Affiliate Disclosure: Some links on this page may earn us a commission at no additional cost to you. We only recommend dealers and services we believe offer genuine value. Read our full disclaimer.
Why Invest in Gold?
Gold has been used as currency and a store of value for over 5,000 years. While paper currencies have come and gone, gold's intrinsic value has endured through empires, wars, and economic collapses. Today, investors turn to gold for several key reasons:
- Inflation hedge: Gold tends to maintain purchasing power as the dollar loses value over time.
- Safe haven: During recessions, geopolitical crises, and market crashes, gold often rises while other assets fall.
- Portfolio diversification: Gold has a low or negative correlation with stocks, reducing overall portfolio risk.
- No counterparty risk: Physical gold isn't someone else's liability. Unlike stocks or bonds, it requires no issuer to honor it.
Ways to Invest in Gold
There are several ways to gain exposure to gold, each with different tradeoffs around cost, convenience, and direct ownership.
Physical Gold (Bullion)
Buying physical gold — bars or coins — gives you direct ownership of the metal. You can hold it in your home safe, a bank safety deposit box, or a third-party vault. Common options include:
- Gold bars: Available from 1 gram to 400 troy ounces. Lower premiums over spot price for larger sizes.
- Gold coins: American Gold Eagles, Canadian Maple Leafs, and South African Krugerrands are globally recognized. Slightly higher premiums but more liquid.
Gold ETFs
Gold exchange-traded funds (ETFs) like GLD or IAU track the gold price and trade on stock exchanges like shares. They offer convenience and low cost but don't give you ownership of physical metal — you hold shares backed by gold held in vaults.
Gold Mining Stocks
Shares in gold mining companies offer leveraged exposure to gold prices — when gold rises, miners can rise more. However, they also carry company-specific risks unrelated to the metal itself.
Precious Metals IRA
A self-directed IRA can hold physical gold in an approved depository. This provides the inflation-hedging benefits of gold with the tax advantages of a retirement account. Read our full IRA guide.
How Much Gold Should You Own?
Most financial advisors suggest a precious metals allocation between 5% and 15% of your investment portfolio. This is enough to provide meaningful diversification benefits without overconcentrating in a single asset class.
For beginners, starting with a modest position — even just 1–2 ounces of physical gold or an equivalent ETF position — lets you learn the market before committing larger sums.
Understanding Gold Pricing
Gold trades at the "spot price" — the current market price per troy ounce for immediate delivery. When you buy physical gold, you'll pay a premium above spot to cover the dealer's costs and profit. Typical premiums:
- 1 oz gold bars: 1%–3% over spot
- American Gold Eagles (1 oz): 3%–5% over spot
- Fractional coins (½ oz, ¼ oz): 5%–10%+ over spot
Buying larger quantities or full ounces (rather than fractional) is generally more cost-efficient.
Storing Your Gold
Once you buy physical gold, storage is your biggest practical concern. Options range from home safes to professional vault services:
- Home safe: Convenient and free, but carries risk of theft and isn't insured by default.
- Bank safe deposit box: Low-cost but not FDIC insured — and inaccessible during bank closures.
- Third-party vault: Secure, insured storage offered by most reputable dealers. Recommended for larger holdings.
Buying from Reputable Dealers
When purchasing physical gold, always use established, reputable dealers. Look for members of the Professional Numismatists Guild (PNG) or the American Numismatic Association (ANA). Be wary of dealers with prices dramatically below spot — that's often a red flag for fraud.
Ready to get started? Request a free information kit from a trusted precious metals dealer — no obligation, no pressure. Get your free kit →
Tax Considerations
Physical gold is classified as a "collectible" by the IRS, meaning long-term capital gains are taxed at up to 28% (versus 15%–20% for most other long-term investments). Gold ETFs held in taxable accounts are subject to the same 28% collectibles rate. Holding gold in an IRA eliminates this concern for the life of the account.
Getting Started: A Simple Path
- Decide on your allocation (5%–10% of investable assets is a common starting point)
- Choose your vehicle: physical gold, ETF, or IRA
- Select a reputable dealer or brokerage
- Make your first purchase — even a single 1 oz coin or small bar
- Plan your storage strategy before your metals arrive
The most important step is simply getting started. You don't need to understand every nuance of the gold market on day one. Follow our step-by-step buying guide for practical next steps.