Want to buy gold? Here are 3 ways ASX investors can own the precious metal

Here are 3 ways an investor can buy gold in Australia…

Rising gold asx gold shares share price buy represented by multiple hands grabbing at gold bullion

Image source: Getty Images

Key points

  • The gold price has been on the rise lately
  • Many investors are looking to gold to diversify their portfolios
  • Here are 3 ways you can get exposure to the yellow metal

Once again, gold has been a hot topic for ASX investors. The precious metal has seen renewed interest over the past few weeks as inflation concerns and geopolitical tensions have pushed up its price. Just over a month ago, gold was at a multi-month low, under US$1,780 an ounce. But the past week has seen the yellow metal spike in value. Today, it’s sitting at US$1,843 an ounce (a 2-month high), having risen from roughly US$1,816 over just the past few days.

Usually when gold goes up in price, it reflects economic or geopolitical concerns in the broader global economy. And indeed, we have recently seen tensions between the United States and Russia over the situation in Ukraine escalate dramatically. We have also seen some very elevated inflation metrics coming out of the US economy in particular.

So with all of these factors swirling around, it’s not hard to see why investors are again taking a second look at gold. But how does one invest in gold here in Australia? Here are 3 ways you can do it

3 ways ASX investors can invest in gold

Buy physical bullion

The most direct route to owning gold is by buying the physical metal itself. There are many bullion dealers across the country one can visit or contact to buy the precious metal from directly. Many investors prefer this method as it is the only way to completely own gold as an asset. There are some drawbacks though, such as the risk of theft, insurance and cost of storage.

Use an ASX ETF

Investors can also use the exchange-traded fund (ETF) structure to invest in gold indirectly. There are a few ETFs on the ASX that represent ownership of gold bullion. Perth Mint Gold (ASX: PMGOLD) is one. The ETFS Physical Gold ETF (ASX: GOLD) is another. Some investors like investing in gold this way as you don’t have to worry about storage or theft.

Additionally, buying and selling units of an ETF is arguably a lot easier than buying or selling physical bullion. But for investors who like to hold their gold, as it were, an ETF might just not cut it. There are also fees to consider. For instance, Perth Mint Gold charges an annual fee of 0.15% per annum. EFs Physical Gold ETF charges 0.4% per annum.

Buy a gold miner

Buying gold miners is another way to indirectly invest in gold. The ASX is home to more than a few too, the largest of which being Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST).

A gold miner may be a company, but most ASX 200 gold miners own mines that contain gold, and by extension, the gold itself. A miner also can pay a dividend, which is one of the few ways to extract a yield from owning gold. Investing in gold this way can also be viewed as a ‘leveraged’ bet. Miners’ costs are relatively stable, so any increase in the price of gold can result in an exponential increase in profitability (although this can cut both ways too).

But this is perhaps the riskiest way to invest in gold. Miners can go broke, or can destroy capital if the gold price sinks to a level that the mine can’t operate profitably at. There’s also longevity to consider. Mines run out eventually, and the company will need to find a new source of gold to remain viable.

Foolish takeaway

Investing in gold is not as straightforward as you might think. Investors who want to walk down the yellow brick road, as it were, need to weigh up the pros and cons of these different methods of investing in gold and see what works for them.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Sebastian Bowen owns Newcrest Mining Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Gold

A woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression on her face after watching the Ramelius share price fall today
Gold

Why has the Newcrest share price fallen 14% in a month?

What's happened to the gold miner's shares lately? Let's take a look...

Read more »

plummeting gold share price
Gold

If gold is regarded as a ‘safe-haven’ asset, why is the Newcrest share price still tumbling?

Why hasn't gold and gold miner Newcrest been a better safe haven for ASX investors?

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them as the Newcrest share price rises and the ASX 200 gold miner pays its interim dividend today
Broker Notes

Why are brokers so bullish on the Northern Star share price?

Brokers see plenty of upside for the gold miner in 2022.

Read more »

gold, gold miner, gold discovery, gold nugget, gold price,
Gold

What’s happening with the Northern Star share price on Tuesday?

Exploration activities have replaced the gold reserves lost to mining depletion.

Read more »

an older man wearing thick gold chains and a baseball cap on the side looks glumly at the camera.
Gold

Own Newcrest shares? Here’s how the share price performed in April

We check the performance of the gold miner's shares over the last month.

Read more »

a woman in a business suit holds a large solid gold bar in both hands with a superimposed image of a gagged gold line tracking upwards and featuring a swooping curved arrow pointing upwards.
Gold

Can the gold price surge above US$2,000 again this year?

Where to next for the gold price?

Read more »

A man wearing 70s clothing and a big gold chain around his neck looks a little bit unsure.
Gold

Why aren’t ASX gold shares performing better in these uncertain times?

Should gold be shining brighter in 2022?

Read more »

A little girl wearing a gold crown sulks and pokes her tongue out.
Gold

Firefinch share price tumbles 6% despite meeting gold production guidance

The miner forecasts a significant increase in the pace of its gold production for the second half of the year.

Read more »