You’ve got to admit: gold is an investment that has certainly stood the test of time.
It’s been used as a store of value for thousands of years, and although Bitcoin is popular (and some even think could someday replace gold) there are still many reasons to invest in the real McCoy.
Gold is priced in U.S. dollars. So, if the value of the U.S. dollar declines, it will take that many more dollars to buy an ounce of gold. As such, if you believe that the dollar will struggle (thanks to government stimulus and the Federal Reserve’s money printing) then, owning gold should help protect your investment portfolio against a declining U.S. dollar.
So, where do you begin? HOW do you invest in gold? At Trish Intel, we like ETFs.
GOLD EXCHANGE TRADED FUNDS
Index funds provide you with tremendous liquidity so that you can get in (and out!) of your investments with ease. The costs associated with these funds are typically quite low which is a big plus. And, you don’t even need a safe to keep your investments in!
Here’s a look at some of the biggies:
SPDR GLD Shares – GLD is one of the most popular ETFs. This is a go-to fund with roughly $70 billion in assets under management. It enables you to own gold in your IRA or 401k with a low expense ratio of 0.4% (or, $4 for every $1,000 invested.)
SPDR Gold Minishares Trust (GLDM) is a low expense fund that tracks the performance of gold. Its benchmark is the London Bullion Market Association Gold PM Price. This is one of the lowest cost funds around at just 0.18% in expenses.
iShares Gold Trust (IAU) is another low cost fund – lower than GLD – that enables investors to easily buy and sell gold in their portfolios.
Aberdeen standard physical gold shares ETF (SGOL) tracks the spot price of gold bullion, minus the fund’s expenses. The fund is backed by actual, physical gold bullion held in vaults in Zurich, Switzerland. Expenses again are low at just 0.17%.
GOLD MINING STOCKS, INCLUDING ETFS
Another popular way to invest in gold is to consider a portflol of gold-mining stocks, or an ETF that invests in gold mining companies. Though a mining company isn’t a gold pure-play, it’s actually an excellent way to expose yourself to an investment in the commodity.
Mining companies share a correlation with gold prices and since investors are buying into an actual company…if that company is run well, then the investment will do extra well thanks to a strong performing businesses. (Of course, if it’s poorly run then it would do worse than gold itself.) There are also several gold mining ETFs investors could consider. Products like VanEck Vectors Gold Miners ETF (GDX) and, VanEck Vectors Junior Gold Miners ETF (GDXJ) which invests in about 90 junior gold stocks with market caps of less than $4 billion.
Futures contracts are another way to invest in gold however, we wouldn’t recommend them for first time investors. The options market is highly risky and the simplicity of a straight forward index fund or gold mining stock is a better way to invest.
Of course, there’s always this option: you can actually buy actual physical gold — as in gold coins, gold bars and gold jewelry. Just keep in mind, you won’t have the same liquidity as the other investment choices…and those gold bars can get pretty heavy to lug around.