Gold Investing for Beginners: A Quick Guide to Investing in Gold (2024)

FAQs

Gold Investing for Beginners: A Quick Guide to Investing in Gold? ›

How Do Beginners Buy Gold? Mutual funds and ETFs are probably the smartest options for beginners. Each share of these securities represents a fixed amount of gold, and you can easily buy or sell these funds in your brokerage account or retirement account.

“Gold can be useful to hold in a portfolio alongside shares, bonds, cash and property. It behaves a bit differently to other assets, and so can act as a bit of extra diversification,” says Laith Khalaf, of investment platform AJ Bell. There are also tax advantages to owning gold, depending on how the asset is held.

So you'll need to invest in the precious metal differently than you would with those assets. Most experts recommend limiting your gold investment to 10% or less of your overall portfolio. The range between 1% and 10%, however, will often vary based on your age and overall investor profile.

However, due to its 99.9% purity, 24-karat gold will be the greatest choice for investment. Even though it is less robust and more susceptible to scratches, it has a higher intrinsic value.

What is the minimum amount of money I should invest in gold? If you plan to invest in gold, you could start small: Physical gold can be purchased in increments down to the gram, and fractional trading offered by many big brokerage platforms means you can start investing in gold stocks or ETFs with virtually no minimum.

Con: It doesn't give you passive income or steady returns

Unlike some investments that yield passive income (e.g., rental properties, some stocks and bonds), physical gold doesn't provide passive income, dividends or interest. You will only earn once you sell your gold.

Investing in 1-ounce gold bars, like any other investment, generally requires a long-term perspective. While gold has proven to be a reliable store of value over time, its price can experience short-term fluctuations — especially in uncertain economies like the one we're experiencing now.

Gold Coins: Assuming an average premium of 5% to 10% over the spot price, you can purchase around 4.5 to 4.7 troy ounces of gold coins with your $10,000. Gold Bars: With lower premiums, possibly around 2% to 5%, your $10,000 could buy you closer to 4.8 to 4.9 troy ounces of gold in bar form.

Potential for higher returns: While this is subject to market conditions, larger gold bars may offer the potential for higher returns if the price of gold appreciates. The value of a 1-ounce bar will increase more significantly than that of a 1-gram bar if gold prices rise.

What is the smartest way to buy gold? ›

The best place to buy physical gold depends on whether you want to buy bars, coins or jewelry. While you can buy gold bars from certain banks, it's much more common to use online dealers. You may also be able to buy gold bars from a pawn shop or individuals, and these sources may also offer gold coins.

How Do Beginners Buy Gold? Mutual funds and ETFs are probably the smartest options for beginners. Each share of these securities represents a fixed amount of gold, and you can easily buy or sell these funds in your brokerage account or retirement account.

Some banks in the U.S. sell gold bars and coins (as well as silver coins). This can be a good option for investors who prefer the public accountability of a federally regulated institution. However, your options may be limited compared to what you'll find at an online retailer.

Today, there are no specific limits on how much gold a person can own in the U.S. Whether it's bullion, coins, or jewelry, you can buy, own, and possess as much gold as you like. The only restrictions may come from reporting requirements if you simultaneously buy or sell large amounts of gold.

Investors can invest in gold through exchange-traded funds (ETFs), buying stock in gold miners and associated companies, and purchasing a physical product such as coins or bullion. They usually have as many reasons for investing in the precious metal as they do methods to make those investments.

Two Jakarta-based commodity analysts forecast that the price of gold could reach as high as $3,000 per ounce in the next five years. While they remain bullish, they cautioned that many factors could affect the price of gold within this timeframe.

Gold offers a hedge against inflation

Gold is a unique safe haven asset because it acts as an inflation hedge. This is due to gold's historical tendency to climb in value when the dollar falls. So, the precious metal may help you maintain the value in your portfolio during periods of high inflation.

If the bulk of your current investments are in cash in one form or another, converting some of that cash to gold can be beneficial. It's a great way to round out your portfolio so you're not entirely dependent on cash.

Gold is also well-known as a smart hedge against inflation, allowing you to preserve wealth — even while paper currency loses its purchasing power. That's because it's scarce; you can't create more, so it can't be devalued by oversupply, as the dollar can.