How to invest in gold in the UK

When you think of gold, you might picture glimmering jewellery, hidden treasure or Olympic medals. But for many, gold represents a valuable investment, particularly during times of uncertainty.

As a “safe haven” asset, gold has often retained value over time, many investors choose to hold some gold in their portfolios as a diversification tool. But with so many ways to buy or trade gold in the UK, how do beginners start and is it even worth it?

Investing in gold in the UK

Gone are the days when you’d have to head out west to the gold mines of San Fransisco to get your hands on this precious metal. With today’s technology, you can start your own gold rush from your living room if you like.

Here are some of the most popular ways to trade gold or invest in gold if you’re in the UK:

• Physical gold. This might include investing in gold coins, gold bars or gold bullion.
• Gold ETFs. Using gold exchange-traded funds (ETFs) or exchange-traded commodities (ETCs) can be an efficient and cheap way to invest your money in gold.
• Gold mining companies. Investing in gold mining shares is an alternative strategy that lets you own individual gold-related stocks.
• Trading gold. If you’d rather trade the spot price of gold you can use instruments like contracts for difference (CFDs).

1. Physical gold

This is the old school way to invest your money in gold. Owning physical gold has been popular with savers, investors, central banks, governments – and everything in between.

You can still use trusted online platforms to invest in things like gold coins, gold bars or gold bullion – and get it delivered right to your door. If you like, you can even invest in physical gold by buying yourself some bling, by which we mean gold jewellery.

Buying physical gold means that you’ve got complete and total control and ownership over the asset. However, that physical ownership also comes with some questions like how will you store your gold? How would you move it around? And, how would you eventually sell it?

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2. Gold ETFs

In the modern age, with global markets at your fingertips, gold ETFs have become an increasingly popular choice for investors looking for a fast, cheap and convenient way to invest in gold.

Using a gold ETF or gold ETC is an alternative way to own physical gold without having to manage, store or insure it yourself. With some investment apps you can buy or sell gold ETFs and ETCs paying no (or low) commissions. However, there will usually be a small ongoing percentage fee to hold an ETF investment.

It’s also important to check whether it’s an investment that purchases physical gold or one that invests in a basket of gold-related stocks. If you want to make sure you’re just investing in the underlying gold, it might be better to use a gold ETC.

A gold ETC trades exactly the same way as an ETF does on a stock exchange. A useful long-term benefit of gold ETFs and gold ETCs is that you can hold them in tax-efficient accounts like a stocks and shares ISA or self-invested personal pension (SIPP) and pay no tax if your gold investment rises.

Best gold ETFs and gold ETCs available in the UK

Gold ETC/ETF	Ticker	YTD performance (to 18 November 2024)	Link to invest
Invesco Physical Gold A	SGLD	24.80%	InvestInvestCapital at risk
iShares Physical Gold ETC	SGLN	24.65%	InvestInvestCapital at risk
Xtrackers IE Physical Gold ETC Securities	XGDU	24.66%	InvestInvestCapital at risk
Amundi Physical Gold ETC GBP	GLDA	24.67%	InvestInvestCapital at risk
WisdomTree Physical Gold	PHGP	24.50%	InvestInvestCapital at risk
WisdomTree Physical Swiss Gold	SGBX	24.77%	InvestInvestCapital at risk
Gold Bullion Securities	GBSS	24.50%	InvestInvestCapital at risk
WisdomTree Core Physical Gold	WGLD	25.11%	InvestInvestCapital at risk
HANetf The Royal Mint Responsibly Sourced Physical Gold ETC	RMAU	23.70%	InvestInvestCapital at risk
Xtracker Physical Gold ETC	XGLD	24.66%	InvestInvestCapital at risk

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

3. Gold mining companies

One of the most popular alternative ways to invest in gold is with gold mining stocks. This type of investment has some unique advantages because the share price of gold mining stocks isn’t based on the price of gold alone. So it is possible that investments can outpace the spot price of gold, and these companies can generate dividend income.

Like with gold ETFs, you’re also able to hold some of these stocks in accounts like ISAs and SIPPs. If you want to go prospecting for real high-risk, high-reward gold mining stocks, there’s even sub-sectors like junior gold mining stocks where you can invest in miners that may not have struck gold just yet and your investment performance will rely on the miner’s success or failure.

If you’d rather opt for the big dogs of the gold mining industry, here in the UK a number of top miners are listed on the London Stock Exchange (LSE) and are even members of the esteemed FTSE 100 index. This includes the likes of Glencore (GLEN), Rio Tinto (RIO) and Fresnillo (FRES).

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

4. Trading gold

If you’d like to trade gold based on the spot price (rather than invest and hold gold for the long-term), one of the best strategies is to use derivatives like contracts for difference (CFDs).

