While it may sound like a rich woman’s game, owning gold isn’t as old-school or out of reach as you may think.
Gold is a commodity, just like any other raw material (copper, silver, oil) or primary agricultural product (beef, wheat, coffee beans) that can be bought and sold. But let’s be honest, gold is a lot more exciting than a bushel of wheat.
What does investing in gold entail, and how do you get started? We’ve got the answers here.
Is investing in gold a good idea for me? It could be! Gold is eye-catching to investors because it doesn’t lose value when the stock market drops. In fact, it has an inverse relationship to the stock market, increasing in value when the market tanks and dropping in value when the market is up. Therefore, it can help balance out your investments and serve as a hedge against inflation.
What’s the catch? Well, not all that glitters is gold. Historically, the return on investment for gold is lower over a lifetime than it is for stocks. So you wouldn’t want, say, all your retirement investments tied up in it. Financial advisors usually recommend investing no more than 10% of your savings in gold.
Should I buy gold bricks? You absolutely can. Physical, high-purity gold—99.5% to 100% pure gold (24 karats)—is called bullion and comes in bars, coins and other shapes. You can buy gold bars from respected online gold retailers, including Provident Metals, Money Metals Exchange and JM Bullion.
Coins can be bought from government mints, including the U.S. Mint and the Royal Canadian Mint. The current cost of an ounce of gold—which is about the size of a 1.3-inch coin—is $2433 at time of writing. It’s fun to own physical gold, but remember that you may have to pay for safe storage, and you’ll also have to pay for delivery (and insurance on the delivery!).
Does my jewelry count? Maybe. If your hoops, chains and rings contain 24 karats, they could add up to an ounce or more of melted gold. But when it comes to jewelry, you don’t just pay the going rate for the metal; you also pay a significant markup for the design or brand of the piece, which may or may not keep its value. That said, a stunning piece of gold jewelry can be an incredible—and valuable—family heirloom to pass down to kids.
How else can I invest in gold? Glad you asked. You don’t have to own physical bars, coins or jewelry to take advantage of gold’s value. These days, you can easily get gilded through exchange-traded funds (ETFs) and mutual funds. ETFs and mutual funds invest in physical gold or in gold-industry companies like miners and refiners.
They’re typically easy to buy into and offer more liquidity: You can buy and sell your shares when you want. Mutual funds have higher fees but also have the advantage of being actively managed by real experts, which often leads to better returns. While ETFs usually passively track market rates, more and more ETFs are now becoming actively managed, as well. You can buy both through online brokerages.
Is gold mining even ethical? Gold mining can “displace communities, contaminate drinking water, hurt workers and destroy pristine environments,” according to Earthworks, an environmental nonprofit organization based in Washington, D.C. So for good reason, investors are looking for more ethical ways to source the precious metal.
Both the World Gold Council and the International Council on Mining and Metals established guidelines for environmentally friendly practices and mandates for companies to make their practices public. Look for ETFs and mutual funds that focus on ESG (ethical, social and governance) investments, such as Sprott and Franklin Templeton.
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Patty Onderko is a writer and editor who has covered health, parenting, psychology, finance, travel and more for 20 years. She lives in Brooklyn with her wife and two sons.