How to invest in gold?

How can you invest in gold? Gold has been seen as a stable investment for centuries. This precious metal often provides security during economic crises and also retains its value in the long term.

For many investors, gold is an important addition to their portfolio due to its protection against inflation and its intrinsic value. But how can you best invest in gold, and which options suit your situation? We’ll explain it to you.

Why is gold a popular investment?

Gold is globally recognized as a valuable asset. It often retains its value regardless of economic fluctuations and offers protection against inflation. In times of economic uncertainty, demand for gold often rises, which also leads to higher prices. This makes gold a popular choice for investors seeking stability.

In addition, gold is easy to trade, both physically and digitally. Its broad acceptance makes it an accessible investment for both novice and experienced investors.

The different ways to invest in gold

There are various ways to invest in gold for the first time, depending on your preferences and financial goals. Physical gold, such as bars and coins, is the most commonly used investment method. These products have intrinsic value, and many people appreciate having a tangible asset.

An alternative is investing in gold ETFs (Exchange Traded Funds). These trackers follow the gold price and offer a simple way to benefit from the price movement of gold without having to store it physically. For those interested in more speculative investing, gold mining stocks are an appealing choice. This allows you to invest indirectly in gold with the potential for higher returns, but also greater risks, as it depends on the performance of the mining company.

How to choose the right gold investment for your situation?

Choosing the right gold investment depends on your goals and risk tolerance. Do you want to use physical gold as protection in an uncertain economy, or are you looking for substantial profit through gold-related stocks? For those seeking safety and security, gold bars and coins are ideal. These products offer direct access to gold and are easy to trade.

During the 2008 economic crisis, the gold price rose significantly due to increased demand for safe investments. The gold price rose about 5% that year, from around $800 per troy ounce in early 2008 to over $1,000 per troy ounce in February 2009.

If you prefer convenience and lower storage costs, a gold ETF can be a good option. The key is to clearly define your goals and weigh the pros and cons of each option carefully. Of course, we’re happy to advise you.

What are the risks of investing in gold?

Although gold is considered a safe investment product, there are also risks. The gold price fluctuates due to global economic and geopolitical developments. This means your investment can rise quickly—but also fall sharply. Nevertheless, the gold price has generally been increasing in recent years.

Additionally, physical gold carries storage and insurance costs, which can rise depending on the quantity you own.

When investing in gold mining stocks, there’s an extra risk: the performance of individual mining companies depends on operational and market-related factors. A solid strategy and diversification are essential to limit risks.

The benefits of physical gold vs. gold ETFs

With physical gold, you have a tangible asset. This makes it attractive to investors seeking certainty. Moreover, physical gold carries no counterparty risk; it retains value regardless of bankruptcies or economic crises.

Gold ETFs, on the other hand, offer more convenience and liquidity. They’re easy to buy and sell via the stock exchange and require no storage or insurance. As a result, they’re more quickly traded. This option is ideal for investors who want to benefit from gold’s price movements without the practical challenges of holding physical gold.

How to store physical gold safely?

Safe storage of physical gold is crucial to prevent damage and theft. Store your gold in a sturdy, certified safe or use professional storage facilities that specialize in precious metals. These offer enhanced security and insurance against loss.

A good option for storing gold is the storage facility offered by our partner Edelmetaal Beheer Nederland. They have highly secured locations in Rotterdam and Zurich, Switzerland.

Storing gold at home is also an option, but using a fire- and burglary-resistant safe is essential. Avoid handling gold without protective means, such as cotton gloves, to prevent damage. Also consider secure storage capsules to protect your gold from corrosion and dirt.

Common mistakes when investing in gold

One of the most common mistakes is lack of research. Many investors buy gold without a clear plan or understanding of the market. This can lead to paying excessive premiums for physical products or investing in gold-related assets that don’t match their goals.

Another mistake is underestimating storage costs. With large quantities of gold, security and insurance costs can rise significantly. Especially if you overpay on intrinsic value, this can be harmful.

Lastly, some investors are tempted by speculative gold projects without understanding the risks. A sound strategy and consultation with experts can help avoid these pitfalls.

How to invest in gold with a small budget?

Investing in gold is also possible with a limited budget. Small gold coins, such as the 1/10 troy ounce coins, offer an accessible entry point. These coins are relatively affordable and provide the same benefits as larger investments.

Another option is to buy fractional gold ETFs. This allows you to invest in gold’s value development with smaller amounts. By regularly buying small quantities of gold, you can gradually build a portfolio without needing a large initial investment.

Would you like to learn more about investing in gold? Contact us for advice or explore our extensive range of gold bars and gold coins.

Disclaimer: The Silver Mountain does not provide investment advice and this article should not be considered as such. Past performance is no guarantee of future results.