How to invest in gold from Australia

Gold has been seen as a reliable store of value since ancient times, acting as a form of currency well before money as we know it today existed.

Today, it is considered a stable investment that has the added perk of being a hedge against inflation.

There are 4 main ways that you can invest in gold from Australia:

  • Buy physical gold bullion
  • Invest in gold stocks
  • Gold exchange traded funds (ETFs)
  • Trade gold via the futures market

Choosing a type of gold asset to buy

When most people hear the term gold bullion, it immediately conjures up images of bank vaults stacked to the ceiling with chunky gold bars.

Gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Bullion is the form in which gold is traded on commodities markets around the world.

If you want to gain exposure to gold in Australia, there are a few ways to go about it. You can physically buy and store gold, you can invest in gold stocks or ETFs via the stock market or you can trade gold on the futures markets as contracts for difference (CFDs).

Compare online brokers to trade gold stocks, ETFs and CFDs

  • Share trading accounts
  • CFD trading accounts

Investing in gold on the stock market

It’s possible to invest in gold through the stock market by profiting from gold prices rather than physically owning gold.

This is done by buying shares in companies that have exposure to gold, including gold miners. This can be done through individual shares or you can buy units in a gold-themed exchange traded fund.

With this approach, you don’t actually buy any gold – rather you’re investing in the performance of the gold industry or the mining company. To invest in gold via the stock market, you need a stockbroker or online trading platform.

But remember, you own part of a business (or multiple businesses in the case of an ETF).

This means investors have an extra layer of complexity. Not only do you need to know the price of the asset, but also at what price the business can produce the raw material and be profitable. It is after all possible for the gold price to increase while the business you own loses money.

However, the flip side is also true. If your investment mines additional minerals, it could reduce your risk should the gold price fall.

ASX-listed gold stocks

There are a number of gold stocks and ETFs listed in Australia. Some of the largest and most well-known gold stocks include the following:

  • Evolution Mining (EVN)
  • Newcrest Mining (NCM)
  • Northern Star Resources (NST)
  • Regis Resources Limited (RRL)
  • St Barbara Ltd (SBM)
  • West Africa Resources (WAF)
  • De Grey Mining (DEG) shares

The following are some gold-themed ETFs listed on the Australian Securities Exchange:

  • VanEck Vectors Gold Miners ETF (ASX: GDX)
  • BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS)
  • ETFS Physical Gold (ASX: GOLD)
  • Perth Mint Gold (ASX: PMGOLD)
  • BetaShares Gold Bullion ETF – AU Hedged (ASX: QAU)

While physical gold is sometimes pegged as a “safer” investment option, gold stocks or ETFs expose you to all the usual risks that the stock market carries. This includes market volatility, company bankruptcy and the possibility of losing your investment.

When you buy units in a gold-themed ETF, you’re tracking the price movements of the commodity itself or stocks in multiple companies with gold exposure – read our comprehensive ETF guide for information.

Invest in gold via the futures market

An alternative to buying gold stocks or units in an ETF is to speculate on price movements through CFD investing in the futures market. CFD investors try to profit from gold price movements – whether up or down.

Again, you don’t own the asset itself, but instead own contracts based on the price movement.

That means that even if gold prices are falling, CFD investors can still make a profit (as well as a loss). However, because CFDs are risky and are complex derivative products, CFDs are better suited to advanced traders.

You can read more about CFDs in our comprehensive guide.

Investing in physical gold

This is the traditional approach and involves buying gold as a physical asset and owning it yourself. It allows you to get your hands on a tangible asset and avoid the counterparty risks associated with exchange traded funds.

If you decide to buy physical gold, you’ll then need to consider what form you’d like to acquire. You can buy gold bullion in bars or in coins. Bars are larger and therefore more expensive, but they are an effective option if you’re looking to make a sizeable investment. Gold coins are smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment.

There’s an obvious downside though. You need to have a place to securely store your gold.

Compare gold bullion dealers

Deciding where to buy gold

There are several options to consider when choosing where to buy gold, so make sure to keep the following in mind:

      • Location. There are several gold dealers around Australia, so the location of those dealers will influence your decision if you plan on buying gold in person.
      • Online options. Many online dealers allow you to conveniently buy gold bullion over the Internet. As well as specialist dealers, you can also buy gold through marketplaces such as eBay and even arrange purchases through precious metal forums. However, as is always the case when spending money online, you’ll need to make sure you know who you’re dealing with – do some research to find out whether the seller is reputable and trustworthy.
      • How the gold was produced. You’ll also need to find out where the dealer gets their gold from. Is it refined and produced by an established and recognised manufacturer?
      • Premiums and commissions. Read the fine print to find out what fees the dealer charges. Expect to pay a commission to the dealer, which is usually folded into the purchase price as well as an assay fee to check the purity of the gold and to verify its authenticity, but shop around for the best value.
      • Compare price to Australian gold price. Gold prices are commonly quoted in US dollars, so make sure you compare the price offered by a dealer with the current price of gold in Australian dollars.
      • Delivery. Find out how and when the gold will be transported to you or to its place of storage. Is it insured if anything goes wrong during the delivery process?

Storing your gold

Once you’ve purchased your gold, you’ll also need to find a safe place to store it. There are several options to consider, including the following:

      • Bullion dealers. Many gold dealers will also offer a storage service where you can keep your gold bars or coins for a fee, so ask about the storage options available when you make your purchase.
      • Safety deposit boxes. You can rent a safety deposit box at a bank to securely store your gold bullion.
      • Secure vault storage. For high-level security, you may want to research vault storage companies near you and the storage options they offer.
      • At home. You can also choose to store your gold at home. This obviously may not be as secure as some other options, so you may want to get a home safe installed. You’ll also need to update your home and contents insurance to make sure your precious metal is covered by your policy.

Things to consider before buying gold

If you’re searching for ways to protect your wealth or diversify your investment portfolio, gold may be a practical solution. However, please be aware that just like any other type of investment, buying gold comes with certain risks.

Do your research to make sure you understand the risks involved in buying gold, including the costs of storage and security as well as the fact that the returns may not match those provided by other investments. This will help you make an informed decision about whether buying gold is the right choice for you.

Back to top

Frequently asked questions

Related Articles

Back to top button