How to start investing in gold with a small budget?

Gold is one of the most stable investments. It offers protection against inflation and economic uncertainty. For many people, investing in gold seems out of reach because the price of gold can be high. However, it is possible to buy gold with a small budget, for example by purchasing small gold bars. By making smart choices and applying the right strategy, you can make a valuable start.

Why is gold an attractive investment for beginners?

Gold provides stability in times of economic uncertainty. Unlike stocks or bonds, gold is less sensitive to market volatility. When financial markets are under pressure, gold retains its value or even increases in price. This makes it an attractive tool for both experienced and novice investors.

Beginning investors benefit from the tangible nature of gold. Physical gold, such as coins and bars, offers investors the security of direct ownership. In addition, gold is tradable worldwide, making it easy to buy and sell.

The ability to retain value makes gold especially attractive for those just starting to invest. Also, the fact that you are not typically exposed to counterparty risks makes investing in gold more appealing. With physical gold, you are not affected by brokers going bankrupt. If you invest in physical gold and not in gold paper, you are not subject to the risk that managers of paper gold may go bankrupt.

What are the best ways to invest in gold with a small budget?

There are various options for people with a small budget to access gold investments. Small gold bars, such as 1 gram, and gold coins are popular because they are affordable and easy to trade. Starting with coins that have significant collectible value, such as the Krugerrand or Maple Leaf, offers the chance to own gold without large investments. The fact that these coins are tradable worldwide is also a plus.

Another option is to purchase gold gradually. By investing a small amount periodically, you gradually build up a gold reserve. This is known as ‘dollar cost averaging’ and helps to absorb price fluctuations by buying at different times.

Gold ETFs are also suitable for people with a limited budget. These funds track the gold price and do not require a large initial investment. You buy a share in the fund and benefit indirectly from the generally positive price trends of gold.

The benefits of gold coins and small gold bars

Gold coins and small bars are ideal for beginning investors. They are relatively inexpensive and offer flexibility when selling. If you own a large gold bar, you have to sell it all at once, while smaller units can be sold partially with ease.

Coins like the Krugerrand and Maple Leaf are recognized worldwide, which increases their liquidity. This means you can easily sell them at market prices. Additionally, some gold coins have numismatic value, which may increase over time.

Small gold bars, ranging from 1 gram to 50 grams, come with certificates guaranteeing authenticity and purity. This provides extra assurance and trust, especially in international transactions.

What are the risks of investing in gold with a small budget?

Although gold is known for its stability, every investment carries risks. One of the biggest risks for small investors is the premium on top of the spot price. Small quantities of gold often carry higher premiums, meaning you pay significantly more than the current market price. This is partly because the transport costs of small amounts of gold are relatively high.

Price fluctuations also influence your return, especially in the short term. While gold often retains or increases in value in the long term, short periods of decline can lead to losses. It is important to remain patient and focus on the long term.

Additionally, there is a risk of theft or damage with physical gold. That’s why it is crucial to invest in secure storage, such as a certified safe or professional storage facilities—like those of our partner Edelmetaal Beheer Nederland. They offer high-security vaults in the Netherlands and Switzerland.

How to use ETFs to invest in gold without much capital?

Gold ETFs offer a simple and accessible way to invest in gold without large amounts of capital. ETFs are small investment funds that follow the same price movements as gold. Instead of owning physical gold, you purchase shares in the fund. This allows you to benefit from the gold price without the costs of storage and insurance.

One advantage of gold ETFs is the low entry barrier. With a small amount, you can already buy a share. This makes it easy to join the gold market. In addition, ETFs are liquid and easily tradable on the stock exchange.

However, it’s important to consider counterparty risks. Although ETFs are managed by professional funds, there is a risk that the institution managing the fund may not meet its payment obligations. For those seeking certainty, physical gold remains a safer choice. This is what’s known as counterparty risk.

Tips to avoid hidden costs in gold investments

When investing in gold, hidden costs can reduce your returns. Therefore, keep an eye on the premiums added to the spot price. Always choose providers that are transparent about their pricing structure and avoid those with excessively high premiums.

Also check additional costs such as storage and insurance fees. Safely storing physical gold is important, but the costs can vary. Professional storage with reliable parties provides security without unnecessary expenses.

Additionally, it’s wise to account for selling fees. Some providers charge transaction fees when selling gold. By asking in advance about all potential costs, you avoid surprises and maximize your return.

Would you like to start investing in gold and have a small budget? Contact us for personal advice. Check out our selection of affordable gold coins and gold bars.

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.