stocks

Another interesting way to invest in gold is to buy stocks of companies in the gold industry. Gold mining and refining companies in particular are popular options.

The best way to think about these stocks is like a leveraged bet on gold. If gold goes up in value, the stocks of the best-run companies will typically outperform the underlying commodity itself. On the flip side, the poorly-run ones will see their stocks underperform.

This means that stocks like these aren’t pure bets on gold. They’re a lot riskier and require you do a lot more due diligence. If you simply want exposure to gold, I wouldn’t recommend these stocks unless you’re excited by the research and the higher beta.

Some of the largest gold mining companies include Newmont Corp. (NEM), Barrick Gold Corp. (GOLD), and Franco-Nevada Corp. (FNV). The latter stands out by not owning any gold mines. Instead, it buys the rights to royalties from other gold miners.

4. Gold miner ETFs

Just as we’ve got ETFs that track the price of gold bullion, we’ve got some that track a basket of gold mining companies. This provides a great way to invest in the aforementioned companies without having to pick individual names yourself.

All ETFs aren’t created equal though. Some focus on well-established miners with proven track records. Others specialize in newer miners with a higher potential upside but additional risk as well. They all charge an annual fee, just like the gold bullion ETFs.

I have listed some of the most popular funds below.

• VanEck Vectors Gold Miners ETF (GDX) is a passively managed fund that tracks the NYSE Arca Gold Miners Index, a basket of gold mining and refining companies. The annual fee is 0.51%. Check out VanEck Vectors Junior Gold Miners ETF (GDXJ) as well.
• iShares MSCI Global Gold Miners ETF (RING) is issued by Blackrock and gives you exposure to 40 global stocks that earn their revenues primarily from mining activities. The annual fee is 0.39%.
• Sprott Gold Miners ETF (SGDM) gives you exposure to larger-sized gold companies listed in Canada and the US by tracking the Solactive Gold Miners Custom Factors Index. The annual fee is 0.50%.
• U.S Global GO GOLD and Precious Metal Miners ETF (GOAU) tracks the index of the same name, made up of a wide variety of companies in the precious metal industries. It’s comprised of both growth and value stocks in developed markets. The annual fee is 0.60%.

Key takeaways

Gold is one of the oldest and most battle-tested alternative investments of all time. It’s a great diversifier and a hedge in turbulent times. Buying the physical gold itself is still one of your best options. Online marketplaces like JM Bullion and APMEX have made it easier than ever.

Buying physical gold (aka gold bullion) isn’t hassle-free though. Shipping and storage come with the risk of loss, damage, and theft. Insurance and a proper storage facility are essential.

ETFs that track the price of gold bullion give you the same investment exposure and none of the hassle. And they do so for a modest fee. The ones I’ve mentioned in this guide all charge between 0.09 and 0.40% per year.

If you’re bored by the idea of plain vanilla gold bullion, you always have the option of investing in companies in the gold mining industry. They benefit from rising gold prices and can provide you with even higher returns — if they’re run properly. Picking the right ones can be tricky.

Once again, ETFs can make our lives a lot easier. We’ve got several gold miner ETFs that track a basket of companies. Some cover a wide spectrum while others focus on early-stage miners, well-established companies, specific geographical regions, and so on.

Whichever option you go with, I’d love to hear your thoughts. What’s your preferred way to invest in gold and why? Feel free to share your comments here or reach out to me directly 🙏