How to Buy Gold: The Beginner’s Guide

Gold is a valuable addition to any portfolio, but buying it requires a thoughtful approach.

There are five main ways to buy gold—buying physical gold, holding physical gold in an IRA, investing in gold ETFs and mutual funds, investing in gold futures and options, and investing in gold stocks.

Each has its nuances to consider. In this beginner’s guide, we’ll start by explaining how to buy gold, the steps for each method, and how to avoid any pitfalls. 

5 ways to buy gold

These days, there are many ways to buy gold. You can purchase physical gold from a dealer and own your bullion, coins, or bars directly. Buying gold stocks lets you invest in gold mining companies. Gold ETFs and mutual funds give you exposure to the gold market without having to manage the physical asset. Gold futures give you an option for speculative investing. 

Each option carries its own risks. Here’s a closer look to help you choose the best approach.   

1. Purchase physical gold

Buying physical gold, like bullion, bars, or gold coins is pretty straightforward. This process begins with finding a reputable dealer online. The best dealers offer experience, expertise and integrity.  

Physical gold is tangible, so it comes with the added costs of setting up storage and possibly insurance. You can store your gold either at home or in a secure vault. Storage fees and dealer markups can affect your overall cost when buying physical gold.  

Pros

• Tangible asset

  Physical gold is an investment you can hold, which gives you some added security.

• Intrinsic value

  Gold historically retains its value, making it a reliable way to store your wealth.

• Hedge against inflation

  Gold tends to perform well during inflation.

Cons

• Storage fees

  Guarding physical gold requires a home safe or secure vault.

• Dealer markups

  Dealers mark up prices for retail so you rarely ever purchase physical gold at its spot price.

• Poor liquidity

  Selling physical gold will incur more fees and taxes.

2. Hold physical gold in an IRA

Opening a gold individual retirement account (IRA) is a valid way for investors to hold physical gold and take advantage of tax benefits. Opening a self-directed IRA account with a reputable gold IRA company is the first step to setting up a gold IRA. 

Your IRS-approved gold is overseen by a custodian and then transferred to a depository for IRS compliance. 

Holding physical gold in an IRA is more complex than buying gold directly. You should clearly understand the regulations and procedures before you consider investing in a gold IRA.  

Pros

• Tax advantages

  Your potential tax benefits are tax-deferred growth on gold held in a traditional IRA or tax-free withdrawals on gold held in a Roth IRA

• Diversification

  Including gold in your retirement account diversifies your portfolio and can reduce your risks.

Cons

• Complexity

  You must find a reputable custodian to help you navigate all the IRS regulations.

• Storage fees

  Custodians and depositories charge a fee for their services.

3. Invest in gold ETFs and mutual funds  

Investing in gold through exchange-traded funds (ETFs) and mutual funds gives you exposure to gold without dealing with physical assets.

Gold ETFs track gold prices and are traded on stock exchanges in real-time. They are frequently bought and sold, so they are more liquid than physical gold. ETFs are also significantly less expensive than physical gold or gold IRAs. 

Gold mutual funds invest in companies that handle gold products. Mutual funds are purchased directly from the fund companies and aren’t traded as frequently as stocks or ETFs. Mutual funds offer more diversity by spreading your investment across multiple assets. 

Pros

• Liquidity

  ETFs and mutual funds are easily traded and can give you quick access to your investment.

• Diversification

  You can spread your investment across multiple gold-related assets and reduce your risk.

• Reduced costs

  There are no storage fees or insurance costs associated with these products.

Cons

• Volatility

  The value of your gold ETFs and mutual funds will fluctuate with daily market conditions.

• Management fees

  While not as expensive as gold IRA management fees, ETFs and mutual funds do have a yearly management fee.

4. Invest in gold futures and options  

Gold futures and options allow you to speculate on gold prices. Futures bind you to buying or selling gold at a fixed price on a specific date. 

Options give you the choice of executing the contract or backing out without commitment from the purchase date up to a specified expiration date. The typical risk is limited to paying a nonrefundable premium to purchase the option. 

