Gold has always been a safe haven in times of uncertainty, and many savvy investors are increasing their holdings given the market uncertainty and expected rise in gold prices.
If you want to buy gold, there are a few ways to go about it. You can physically buy and store gold bullion, you can track gold prices via exchange-traded funds (ETFs), or invest in mining or exploration companies.
However, a new more convenient way has emerged – buying physical gold digitally and having it stored for you. We’ll compare all the options below.
Investing in gold on the stock market.
You can invest in gold through the stock market by buying shares in gold mining companies, gold exploration companies, or via gold exchange-traded funds (ETFs).
If the gold price rises, gold-themed stocks like these are likely to rise too, however, buying stock in a company also exposes you to any operational difficulties it might be facing. Exploration companies either find gold or they don’t so they generally have the most risk, but also a higher potential return.
A gold ETF, or exchange-traded fund, acts like an individual stock and trades on an exchange in the same manner, so can also benefit from gold price increases. However, the fund itself owns the gold and the investor owns a share of the fund, subject to the performance of multiple third parties. Some ETFs only hold gold derivative contracts which increases these “counterparty” risks even further.
In short, investing in a gold ETF on the stock market can enable you to benefit from gold price increases but exposes you to some of the specific risks that gold can protect against such as overall financial system risk, share market volatility, company bankruptcy and the possibility of losing your investment.
If you want to invest in gold via the stock market, you need a full-service broker or you can do so using an online trading platform.
Investing in gold crypto-currencies.
A number of providers have offered “gold-backed crypto-currency tokens” in recent years with the idea of making gold available on blockchains like Bitcoin and Ethereum. These vary widely, and it’s not clear what legal ownership rights to gold the customer would receive, or what happens if you lose your token to hacking or technical difficulty (do you also lose your gold?).
Some bigger companies have entered this market recently, and consumers need to research whether they give them actual rights to gold or whether they are backed by gold derivatives (where instead of owning gold you are owed gold by the company). By one count more than half of all announced gold-backed crypto tokens have stopped trading and it’s not known what has happened to the gold (if any) they represented.
Investing in physical gold.
The advantage of buying physical gold (bullion or coins) is that you have a tangible asset that has traditionally held its value, and avoids the counterparty risks associated with exchange-traded funds.
You can buy gold bullion from bullion dealers. However, you do need to be sure of the quality of the gold that you’re buying. Investment-quality gold bars should be at least 99.95% pure gold. The rest is an alloy, usually silver or copper, that makes smelting possible. The London Bullion Metals Association (LBMA) is the pre-eminent standard-setting body for the global wholesale market for precious metals so look out for it.
Getting hold of the gold itself can be challenging, if you’re not collecting it yourself then it will need to be delivered to you, and you need to make sure that it’s insured in transit. Then you need to store it. Some options for storage include safety deposit boxes at your local bank, or secure vault storage, although there are storage fees for both of these options. You can also store at home, but with any of these options, you will need to make sure that your gold is adequately insured. If you choose to store your gold at home you should also expect to receive a discounted price when you sell because the buyer will need to re-confirm the gold weight, purity, and re-marketability.
Rush Gold – Digitising access to physical gold.
We’ve digitized access to physical gold to make it easier to buy and sell.
You can buy physical gold bullion digitally through our app, giving you access to all the advantages of physical gold but with all the storage and insurance handled for you and included in the transaction costs.
The gold title is in your name, so you are the individual outright owner of the gold bullion and can protect your wealth without the concerns of stock market volatility, systemic financial risk, or counterparty risk.
The gold bullion is 0.9999 (99.99% pure) gold sourced exclusively from refiners certified by the London Bullion Metals Association.
It’s stored in a Brinks high-security vault on your behalf and is physically audited by Bureau Veritas, a global Inspection and Certification service. The audit includes inspection of the vault facilities, verification of all bar counts and sizes, and random verification of bars for correct weights and serial numbers.
Rush is based in Sydney, Australia so you are protected under Australia’s strict property, consumer and financial laws, and we also insure your gold against damage or theft by Lloyd’s of London.
It only takes a couple of minutes to sign up to our app (4.6 star rating in the App Store), just a few seconds to buy or sell gold on the app, and you can open an account as an individual, an SME or a trust/SMSF.
There’s a 1% trading fee (capped at $90) to buy or sell, and storage fees are limited to 0.6% per annum, charged monthly. All insurance costs are included and there are no account opening fees or minimum transaction spends.
It’s available to residents of: Australia, Singapore, New Zealand, China, India, Jamaica, Hong Kong, Indonesia, Philippines, Vietnam, South Africa, United States of America, United Arab Emirates.
You can even use our app to send or gift gold to someone in any of these countries at no cost!