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How to Buy Gold
By Cassidy Horton MONEY RESEARCH COLLECTIVE
When global markets turn volatile, many investors run to gold as a “safe haven.” This guide explores the different ways you can buy gold — whether you want to own the physical stuff itself or just add some sparkle to your portfolio.
- How to Buy Gold
- How to Buy Physical Gold
- How to Invest In Gold
- Should You Buy Gold?
- Using Gold to Diversify Your Investment Portfolio
- What Is the Price of Gold Today?
- Summary of How to Buy Gold
How to Buy Gold
You have two options for buying gold: you can purchase gold coins and other forms of the actual metal or you can invest in gold-backed and gold-adjacent securities such as stocks and ETFs.
How to buy physical gold
If you like the idea of owning physical gold, buying bullion bars, gold coins, and gold jewelry can be a good option. Here’s what you need to know:
Gold bars
Gold bullion is one of the purest forms of gold you can buy. It comes in bars, ingots, coins, and rounds. (Rounds are just coins without legal tender.)
Gold bullion is sold by the ounce or the gram. For instance, a one-ounce gold bar may cost around $2,000, while a 10-ounce bar may cost $20,000 or more. You can even buy fractions of bars if you just want a few grams.
Investment-grade gold bars are at least 99.5% pure. And they always have the weight, purity, and manufacturer’s name engraved on them.
Some reputable gold retailers include:
- APMEX
- JM Bullion
- Money Metals Exchange
- Provident Metals
- Westminster Mint
If you want to buy gold bars in smaller quantities, look for them at local pawnshops, on eBay, or at a shop that specializes in numismatics.
Most people store their gold bars in an off-site facility, such as a safe deposit box.
Gold coins
Gold bullion coins are another way to get your hands on physical gold. Some popular coins include:
- American Eagle
- Australian Kangaroo
- British Sovereign
- Canadian Maple Leaf
- Gold Buffalo
- Mexican Gold 50 Pesos
- South African Krugerrand
- Vienna Philharmonic
You can find gold coins at a number of outlets — coin shops, coin shows, eBay, and even online gold dealers. However, most people buy them straight from the source: a government-owned or privately-owned mint.
- Examples of government-owned mints are the U.S. Mint, Perth Mint, and Royal Canadian Mint.
- Examples of privately-owned mints are the New Zealand Mint, South African Mint, Valcambi, and PAMP Suisse.
While you can use gold coins as legal tender in some states (such as Arizona, Oklahoma, and Utah), it’s entirely up to the businesses in these states to accept them.
And even if you do find a business that accepts them, it’s usually not recommended because the amount of gold in the coin is usually worth way more than its face value. For instance, the American Gold Eagle coin has a face value of $50, but it’s worth around $2,000 (40 times as much!).
Gold jewelry
If you want to own gold and look good while doing it, gold jewelry may be a good option. Unlike other luxury items that decrease in value (such as vehicles, for example), gold tends to increase over time.
Just keep in mind that you may pay more per ounce for gold jewelry than you would for other gold content, such as bars and coins. This is because gold jewelry involves craftsmanship and cachet.
You’ll get more gold from jewelry that’s 18 karats or 22 karats. For instance, 14 karat gold is roughly 58.3% pure gold and 41.7% other precious metals, like silver or palladium.
How to invest in gold
If you don’t want to deal with the hassle of buying, storing, and insuring physical gold, investing in commodities like gold can be a good alternative. (This is actually what most financial advisors recommend over physical gold.)
All the best online trading platforms should have some type of gold-backed securities you can invest in — whether it’s a gold ETF, a mutual fund, gold stocks, or futures.
Gold ETFs
Gold exchange-traded funds (ETFs) are a type of investment that allows people to own gold without having to physically hold it. They trade on stock exchanges like regular shares.
Some gold ETFs buy physical gold on your behalf. One popular example of this is SPDR Gold Trust (ticker symbol: GLD). When you invest in GLD, gold is held in trust on your behalf.
Other gold ETFs are comprised of companies that work in the gold industry. For instance, VanEck Gold Miners ETF (GDX) is made up of some of the largest gold mining companies in the world.
You can buy gold ETFs in most brokerage accounts. They offer investors several advantages:
- First, they’re easier to buy than physical gold. Just a few clicks on your computer and you’re done. You also don’t have to worry about having them stolen.
- Second, gold ETFs are much more liquid than physical gold, which makes them easier to sell if you need cash quickly.
- Lastly, gold ETFs can be an affordable alternative to owning physical gold because you don’t have to pay to store or insure them. They also tend to have lower fees than gold mutual funds (which you’ll learn about next).