The major benefits of trading gold CFDs are that you have the ability to go long or short on gold. So, you can make money if gold goes up or down in value. You can even make money from the volatility of gold if it happens to trade sideways for long periods (something that’s happened a lot in the past). The other key upside is that trading gold CFDs can be a tax-efficient way to make a profit (if you’re successful).

Using leverage for trading gold CFDs is something that can be both a benefit or a drawback. Trading with leverage basically involves borrowing money from your broker to open bigger gold trades. This means you could maximise your profit with a successful trade, but it also means you can maximise and multiply your losses if your trade doesn’t pan out (excuse the pun).

What is the best way to invest in gold?

This depends on your personal style of investing, goals and risk appetite. The best way for you to invest might be different than it is for someone else.

However, using a gold ETF or a physical gold exchange-traded commodity (ETC) can be a low-cost, accessible way to invest. By investing in a gold ETF, you’re able to avoid the cost and hassle of buying and storing physical gold while still getting full exposure to any potential increases in the price of gold.

Like with any investment, there are still elements of risk. When buying a gold ETF, you’re still exposed to the price volatility of this commodity. If the price of gold falls, so too will the value of your investment.

How to invest in gold for beginners

If you’re a beginner investor, you should try and keep things simple if you want to invest in gold. Ideally, keep your costs low and invest in a way that you understand. How much you want to invest can also be a factor. If you’re a beginner looking at how to invest in gold with a little amount of money, this will narrow down your options.

First, think about how much money you want to invest in gold. Next, decide what method best suits your situation and profile. Understanding your own goals and long-term portfolio ambitions will help you find the right method of investing in gold. Some investors will prefer a stock-based or ETF approach, while others might prefer to look at physical gold.

Typically, gold stocks and ETFs can be cheaper, easier to store (digital), and simple to buy or sell – you can do it online using your trading platform. Buying something like physical gold sometimes requires a larger minimum investment and you also need to think about how you’ll store it and how you’d plan on selling it. Selling shares is much easier than selling physical gold.

Advantages of investing in gold

If you want to know about the benefits, this depends slightly on what you’re buying. For example, are you investing in gold coins or bars, or are you investing in a gold stock or ETF?

Whatever way you decide to invest in gold, here are some broad advantages linked to gold investments:

• Safe haven asset. Gold has a solid reputation for holding its value over decades and even centuries. When other assets like stocks are volatile, gold sometimes remains steady.
• Variety of ways to invest in gold. These days it’s easier and cheaper than ever to buy physical gold (like gold coins or gold bars), trade the spot price of gold, or invest in gold stocks and ETFs.
• Tangible asset. Similar to a bricks and mortar property, gold can be a tangible asset that you can touch and hold (if you want).
• Hedge against inflation. With the pricing power of fiat currencies (like the British pound or US dollar) falling over time due to rising prices (inflation), holding some of your money in gold can shield against this.
• International demand and liquidity. Unlike some assets, gold is a commodity that’s bought and sold all over the world, meaning there’s a steady level of demand and liquidity (making it easier to sell).
• Diversification tool. Most don’t recommend going “all-in” on gold, instead think of it like a tool for some added diversification in an investment portfolio.

Disadvantages of investing in gold

Depending on the type of gold investment you’re using, some of the key disadvantages of investing in gold include:

• Volatility. Prices can be volatile, moving sharply based on supply and demand.
• Sometimes it does nothing. Gold is just an element (throw your mind back to the periodic table and chemistry in school) that doesn’t generate any profit or cash
• Lack of income. You can’t earn dividends from physical gold, however you can if you invest in certain gold mining stocks.
• Storage and insurance. If you opt for investing your money into physical gold, you might also have to pay to store it or insure it.
• Ongoing costs. Using a gold ETF or gold ETC will mean paying an ongoing percentage fee, which you pay regardless of whether the price of gold goes up or down.
• Taxes. Depending on how you invest or trade gold, you may have to pay taxes like capital gains tax (CGT) on any profits.

Gold vs. silver

If you’re considering investing in gold and silver, they share a lot of similarities in terms of advantages and disadvantages. It’s usually gold that takes priority, but silver can be useful too. However, whether you choose to invest in gold or silver will depend on your goals and appetite for risk.

The gold market is more mature than the silver market. This means that the price of silver can be even more volatile, but it also means there can be the possibility of larger profits with silver due to growth potential. That being said, silver is less liquid than gold, so it can be harder to sell.

If you’re thinking of buying physical silver, bear in mind that silver is cheaper and bulkier. So, you’d need more storage space for a silver investment compared to a gold investment which could mean increased costs for you.

