There are five main ways to invest in gold: physical gold, gold ETFs, gold mining stocks, gold futures and gold IRAs. For most people, a low-cost gold ETF is the simplest and cheapest option, while physical coins and bars suit those who want to hold the metal itself. Here is how each one works, what it costs, and how much gold makes sense in a portfolio.
The five ways to own gold
| Method | Costs | Best for |
|---|---|---|
| Physical bars and coins | Dealer markup (often 2% to 8%+), storage, insurance | People who want metal in hand |
| Gold ETFs (GLD, IAU, GLDM) | Yearly fee of about 0.10% to 0.40% | Most investors: cheap, easy to buy and sell |
| Gold mining stocks and ETFs (GDX) | Normal stock costs | Those wanting leverage to gold prices, with company risk |
| Futures and options | Margin, rolling costs | Experienced traders only |
| Gold IRA | Setup, storage and custodian fees, often high | Some retirement savers; compare costs carefully |
1. Physical gold
Buy bullion coins such as American Gold Eagles, Canadian Maple Leafs or UK Britannias, or small bars, from a reputable dealer. Compare the price to the spot price: the markup is your cost. Then plan secure storage, such as a home safe or a bank or vault service, and insurance. Selling also involves a spread, so physical gold is best held for the long term. Canadians can see local options in how to buy gold in Canada.
2. Gold ETFs
A gold ETF holds physical bullion in a vault and tracks the gold price. You buy it in a brokerage account like a stock. The cheapest US options charge around 0.10% a year (GLDM), while the largest, GLD, charges 0.40%. No storage, no dealer markup, and you can sell in seconds. If you are new to ETFs, read what is an ETF.
3. Gold mining stocks
Miners’ profits rise faster than the gold price when gold climbs, so their shares often move two to three times as much, up and down. You also take on company risks like costs, debt and mine problems. A miners ETF such as GDX spreads that risk across many companies.
4. Futures and options
These use leverage and can lose more than you expect quickly. They are designed for professional and experienced traders, not long-term savers.
5. Gold IRAs
A self-directed IRA can hold approved physical gold, but fees for setup, custodians and storage are often high, and some sellers use aggressive sales tactics. For most people, buying a gold ETF inside a regular IRA gives similar exposure for far less.
How is gold taxed in the US?
The IRS treats physical gold and most physically backed gold ETFs as collectibles. Long-term gains are taxed at your regular rate up to a maximum of 28%, rather than the lower 15% or 20% for stocks. Holding gold ETFs in an IRA avoids this.
How much gold should you own?
Gold pays no interest or dividends, so its role is diversification and protection in a crisis, not growth. Many advisers suggest keeping it to around 5% to 10% of a portfolio. Learn what has driven prices recently in why gold is going up, and compare metals in gold vs silver.
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Frequently asked questions
What is the best way to invest in gold for beginners?
A low-cost gold ETF bought through a brokerage account. It tracks the gold price without dealer markups or storage costs.
Can I buy gold with $100?
Yes. With fractional shares you can buy $100 of a gold ETF. Physical gold under one-tenth of an ounce usually carries a high markup.
Is gold a good investment right now?
No one can reliably predict short-term gold prices. Gold tends to help most during crises and high inflation, so a small, steady allocation is more sensible than trying to time it.
Is it better to buy gold coins or bars?
Bars usually have lower markups per ounce, while well-known coins are easier to sell. For small amounts, coins are often more practical.
This article is general information, not financial advice.
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