For centuries, gold has been sought after as a source of value. And for good reason. Gold has remained resilient in the face of numerous recessions, market crashes, high-inflationary periods and other times of economic volatility.
And in the midst of global economic and geopolitical uncertainty, gold spiked to an all-time high of more than $2,700 per troy ounce in October 2024.
That’s a far leap from its price of under $500 at the turn of the millennium.
Despite some setbacks in November, gold is expected to peak at $3,000 per troy ounce by December 2025, according to a forecast by Goldman Sachs.
So it’s not surprising that many investors want to diversify their portfolios with gold. But investing in gold is not a one-size-fits-all strategy. There are many ways to benefit from the value of bullion. So it’s important to understand the potential benefits and risks of each before you pursue gold.
Investing in Gold ETFs
One of the easiest ways to benefit from the value of gold is by investing in a gold exchange-traded fund (ETF). Gold ETFs are designed to track gold markets.
Some of these ETFs directly invest in physical gold. Others invest in the stocks of companies involved in the gold trade such as mining firms.
You can purchase shares of gold ETFs through traditional brokerage accounts much in the same way you would buy shares of a common stock or ETF.
This means you can potentially benefit from positive movements in the gold markets without having to buy and store the physical metal.
- SPDR Gold Shares (GLD)
- SPDR Gold MiniShares Trust (GLDM)
- iShares Gold Trust (IAU)
- iShares Gold Trust Micro (IAUM)
- Franklin Responsibly Sourced Gold ETF (FGDL)
- abrdn Physical Gold Shares ETF (SGOL)
- VanEck Merk Gold ETF (OUNZ)
- VanEck Gold Miners ETF (GDX)
- Goldman Sachs Physical Gold ETF (AAAU)
- GraniteShares Gold Trust (BAR)
The average gold ETF expense ratio is 0.65 percent, according to research by ETF.com. That translates to $65 in fees for every $10,000 invested.
Buying Gold Stocks
Another way you could benefit from gold’s price movements is by investing in gold stocks. These are the stocks of companies involved in the extraction, production and sale of gold. They can be gold mining firms and gold streaming companies that purchase royalties contracts from mines to purchase gold at a discount and sell at market value.Just as with investing in any other stock, you could gain from the positive performance and revenue of gold stock companies. And you can purchase shares of gold stocks through a brokerage account as you would with a common stock.
Another key benefit is that some gold stocks pay dividends. A dividend is a payment in the form of cash or additional shares paid to stockholders based on the company’s profits. This can provide a steady stream of income while you hold gold stocks.
But here too, it’s important to do your homework. Gold stock companies may be affected by various factors including the price of gold, supply and demand dynamics, geopolitical conditions, and the financial health of the company selling the stock. Understanding these variables can help you decide which gold stocks may best be suited for your portfolio.
- New Gold Inc (NGD)
- Barrick Gold Corp. (GOLD)
- Agnico Eagle Mines Ltd (AEM)
- Coeur Mining Inc (CDE)
- Iamgold Corp (IAG)
- Kinross Gold Corp (KGC)
- Gold Fields Ltd. (GFI)
- Harmony Gold Mining Co Ltd ADR (HMY)
- Endeavour Silver Corp (EXK)
Opening a Gold IRA
Considering the economic volatility of the past few decades, it’s no wonder many investors want to add gold to their retirement portfolio.One way to do that is by opening a gold individual retirement account (IRA). A gold IRA holds physical gold. And it offers the same tax advantages as ordinary IRAs.
As with a traditional IRA, your contributions are tax-deductible. And your investment’s growth is tax-deferred until you make qualified withdrawals when you reach age 59-and-a-half.
With a Roth gold IRA, your contributions won’t be tax-deductible. But you can make qualified tax-free withdrawals if you’re at least 59-and-a-half years old and the account has been open for at least five years.
But there are some things to look out for when opening a gold IRA. A gold IRA is a type of self-directed IRA. These types of IRAs don’t undergo the same level of federal regulation as registered investment advisors (RIAs) or registered broker-dealers that offer common IRAs. Self-directed IRA custodians aren’t required to evaluate the legitimacy, performance or quality of investments held in these accounts. That responsibility falls entirely on you.
And because the IRS requires you to store the gold held in your IRA within government-approved depositories, you may also face storage and maintenance fees ranging from $100 to $300.
Physical Gold
If you want to directly invest in gold, you can always purchase, manage, and sell the metal on your own. You can buy gold coins or bars from government mints, private mints, precious metal dealers and jewelry stores.But you should keep your eyes peeled for gold that is at least 0.999 fine. Some coins that meet these standards include the American Gold Buffalo coin, the Canadian Gold Maple Leaf and the South African Krugerrand.
But before you purchase physical gold, you should be aware of the costs and risks associated with it.
The spot price of gold is the current price of the precious metal per troy ounce for immediate delivery. In other words, it’s the actual going rate for gold and what most charts would reflect on the open market.
But what you pay for physical gold—the retail price or ask price—is usually higher. The price you pay is based off the spot price plus a markup or premium, so the provider can make a profit. You may also face varying shipping and handling charges to receive your physical gold.
Most investors don’t want to store physical gold in their homes or offices due to the risk of theft, structural damage, and natural disasters. But you can keep your gold in vaults, depositories or certain safety deposit boxes—all of which come with their own expenses.
You may also face liquidity issues. So if you need to turn your gold into cash quickly, you’d need to get through the process of finding the right buyer and transferring the metal.
Still, many investors prefer physical gold because of its reassurance. By holding physical gold, it’s literally all yours. You can admire its gleam, knowing you are 100 percent in control. Physical gold can also be used as currency. As history has taught us, its value tends to rise when paper currencies fall.
But no matter how you invest in gold, making room for this precious metal in your overall investing strategy can help you retain value and financial strength during times of economic turmoil. Still, it’s important to know your risk tolerance and never invest more than you can stand to lose.
