When you think about gold, what comes to mind? Coins, jewelry, medals, electronics? Maybe that filling you had at the dentist’s a few years ago? What about gold as a way to save on a long-term basis? The precious metal is more versatile than you may know, but for years, its value has been mostly contained within certain economic and social groups.
The high demand for gold and its stable yields mean that its value is stable and grows against the dollar over long periods of time. Even in economic downturns, when currencies and stock markets lose value, gold holds its value. In fact, gold prices have increased during past recessions, including the most recent economic crisis ignited by COVID 19, and gold is now poised to hit a new record high.
We’ve put together a comparison of the existing ways people can presently buy and save gold.
|Physical Gold||High (available offline|
|High (direct ownership,|
|High (retail prices|
are marked up)
|High (requires secure|
storage, subject to theft)
|Gold ETFs||Medium (requires|
|Low (no direct ownership,|
|Medium (lower initial|
expense than physical gold
but has potentially high fees)
|Gold mine stocks||Medium (requires|
|Low (reliant on the|
performance of the mine)
|Low (lower initial expense|
than physical gold
but stock costs vary)
|High (download app|
and connect to bank account)
|High (direct ownership,|
|Low (lower mark-up than|
physical gold, can buy
|Low (track and use on|
your phone, high-tech security)
Buying physical gold can mean two things – the first is to buy jewelry or an item made from gold (like a commemorative coin). This option is the most accessible, as many retailers sell gold products. That said, some items have other metals added to them, so the number of karats will tell you the real value of the gold content. Karats are measured on a scale of 0 to 24, with 24 being the highest purity and the most valuable.
The second option is to buy gold in its bullion form. This is when gold has been melted into storable bar forms. As thick ingots, they are stored in Central Banks across the world, though most people will only see them in movies. Bullion is also available as smaller bars or coins. Having gold in this state is the most tangible type of ownership, as you can physically store it. Bullion is sold based on weight and can be bought online.
Gold bars should always be stamped with the name of the manufacturer, the purity (no less than 99.5 percent), and the weight.
Buying physical gold may be considered relatively expensive, as dealers tend to charge commissions significantly above market price (not to mention potential shipping and storage costs). A typical mark-up is a few percentage points above the market price, but it can also be much higher. Likewise, if you choose to keep gold in your home – which poses a higher risk of theft – the insurance costs can be high. A safer alternative is to have gold stored professionally and pay for storage and insurance. Furthermore, the smallest bullion purchases are typically no less than 1 gram, which does not give you the freedom to buy lower amounts.
Gold exchange-traded funds (ETFs)
Exchange-traded funds act like individual stocks and can be bought and sold in the same way – through fund managers or online brokerages. Gold ETFs are made up of small quantities of assets that are merely backed by gold, which means purchasing them will not mean you own gold. Instead, you gain access to a mixture of gold stocks from holding companies.
Because ETFs monitor and reflect the price of gold, they have become popular as a way to hedge against economic and political disruption, as well as currency devaluations. However, owning gold ETFs for more than one year can result in high taxes, which combined with management fees can eat into any profit you make. Additionally, ETFs are high-risk investments and not for the newbie or the faint of heart – if the ETF goes under, you are left with nothing, nor do you have the option to trade in your ETF shares for actual gold.
Gold mine stocks
Another indirect manner of buying into gold is to purchase stocks in gold mining companies. The gold mining sector is made up of more than 300 publicly-traded companies, with some of the biggest players having a market capitalization worth over $25 billion (each).
Gold mine stocks can be acquired online or from in-person brokers, and companies. Remember, gold mining companies want to make their own profits, and are reliant on their own internal performance. As a result, gold mine stock prices don’t align with the market price of physical gold, so it is a higher risk option than directly buying gold bullion.
The newest way to own gold is digitally, which is the fastest, most user-friendly, and arguably most secure way to directly own gold.
Buying and saving gold digitally can be cheaper than other options in terms of fees, with extra costs like insurance, audits, and regulatory filing included in the product’s pricing. Another benefit. of a gold trading app is that you can buy much smaller amounts of gold compared to bullions and coins, which is great if you’re venturing into gold ownership for the first time and don’t want to commit to large quantities.
Coro for example allows you to easily buy and save gold as well as use gold as a currency for everyday purchases. Coro connects to your bank account so you can simply exchange US dollars for gold. The gold you buy is stored and audited by an independent party. The gold is legally owned by you, and is available at any time.