3 Best Ways to Invest in Gold
There are a handful of ways to invest in gold, and each has its own costs and benefits.
The most common option for investors these days is via ETFs like the aforementioned SPDR Gold Shares or the iShares Gold Trust ETF (NYSE:IAU). The pair of funds have more than $80 billion in physical gold assets, proving their popularity. GLD is 10 times the size but has a 0.4% expense ratio vs. 0.25% for IAU. Over time this can eat into your performance, but the ease of trading and the lack of physical gold in your possession is attractive to many folks.
Less accessible is the idea of owning physical gold in the form of bars or coins. This, of course, saves you the management fee — but logically it should involve an investment in a safe or other security so your hoard doesn’t get stolen. If you have a big stash, the cost of a sizable safe could be the least of your worries since a single cubic foot of gold bars weighs more than 1,200 pounds! That’s a big logistical mess. Also, trading in physical gold can be risky if you don’t do your homework — gold coin scams are popular and costly for investors. Selling also is problematic for physical gold because you can’t just dump shares on the open market like the gold trust ETFs. You have to find a human buyer willing to pay what you’re asking.
A less direct way is to invest in stocks of gold miners like Goldcorp (NYSE:GG) or Randgold Resources (NASDAQ:GOLD), or diversified ETFs like the Market Vectors Gold Miners ETF (NYSE:GDX) that own shares in a bunch of these stocks. But remember that you are investing in a stock as much as gold, and your investment will not track the movement of gold prices 100%.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.