Ah, gold. It’s rare, accepted everywhere, and governments can’t print it at will. These are the reasons that some folks — fondly known as “gold bugs” — have always invested heavily in the honey-hued metal. And in times of financial chaos, they’re not the only ones.
“History has shown that during economic slowdowns, from the Great Depression to the COVID-19 pandemic, gold appreciates in value,” says financial analyst James Jason of Mitrade, a commodities trading platform.
No matter what the state of the economy, gold offers a good way to diversify your assets. Many financial advisors recommend keeping anywhere from 5% to 10% of your portfolio in it — perhaps up to 15% in times of crisis.
Individuals have two main ways to invest in gold:
- Physical gold, or bullion (the most obvious, but not necessarily the least expensive)
- Gold securities such as stocks, funds, and futures (less of a pure play, but more convenient)
Let’s go digging into both.
How to invest in physical gold
Physical gold comes in many forms and sizes, each with its own characteristics and costs.
Bullion often refers to gold in bulk form, usually bars or ingots. Typically, gold bars are poured and ingots are pressed (a cheaper production method). As a result, bars command a higher premium, or added cost, over the daily spot price of gold than ingots.
Ranging in size from quarter-oz. wafer to a 430-oz. brick, bars, and ingots are stamped with purity, origin, weight, and where the bullion was minted. Not all gold is equal, especially when it comes to purity and weight. Investment-grade gold is at least 99.5% pure.
Bullion bars and ingots are sold by banks and gold dealers. Banks often offer physical gold at a lower-markup than dealers but finding a branch that actually has it may be harder.
Minted coins are another common way to buy physical gold. Not to be confused with old rare coins that numismatists collect, these coins are new, minted by governments for investors. The prices they fetch are based on their gold content —aka their “melt value”— plus a 1%-5% premium.
Although several governments issue gold coins, for maximum liquidity, most buyers stick with the most widely circulated and recognized:
- American Gold Eagle
- Australian Gold Nugget
- Canadian Maple Leaf
- South African Krugerrand
Minted bullion coins are available from major banks, coin dealers, brokerage firms, and precious metal dealers.