How to invest in gold
There are a number of ways you can invest in gold, from buying the yellow metal directly to investing in a gold ETF or buying gold-mining stocks. We look at the pros and cons of each strategy.
With a history stretching back to the dawn of civilisation, investing in gold is perhaps one of the most tried-and-tested economic transactions you can make.
It’s been a prosperous period for gold investors recently. Strong demand from various sources drove global gold prices to new all-time highs early in 2026.
The price of gold hit an all-time high of $5,595 on 29 January, having been driven upwards during the month by Trump’s intervention in Venezuela and rumours that the president was about to nominate a dovish chair of the Federal Reserve (Fed) to replace Jerome Powell.
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In the end, Trump went with a more hawkish Fed chair pick. Gold prices were starting to decline, before falling rapidly from the beginning of March as the conflict in the Middle East prompted a rush for liquidity.
Gold outperformed the S&P 500 in 2025 for the second calendar year in a row, and despite recent falls, it is still up 11.8% so far in 2026 – compared to 1.6% for the S&P 500. If you are considering where to invest for 2026 then an allocation to gold may well be tempting.
“The case for gold as a core portfolio allocation continues to strengthen, particularly in the current environment of persistent inflation, elevated geopolitical tension and uncertain monetary policy,” said Cosmo Sturge, director, market strategy at precious metals fund manager Baker Steel.
There are various ways that you can add gold to your portfolio. These range from buying gold bullion to investing in a gold ETF.
“Physical gold, in the form of coins and bars, offers direct ownership with no counterparty risk, appealing to investors seeking tangible wealth preservation, albeit with storage and insurance costs,” said Sturge. “Physically backed gold ETFs provide a convenient and cost-efficient alternative, delivering exposure to the gold price without the practical challenges of holding bullion.”
We take a look at the pros and cons of each approach.
Gold investing for beginners
If you’re just getting started in investing, it’s worth considering the role that gold could play in your portfolio. It’s tempting to buy gold during a bull run like the one it enjoyed last year, but even when gold prices aren’t climbing there are good reasons to include an allocation in your portfolio.
“Gold can be a highly effective hedge against governments’ monetary and fiscal profligacy (monetary debasements and currency devaluations) and tends to become the ultimate safe haven when global geopolitical shocks start to occur,” says James Luke, manager of the Schroder ISF Global Gold Fund.
Traditionally, bonds are used to diversify a portfolio away from equities, the theory being that when bonds underperform, stocks overperform, and vice versa.
However, as Luke explains, bonds have shown a greater degree of correlation with equities in the current market. As such, gold currently offers a greater level of protection against a downturn in equities markets, given its lower degree of correlation.
Despite this, most investors are relatively underweight gold. “We absolutely believe gold deserves a place in investors’ portfolios,” says Luke. “In our view a traditional 60:40 portfolio would benefit from diversifying 10% into a gold allocation.”
How to invest in physical gold
One way to add gold to your portfolio is by buying physical gold in the form of gold bars and gold coins. And though it isn’t usually purchased for investment purposes, bear in mind that any gold jewellery you buy will store value in the same way that other gold investments will.
Physical gold can be purchased from government mints such as the UK’s Royal Mint, precious metal dealers such as Sharps Pixley or GoldCore, and jewellers.
It is an unregulated market so you should be careful to avoid scams. One way to protect yourself is to always check whether a dealer is part of the London Bullion Market Association (LBMA), which sets standards across the industry.
As with any investment, it is important to do your own research on prices. Gold dealers make their money by selling for more than the spot price and buying for less. The difference – or spread – will vary depending on the gold content and weight of the bullion, who you buy from, and current supply and demand.
Gold coins can have more value than bars as they may be rarer and are often viewed as collectables, known as numismatic coins. Some forms of gold coin are tax-exempt, as they are legal tender. That means you won’t incur capital gains tax (CGT) if you sell them for a profit.
Buying gold bars or ingots is one of the most direct ways to invest in gold.
As attractive as buying a gold bar or coin may be, you should also consider the cost of delivery, insurance and secure storage. One solution may be using an online investment service such as BullionVault, which lets you invest in gold bars or coins which are stored in its vaults.
The Royal Mint also has a digital option that lets you invest in physical gold, silver or platinum based on monetary value instead of weight. It can then be stored in the Royal Mint’s vault.
Investing in gold with ETFs and ETCs
A simpler and cheaper way to invest directly in gold is through exchange-traded funds (ETFs) – or to be precise, exchange-traded commodity (ETC) products.
Analysts typically favour physical-backed ETCs, such as iShares Physical Gold (LON:SGLN), over leverage-style products that rely on derivatives, adding extra complexity.
“An ETC owns physical gold and tracks the price,” says Ben Yearsley, investment director at Shore Financial Planning. “It’s as close as most people get as it’s simple and can be held in your SIPP and ISA.”
The main benefit of using ETCs to invest in gold, according to Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, is their simplicity and cost-effectiveness.
“It’s low cost, and [an ETC] trades throughout the day,” he says.
You won’t actually own any gold directly – although The Royal Mint Responsibly Sourced Physical Gold ETC (LON:RMAP) allows investors to exchange shares for physical gold coins or bars.
Owning a gold ETF or ETC will allow you to benefit from any growth in prices. Of course, you will also lose money if the gold price drops.
Take a look at our article on the best gold ETFs for more information.
Investing in gold miners
Rather than buying actual gold, you could consider backing the companies involved in gold exploration or mining. This would mean buying shares in gold miners. This requires significantly more research than tracking the gold price, as a company’s success will be linked to its exploration activities, business strategy and management.
“While gold miners carry additional volatility versus physical gold, they can offer operational leverage to rising gold prices, as well as shareholder returns and exploration and development upside,” said Baker Steel’s Sturge. “Gold miners are currently benefitting from strong margins and are maintaining capital discipline, creating a potentially strong environment for performance.”
While investing in gold miners can come with greater reward, there is also the risk of incurring greater losses.
Investors should also pay attention to the size of the company, says Evangelos Assimakos, investment director at Rathbones Investment Management.
“Smaller companies will usually have a greater proportion of their operations in mines that have yet to start production and thus carry more execution risk should their plans get pushed further into the future or see a reduction in expected output,” he explains.
Rather than picking individual gold mining stocks – which can be more volatile compared to physical gold or gold price trackers, and therefore carry greater risk – you could select a fund consisting of gold miners. For example, the L&G Gold Mining UCITS ETF (LON:AUCP) tracks the Global Gold Miners Index, and as such holds companies like Agnico-Eagle Mines (LON:0R2J) and Newmont (LON:0R28).
The pros and cons of investing in gold
One drawback of investing in gold is the lack of income available from physical gold or through gold ETFs which don’t pay dividends.
What’s more, the price of gold can be volatile over the short or medium term, making it hard to know if you are buying at the top or bottom of the market.
However, advocates see the metal as a useful diversifier, as its value and performance don’t correlate with those of other assets. It also has a reputation for retaining its value well in periods of inflation.
“Gold’s role as a store of value and hedge against currency debasement has been reinforced in recent years, while its low correlation with general equities provides valuable diversification benefits,” said Sturge.