Gold mutual funds
Gold mutual funds are similar to gold ETFs — you can buy them directly in your brokerage account either online or by calling your stockbroker.
However, gold mutual funds tend to have higher fees than gold ETFs. This is because they’re actively managed by fund managers who conduct stock market research and analysis.
Popular gold mutual funds include:
- Sprott Gold Equity Fund (SGDIX)
- Franklin Gold and Precious Metals Fund (FKRCX)
- Gabelli Gold Fund Class AAA (GOLDX)
- Fidelity Select Gold Portfolio (FGDAX)
That said, don’t be fooled into thinking an actively managed mutual fund is better than an ETF. Research suggests very few mutual fund managers actually beat index averages.
Gold mining stocks
You can also own gold by investing in gold stocks — which are shares of companies that are involved in the gold industry in some way.
There are all types of gold-related companies to invest in. For instance, you could look into businesses that:
- Mine gold, such as Barrick Gold Corp (GOLD) and Newmont Corp (NEM)
- Produce mining equipment, such as Caterpillar (CAT) and Komatsu Ltd. (KMTUY)
- Sell gold jewelry, such as Signet Jewelers (SIG), which owns Kay, Jared, and Zales
- Stream gold, such as Franco-Nevada Gold (FNV)
By the way, that last item – streaming gold – refers to a business model where a company gives money to a mining company to finance their operations in return for the right to purchase the gold that’s mined at below-market rates.
If you do decide to invest in gold mining stocks, beware: the commodities sector (which includes gold stocks) is the second most volatile market you can invest in, according to data from S&P Global.
While investing in gold is often a better alternative than owning it, consider spreading out your risk by going with a pool of securities, such as a gold ETF or gold mutual fund.
Gold futures
Gold futures can be another way to invest in gold. But this method is only for professional investors. If you’re a beginner — or you’re not sure what the words “futures contract” mean, skip over this one.
When investors lock in a gold futures contract, they and a third party agree to trade gold at a predetermined price and date in the future. Once that date rolls around, the contract gets “settled” as agreed upon.
If you think that the price of gold will rise or fall soon, you can make money from a gold futures contract. But because you can lose your initial investment (and then some), only expert traders should engage in this kind of speculation. If that’s you, you can trade gold futures on the New York Mercantile Exchange (NYMEX). Each contract is typically for 100 fine troy ounces of gold, stated in U.S. dollars per ounce.
Should You Buy Gold?
Whether you should buy gold depends on your risk tolerance and goals — and whether you think the benefits of owning gold outweigh the cons.
- Gold investments can be a good way to diversify your portfolio. This is because the value of gold often rises as stock prices fall, and vice versa.
- Historically, gold has kept up with the cost of living, making it ideal for hedging against inflation.
- Gold is considered a "highly liquid asset," meaning it's easy to sell when you're ready.
- Precious metals, such as gold, can be volatile in the short term.
- There are often fees associated with holding, buying, and selling gold.
- Gold doesn't rise in value as much as stocks, so it's not considered an income-generating asset when saving for retirement.
- Gold mining has a history of being ethically suspect and environmentally harmful
Using Gold To Diversify Your Investment Portfolio
Many investors use gold as a portfolio diversification tactic. But exactly how much of your assets should be in gold investments?
Most financial advisors say gold shouldn’t account for more than 10% of your portfolio. So, if you have $200,000 in assets, gold should comprise no more than $20,000 of that total.
This is because gold doesn’t appreciate as much as stocks or savings bonds. And even though it (and other commodities) help hedge against inflation surges, it’s not good for long-term growth.
What Is the Price of Gold Today?
The price of gold is currently $1,974.80 per ounce, as of April 14, 2022. This price is from COMEX, which is the primary exchange used to set U.S. gold prices.
Tip: Want to look up gold prices on your own? Look for the “gold spot price.” This tells you how much someone is willing to buy or sell gold today (rather than at a later date, as with futures contracts).
Summary of How to Buy Gold
In conclusion, there are two primary ways to buy gold: as a physical asset or by investing in it through a brokerage account. Both have their advantages and disadvantages, so weigh your options carefully before making a decision. And as always, consult a financial advisor to get the best advice for your situation.
Cassidy Horton is a finance writer based in Seattle, Washington. With an MBA and a bachelor's in public relations, her work has been published over a thousand times by The Balance, Finder.com, Money Under 30, Clever Girl Finance, and many more. Cassidy is a self-confessed money nerd who’s passionate about helping people find financial freedom. Oh, and she really loves cats.