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How to buy gold

Key takeaways

  • Gold is trading near all-time highs, as of late March 2024.
  • Investors can buy gold and gold-related investments in a variety of ways.
  • There are unique characteristics and risks with investing in gold.

There are a variety of reasons why an investor might want to buy gold: Speculating it will increase in value, to hedge against inflation, and as source of diversification with other assets, to name a few. And with prices near all-time highs (see Gold shines near $2,200 chart), it’s easy to see why many investors are interested in gold.

If you are considering buying gold, here are the ways that you can do it.

Ways to buy gold

Essentially, there are 2 main ways to buy gold: physical gold and gold-related financial investments. While these methods have different characteristics and expertise needed, among other factors, the end goal of getting exposure to gold is the same.

Physical gold. You can touch and look at a physical piece of gold. Bars and coins (i.e., bullion) as well as jewelry are physical gold assets. It’s worth noting that physical gold is marked up from the spot price of gold, and jewelry even more so. Physical gold can be bought from individuals, jewelers, gold dealers, and some banks.

There is no requirement to own an investing account to buy physical gold and the main factor that influences how much it is worth is the underlying price of gold (as well as how rare it is—a stronger factor for gold jewelry). However, owning real gold can require storing and safeguarding it.

Financial investments. These include gold funds (e.g., ETFs and mutual funds), gold futures, and gold stocks. While the various forms of physical gold are mostly similar (consider a gold bar and a gold coin that differ mostly in size), financial gold investments can vary substantially. Investing in gold this way necessitates an investment account (such as an individual brokerage account or IRA). Buying gold-related investments typically involves more complexity compared with owning physical gold, as there can be multiple factors that influence each investment. Let’s break each one down so you can get a sense of the different aspects.

  • Gold funds: ETFs and mutual funds are investments that hold a basket of individual investments. A gold or commodity-focused ETF or mutual fund can be the simplest way to invest in gold without the need to taking physical ownership. The price of a gold ETF, for example, is linked to the price of gold, and investors can buy and sell shares of the ETF like they can a stock. Gold funds might also be made up of individual gold mining stocks, which could reduce concentration risk (the risk of putting all your eggs in one basket, so to speak). Of course, funds have unique characteristics, and they have many of the same risks as individual company stocks.
  • Gold futures: These contracts are a derivative (i.e., their value depends on an underlying asset—gold in this case) that allow you to buy or sell a specific amount of gold at a specific price at a specific date in the future. Futures contracts have the advantage of attempting to directly track the price of gold (compared with, say, gold stocks that are influenced by a number of factors). However, futures are generally a bit more complex than stocks. For example, gold futures allow you to take physical delivery of the metal, although most gold futures traders do not take delivery. Instead, they will settle in cash for whatever the difference is between what they paid and what the current value of the futures contract is, or roll over the contract into a longer-dated futures contract. If this sounds complex, that’s because it can be if you don't know how the process works, relative to simply buying physical gold or a gold stock. Note that Fidelity does not offer futures trading.
  • Gold stocks: Investors might consider individual stocks, such as those for public companies that mine for gold (and other metals), as a way to get indirect exposure to the price of gold. As the price of gold changes, so too can the value of these types of companies. A major difference between investing in a gold miner's stock (or gold funds) and investing in gold futures is simplicity. Buying a stock is relatively straightforward and does not involve potentially taking delivery of gold. With that said, owning stock can involve more risk than buying physical gold (although you do not need to worry about safeguarding and storing physical gold when you buy a gold stock). Moreover, gold mining stocks do not provide pure exposure to the price of gold. A gold mining company, like any other company, can have a variety of factors that influence how it performs. Consequently, an investor would want to do their research on the individual company.
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Should you invest in gold?

Deciding to buy gold as an investment all comes down to your investing objectives. For many investors, a small percentage of gold exposure in your overall investment mix could help improve the diversification of your portfolio. Other investors may see an opportunity to buy and hold gold with the expectation that it will increase in value. Regardless of why you are interested in buying gold, knowing the various ways that you can buy it can help you make the best decision for your goals and risk tolerance.

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Past performance is no guarantee of future results.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

The commodities industry can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.

The precious metals market can be significantly affected by international monetary and political developments such as currency devaluations or revaluations, central bank movements, economic and social conditions within a country, trade imbalances, or trade or currency restrictions between countries.

Fluctuations in the price of precious metals often dramatically affect the profitability of companies in the precious metals sector.

The precious metals market is extremely volatile, and investing directly in physical precious metals may not be appropriate for most investors.

Bullion and coin investments in FBS accounts are not covered by either the SIPC or insurance "in excess of SIPC" coverage of FBS or NFS.

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