Gold has been a form of currency long before money existed. Today it's seen as a safe way to store capital because it's tangible, has uses beyond money and its value typically rises over time.
There are a few ways to invest in gold in Australia. You could physically buy gold from a bullion dealer, purchase gold stocks or ETFs or trade gold over the futures market.
In this guide, we'll run through each of these options:
This will depend on whether you want to own physical gold or simply want exposure to the price of gold as an investment.
If you want to own physical gold, the best option is to go through a gold bullion dealer
If you simply want to invest in the price of gold, an ETF that tracks the price of gold will probably be an easier and more cost-effective method.
Investors often see gold as a way to diversify their portfolios and as a safeguard against inflation and economic or global unrest.
And it's these very qualities drawing investors towards gold in 2024.
The price of gold continues to hit new all-time highs this year, and is up 32.91% this year (last updated 4 November 2024).1
Some analysts are predicting that it could go as high as US$3,000 (AU$4,670) by the end of the year.2
This is the traditional approach and involves buying gold as a physical asset and owning it yourself. It allows you to get your hands on a tangible asset and avoid the counterparty risks associated with ETFs.
If you decide to buy physical gold, you'll then need to consider what form you'd like to acquire. You can buy gold bullion in bars or in coins. Bars are larger and therefore more expensive, but they are an effective option if you're looking to make a sizeable investment. Gold coins are smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment.
There's an obvious downside though. You need to have a place to securely store your gold.
Gold bars generally range in size from 1/10oz (ounces) to 1kg, but there are bars of up to 500oz available. However, remember that precious metals use troy ounces and that 1 troy ounce equals 31.1 grams.
There are 2 types of gold bars: cast bars and minted bars. Cast bars are produced by pouring molten gold into an ingot mould, while minted gold bars are manufactured via a minting or stamping process. Cast bars are cheaper to produce, but minted bars look better and are generally easier to sell.
Mints around the world also produce gold bullion coins. Typically smaller than bars and ingots, they're generally considered to be a more convenient option for many investors. Not only are they cheaper to buy, but they also make it easier to liquidate a small portion of your investment when you need cash. Coins contain between 1/10oz and 1oz of pure gold.
These coins also have a nominal monetary value and can be accepted as legal tender in the country where they're made – examples include the Australian Kangaroo, the American Gold Eagle, the Canadian Maple Leaf and the UK's Gold Sovereign.
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There are several options to consider when choosing where to buy gold, so make sure to keep the following in mind:
Once you've purchased your gold, you'll also need to find a safe place to store it. There are several options to consider, including the following:
It's possible to invest in gold through the stock market by profiting from gold prices rather than physically owning gold.
This is done by buying shares in companies that have exposure to gold, including gold miners.
With this approach, you don't actually buy any gold – rather you're investing in the performance of the gold industry or the mining company. To invest in gold via the stock market, you need a stockbroker or online trading platform.
But remember, buying a stock means you become part owner of a company. This means investors have an extra layer of complexity.
Not only do you need to know the price of the asset, but also at what price the business can produce the raw material and be profitable. It is after all possible for the gold price to increase while the business you own loses money.
However, the flip side is also true. If your investment mines additional minerals, it could reduce your risk should the gold price fall.
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There are a number of gold stocks listed in Australia. Some of the largest and best-known gold stocks include the following:
This is a list of the best-performing gold stocks on the ASX over the last week. We've only included companies with stock prices above $1.
Stock list last updated 25 Nov 2024.Gold ETFs (exchange-traded funds) are another convenient way to invest in gold that don't require buying and storing physical gold.
When you buy units in a gold-themed ETF, you're either investing in a group of gold-related companies, or getting exposure to the price movements of gold itself, depending on which ETF you invest in.
ETFs like the VanEck Vectors Gold Miners ETF (GDX) and BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS) track the performance of gold mining companies, whilst ETFs like the Global X Physical Gold (ASX: GOLD) and BetaShares Gold Bullion ETF – AU Hedged (ASX: QAU) simply track the price of gold instead.
While physical gold is sometimes pegged as a "safer" investment option, gold stocks or ETFs expose you to all the usual risks that the stock market carries. This includes market volatility, company bankruptcy and the possibility of losing your investment.
"The world still values physical gold, so it is often used as protection if stock markets sour, or interest rates rise. To take a lot of the guess work out of investing in the precious metal, a physical gold ETF can provide you with easy access to the commodity rather than having to pick a winning gold miner or take the risk of holding physical bars of gold yourself."
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An alternative to buying gold stocks or units in an ETF is to speculate on price movements through CFD investing in the futures market. CFD investors try to profit from gold price movements – whether up or down.
Again, you don't own the asset itself, but instead own contracts based on the price movement.
That means that even if gold prices are falling, CFD investors can still make a profit (as well as a loss). However, because CFDs are risky and are complex derivative products, CFDs are better suited to advanced traders.
You can read more about CFDs in our comprehensive guide.
Gold has a lot of benefits for investors, especially during more volatile periods.
Generally speaking, over a long enough time horizon gold appreciates in value, has universal recognition and can work as a hedge against inflation.
In fact, in some countries it is sill used as a form of currency and a gauge of wealth.
So gold can be used to protect and diversify your wealth.
However, just because gold has a proven track record, it comes with some risks, especially if you are trading CFDs.
This one is a little difficult to unpack and will all depend on your own risk profile and key objectives with investing.
While over a shorter period the price of gold can be incredibly volatile, take a long-term view and gold generally increases over time.
It also has a bonus of acting as a hedge against inflation. So in high inflation times, like we experienced in 2022 and 2023, gold generally appreciates in value offsetting other losses.
But, gold can underperform the share market.
If you look at macrotrends gold has significantly underperformed shares in the US over a 100-year period. It is the same story over 5, 10 and 30 years, although if you take the last 20 years gold is beating the Dow Jones, largely thanks to 2 down periods for the market being the GFC and COVID.
If you're just starting out the easiest way to buy gold in Australia is arguably through an ETF.
While some investors may prefer buying physical gold directly, this comes with additional costs and logistical issues.
If you're simply looking to get exposure to the price of gold for investment purposes, a low-cost ETF is likely to be the most straightforward option.
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