Weighing up the benefits and disadvantages of gold

Investing in gold comes with unique benefits and risks, so it’s important to understand your options and the drawbacks of buying gold in the UK. Whether you choose to invest directly in gold or indirectly through gold mining stocks, thorough research is essential.

Consider the costs involved and the potential for liquidity based on the form of gold ownership. While gold is often considered a safe haven asset, its performance during recessions can vary. There have been instances where gold prices declined following market crashes.

Is gold a safe haven?

There are plenty of reasons why investors view gold as a safe haven, for example:

• Gold is a physical asset.
• It’s not easily created or destroyed.
• It doesn’t change (it’s resistant to oxidation – gold will look the same hundreds of years from now).
• Cultural and historical value – without sounding too sentimental, it’s always been seen as beautiful and special.
• Governments turn to gold in times of financial crisis, which adds to gold’s ability to hold value.
• The use of gold predates all modern fiat currency, and most currencies used to be backed by gold.

However, these reasons do not guarantee that gold will continue to be perceived as a safe haven asset. Investing in commodities (including gold) can be a complex business, impacted by a wide range of social and economic factors – not just supply and demand.

Bottom line: Is it worth investing in gold?

If you’re wondering whether investing in gold is a good idea, well, it depends. Gold has proven to be a solid investment over long periods, holding value or increasing in value. However, the price of gold has also barely moved for long periods of time, so you need to think about the opportunity cost if you invest in gold during a flat period – which is impossible to predict.

It also makes a difference which method you choose for investing in gold as each has some pretty unique advantages and disadvantages. For example, using a gold ETF can be useful to provide some diversity and tax benefits if you hold it in a stocks and shares ISA (or other tax-efficient account), but these investments have ongoing costs you pay regardless of whether the price of gold goes up.

Frequently asked questions

• How much is gold per gram?

  This price is constantly changing – we’ve added a graph above with the latest gold price.

• How much gold is there in the world?

  The World Gold Council (WGC) estimates that around 208,874 tonnes of gold has been mined throughout history, two-thirds of which was mined after 1950. Thanks a bunch, California gold rush.

• Should I invest in gold?

  The main reason why investors choose gold is because it’s considered a safe haven, which is a type of investment that tends to perform well even during uncertain times, such as during a recession. This doesn’t mean you’re guaranteed to profit from gold, and“safe haven” doesn’t mean “safe”. It’s important not to get these confused.

  Some forms of gold ownership, like an exchange-traded commodity (ETC), are liquid and can be sold more easily than other forms of gold ownership, like physical bars.

• Why invest in gold over silver?

  Gold is worth more than silver. It’s also slightly less volatile and more liquid (but silver is still a very liquid investment).

• What is the best way to learn how to invest in gold for beginners?

  The best way is to actually try it out. You can get hands-on experience with a demo account. Plenty of providers, such as Trading 212, eToro and IG all let you open demo accounts.

• Can you profit from a fall in the price of gold?

  You can, but it’s riskier than typical buy-and-sell investing. This would be done by investing in contracts for difference (CFDs).

• How do you trade or invest in gold?

  There are a few different ways to invest in gold – you could invest in mining stocks, buy physical gold and invest in gold contracts. Consider the different pros and cons of each type of investment, as well as the risks involved.

• What moves gold markets?

  As with stocks and shares, the price of gold is determined by supply and demand.

• Does the gold price always go up in a recession?

  While it is generally true that gold prices tend to rise during times of market instability and economic downturns, there have been instances where gold prices have declined following market crashes. Looking at data from the last 5 market crashes, we can see that gold investors were down a year after the fact in 3 out of the 5 cases.

  After Black Monday in 1987, the gold price declined by 19% one year later. Similarly, after the Asian Financial Crisis in 1997 and the dotcom crash of 2000, gold prices also experienced negative returns after one year.

  Part of the reason for this is that, during a credit crunch, indebted individuals will be forced to sell everything they have to climb out of the financial ditch – including gold. This rush to raise cash puts short-term selling pressure on gold, potentially lowering its price.

• Is it better to invest in gold or gold miners?

  Gold miners offer “leveraged exposure” to the gold price, meaning that a small change in the price of gold can result in a larger change in the stock price of the mining company. However, investing in gold has no “counterparty risk”, which means its value doesn’t rely on the financial stability of another party. It’s important to consider these factors based on your risk tolerance and investment preferences.

• Can gold miners provide exposure to other metals?

  Yes, gold miners often produce other metals alongside gold. Many mining operations are not exclusively focused on gold extraction but also involve the extraction of other valuable metals and minerals found in the same deposits. These metals can include silver, copper, zinc, lead, nickel and others, depending on the specific mining site and the composition of the ore. Gold mining companies often have diversified operations to take advantage of the presence of multiple metals in their mining projects.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.