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With high inflation on many minds, investors often ask whether gold is a good choice. This article explains how to invest in gold—physical bars and coins, ETFs, and mining stocks—covers whether gold hedges inflation, compares gold to stocks, and lays out the pros and cons of holding physical metal.
What is gold investing?
Investing in gold means buying and selling the metal or securities tied to it. You can own physical gold bars or coins, buy shares of gold ETFs or mutual funds, or invest in mining companies. Unlike stocks or bonds, gold produces no interest or dividends; its value rests on widespread agreement that it’s desirable and scarce, which gives it a role as a “store of value.”
How to buy gold
– Physical gold: Buy bars or coins from dealers or the U.S. Mint. Some apps (for example, Vaulted) let you buy fractional ownership of gold bars and offer storage for a fee, or the option to take physical delivery.
– ETFs and funds: SPDR Gold Shares (GLD) is a low-cost way to track gold’s price. Other options include Invesco DB Gold Fund (DGL), Franklin Gold and Precious Metals Fund (FKRCX), Sprott Physical Gold Trust (PHYS, which allows redemptions for physical gold), and Fidelity Select Gold Portfolio (FSAGX).
– Mining stocks and ETFs: Invest in companies that mine gold, or buy a miners ETF such as VanEck Gold Miners ETF (GDX). Examples of individual miners include Barrick Gold (GOLD) and Equinox Gold Corp. (EQX).
– Futures and derivatives: Contracts to buy or sell gold at a future date suit experienced traders and require careful study before use.
Coins vs bars
Neither is always better. Coins are often more recognizable and easier to sell, while bars tend to be cheaper per ounce and simpler to value. If you can’t afford a full bar, some apps and dealers sell fractional bars.
Does gold hedge inflation?
Gold is commonly thought to protect against inflation, but historical data show a mixed picture. Gold has risen during some inflationary periods and fallen during others, and there are times when gold moves independently of inflation. Studies (including work cited by Bloomberg and the World Gold Council) found that real estate and 10-year TIPS were more reliable inflation hedges than gold, with gold often ranking behind them.
Gold as insurance, not growth
Treat physical gold as a preservation tool rather than a growth investment. Over long periods, stocks have outperformed gold. For example, the S&P 500 returned about 11.93% annually over a recent 50-year span (with dividends reinvested), while gold returned about 6.93% annualized over the same timeframe. Because physical gold often sells at a premium and can incur storage and insurance costs, gold stocks or ETFs can be cheaper and easier to trade.
Risks, costs, and taxes
– Costs: Physical gold usually trades at a markup and may require secure storage or insurance.
– Risks: Theft, loss, and counterfeits (sometimes made with tungsten) are real concerns.
– Taxes: In many places, gold is taxed as a collectible, which can be taxed at higher rates than long-term capital gains (capped or taxed at higher marginal rates depending on jurisdiction).
– Volatility: Gold can be volatile, and its risk/reward profile historically underperforms stocks when adjusted for return.
Why consider a small allocation
Adding a modest amount of gold—many advisors suggest around 5% to 10% for speculative or alternative assets—can dampen portfolio volatility and act as a hedge in severe market or currency stresses. Think of gold as portfolio insurance: something you hope you never need, but that provides protection if markets or currencies suffer a severe setback.
Gold versus cryptocurrency
Cryptocurrencies, led by Bitcoin, are a newer alternative. Bitcoin’s price history shows much larger gains and higher volatility than gold; one bitcoin was worth about $0.09 in 2009 and hit a peak around $114,472 on October 26, 2025, with a later price cited near $84,848 on November 21, 2025. By comparison, gold rose from about $1,104 per ounce in 2009 to roughly $4,096 in November 2025. Crypto may suit investors with high risk tolerance seeking outsized returns, while gold appeals to those wanting a long-established store of value.
Practical approach
If you want short-term access or ease of trading, ETFs and mining stocks are convenient. If you seek a physical safety net for extreme scenarios, hold some physical gold stored securely. You can also combine approaches: keep a small physical holding, own an ETF for everyday portfolio diversification, and consider miners for leverage to gold prices.
Bottom line
Gold has long been valued and can serve as a portfolio diversifier and a store of value. It is expensive to hold, produces no income, and typically underperforms equities over long periods. Use gold strategically and in modest amounts—as insurance rather than the primary engine for wealth growth.
