The Most Profitable Ways to Invest in Gold


When economic conditions deteriorate, or an international crisis - such as the most recent one involving Russia and Ukraine - throws the markets into a loop, investors frequently turn to gold as a safe haven. With inflation on the rise and the stock market trading well below its all-time highs, some investors are seeking a secure asset with a proven track record of returns, and gold fits the bill. In the Richest Man in Babylon, George Clason mentions the secrets of investing.

Here Are the Best Profitable Ways to Invest in Gold

  • Gold Bullion:

Buying gold in bars or coins is one of the more emotionally fulfilling methods to own. You’ll enjoy the gratification of gazing at and handling it, but if you possess more than a little portion of it, there are major negatives. One of the most significant disadvantages is the requirement to protect and insure actual gold.

Owners of actual gold must rely entirely on the commodity’s price growing in order to benefit. This is in contrast to the proprietors of a business (such as a gold mining firm), where the company may create more gold and hence more profit, increasing the investment in that business.

  • Gold Futures:

Gold futures are an excellent opportunity to speculate on the price of gold growing (or dropping). You may even accept actual delivery of gold if you choose, but physical delivery is not what motivates speculators.

The greatest advantage of using futures to invest in gold is the enormous level of leverage available. In other words, you may hold a large number of gold futures contracts for a relatively modest amount of money. If gold futures move in your favor, you may make a lot of money very rapidly.

  • Gold-related ETFs:

If you do not want the inconvenience of owning actual gold or dealing with the quick speed and margin requirements of the futures market, an exchange-traded fund (ETF) that follows the commodity is an excellent option. SPDR Gold Shares (GLD), iShares Gold Trust, and Aberdeen Standard Physical Gold Shares ETF are three of the largest ETFs (SGOL). The purpose of these ETFs is to mimic gold’s price performance minus the ETF’s yearly cost ratio. As of February 2022, the expense ratios for the funds mentioned above are merely 0.4 percent, 0.25 percent, and 0.17 percent, respectively.

Another significant advantage of holding an ETF versus bullion is that it's more easily exchangeable for cash at the market price. You may trade the fund at any time the market is open for the current price, just as you would sell a stock. As a result, gold ETFs are more liquid than real gold and may be traded from the comfort of your own home.

  • Stock Mining:

Another option to profit from rising gold prices is to buy the companies that generate it.

This may be the finest option for investors since they may earn from gold in two ways. For starters, if the price of gold rises, so will the miner’s profits. Second, the miner has the power to increase output over time, resulting in a double whammy effect.

  • ETFs that invest in mining stocks:

If you don’t want to delve too far into particular gold companies, then purchasing an ETF may make a lot of sense. Gold miner ETFs will provide you exposure to the market’s largest gold miners. Because these funds are dispersed across the industry, the underperformance of a single miner will not have a significant impact.

VanEck Vectors Gold Miners ETF (GDX), VanEck Vectors Junior Gold Miners ETF (GDXJ), and iShares MSCI Global Gold Miners ETF are among the biggest products in this category (RING). As of February 2022, the cost ratios for the funds are 0.51 percent, 0.52 percent, and 0.39 percent, respectively. These funds combine the benefits of particular mining companies with the security of diversification.

This article is part of our
Business Coaching blog series. At Dataczar we talk to a lot of small businesses. We’ve found a few books that we keep recommending time and again. To better help our customers, we’ve added a Reading List for Small Businesses to our website. We encourage every small business owner to read and keep these timeless business books on their office shelf.