Gold prices have reached a new high this week, driven by increased investor interest in the precious metal amid economic uncertainty and expectations of a potential Federal Reserve rate cut. As of Friday’s close, spot gold is trading near $3,600 an ounce, marking a 35% gain for the year. This surge has sparked renewed attention from investors who view gold as a safe-haven asset during times of financial instability.

Blair duQuesnay, a chartered financial analyst and certified financial planner at Ritholtz Wealth Management, notes that gold has been trending higher and is gaining significant attention from investors. “Without a doubt, gold has been trending higher, and it’s getting a lot of attention from investors,” she said. The Federal Reserve Bank of Chicago highlights that gold is often seen as protection against economic downturns, performing well in low-interest-rate environments and during periods of political and financial uncertainty.

Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute, agrees that gold checks all the boxes for investors seeking stability. According to the latest investment strategy report from Wells Fargo, analysts expect ongoing gold purchases by global central banks and heightened geopolitical tensions to support demand growth for precious metals.

The ‘Tax Efficient and Low-Cost Way’ to Invest in Gold

Investors have several options when it comes to investing in gold, including physical gold and gold-related financial investments. Most experts recommend gaining exposure to gold through exchange-traded funds (ETFs) that track the price of physical gold, as part of a diversified portfolio. This approach is considered more efficient than buying actual gold coins or bars.

Samana emphasizes that during times of acute stress, gold stocks tend to underperform. “To the extent that people want exposure, a gold bullion-backed ETF does a better job than gold-related equities and gold miner stocks,” he said. The two largest gold ETFs are SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), according to ETF.com.

DuQuesnay adds that gold ETFs are the most liquid, tax-efficient, and low-cost way to invest in gold. “It’s much more inefficient to own physical gold,” she explained, citing higher transaction costs and storage considerations for bullion, including bars and coins. Alternatively, gold mining stocks are not as closely linked to the underlying price of gold and are more tied to business fundamentals, she added.

Ways to Buy Gold

There are multiple ways to buy gold, each with its own advantages and considerations:

• Physical Gold: Investors can purchase physical gold in the form of bars, coins, or jewelry. However, physical gold is marked up from the spot price, and jewelry is even more so. Physical gold can be bought from individuals, jewelers, gold dealers, and some banks. While there is no requirement to own an investing account to buy physical gold, owning real gold can require storage and safeguarding.

• Financial Investments: These include gold funds (e.g., ETFs and mutual funds), gold futures, and gold stocks. Financial gold investments can vary substantially, and investing in this way typically involves more complexity compared with owning physical gold.

How to Invest

Investors should consider the options available in their market and choose the form of investment that suits their circumstances. Here are some key methods:

• Gold-Backed ETFs & Similar Products: Physically-backed gold ETFs, ETCs, and similar products allow investors to gain exposure to gold through modern investment vehicles. These products track the performance of the underlying gold spot price and are targeted at both individual and institutional investors.

• Gold Futures, Options & Forwards: Gold futures are standardized contracts traded on regulated exchanges, offering flexibility for investors to go long or short on gold. Gold options provide the right to purchase or sell gold in the future, while forwards are bilateral agreements tailored to specific investor needs.

• Internet Investment Gold (IIG): IIG allows investors to buy physical gold online, have it stored in professional vaults, and take possession if needed. This method offers the benefits of outright ownership combined with convenience.

• Vaulted Gold: Vaulted gold provides direct ownership of gold without the need for storage, making it ideal for private investors.

• Gold Savings Plans: Regular gold savings plans allow customers to build gold holdings through periodic purchases, such as weekly or monthly contributions. These plans are targeted at mass-market consumers due to low minimum investments.

• Investment Bars & Coins: One of the simplest ways to obtain gold is through investment bars and coins, which are purchased from banks or reputable dealers. These come with a premium over the spot price and require careful handling.

• Gold Certificates: Gold certificates provide ownership of physical gold stored in professional vaults. They are particularly convenient for investors who want to own physical gold without immediate possession.