These methods of buying gold involve leverage trading, which means you can control a large amount of gold for a fraction of the price. These are the riskiest ways to buy gold. Small changes in the market price of gold can lead to significant losses or gains. 

Pros

• Leverage

  You can control large amounts of go with a small investment.

• Flexibility

  Options let you speculate without any commitments to execute the trade.

Cons

• High risk

  These investments are highly speculative and small market changes can lead to big losses.

• Complex

  This method of buying gold is complicated and only recommended for experienced investors.

5. Invest in gold stocks

An alternative way to buy gold is to purchase shares in gold mining stocks. Investors benefit from the business’s profits rather than just the price action of physical gold. Some gold stocks even pay dividends, a potential income stream. 

Gold stocks offer higher returns than other investments, especially if the company does well and gold prices rise. However, the company may perform poorly. Operational issues and broader market issues can negatively impact your investment.

Pros

• Higher returns

  Greater profits if the company performs well and gold’s price is on the rise.

• Dividends

  Some gold stocks pay dividends then can act as an income stream on top of capital gains.

Cons

• Volatile

  Gold stocks are slightly more volatile than gold because they are influenced by the company’s performance and market prices.

• Operational risk

  If the mining company has a production delay, it could negatively impact the stock price.

Why should I buy gold?

There are many reasons to consider buying gold. Historically, it has been a store of value and wealth during inflation. Gold acts as a hedge against currency devaluation and can diversify your portfolio. 

Gold’s price has been rising in recent years, and it hit its all-time high of $2,634 in September 2024. 

While all these qualities make buying gold appealing, is it a reliable option for long-term financial security? Unlike fiat and stocks, government policies don’t decrease gold’s intrinsic value. Over time it could safely protect your wealth from a financial crisis. 

Gold investments and diversification  

Gold investments are a key addition to a diverse investment portfolio. Buying gold spreads your portfolio’s risk across multiple assets, which can reduce the impact of market volatility. 

Gold performs well when other investments decline, helping protect your portfolio from the market fluctuations of traditional assets like stocks or ETFs.  

Gold as a hedge  

You may have been told: “Inflation is coming. Better buy gold!” 

Gold’s role as a hedge against inflation became meaningful in 1971 after President Nixon ended the gold standard. Since then, it’s been viewed as a safeguard against economic downturn.

Historically, gold tends to rise as inflation surges. But recently, analysts have questioned whether this is true and whether gold is the best hedge against inflation. This may have been true in the 1980s, but a more modern way of looking at gold as a hedge in the 21st century is against geopolitical concerns rather than solely inflation.  

Gold is a great option to hedge against inflation and uncertainty. However, over the long term, investing in the market historically outperforms the price of gold. With this in mind, it is important to have a well-diversified portfolio that includes stocks, bonds, cash, and possibly real estate, and no more than 5 to 10% of the portfolio allocated to gold.

Erin Kinkade, CFP®

Pros and cons of investing in gold

Pros

• Hedge against economic downturns

• Diversifies your portfolio and balances risk

• Protects your purchase power

• Global demand across all markets

Cons

• Physical gold doesn’t generate passive income like dividend stocks

• Physical gold requires secure storage at your expense

• The gold market is volatile and prices fluctuate

• Capital gains tax on gold can reduce your overall profits

What is the best way to purchase gold?

It’s important to consider your investment goals before buying gold. Physical gold is a tangible asset, but ownership comes with storage costs. Gold ETFs and mutual funds expose you to gold without handling it physically. Gold stocks carry higher returns but also carry more risk. 

Understanding the gold market and what determines its price will help you find a clearer path. But you should also ask yourself: “Do I want physical ownership or convenience?” Are you looking for short-term gains or long-term security?

Here’s a comparison table to help you decide the best way to buy gold.

Method	Best for	Pros	Cons
Physical gold	Long-term security	Direct ownership	Storage fees
Gold ETF/mutual fund	Convenience	Easy to trade	Management fees
Gold stock	Higher returns or dividends	Profits from company performance	Tied to company performance
Gold futures/options	Short term gains	Potentially high ROI	Complex and very high-risk

When deciding how to buy gold, consider:

• Your purpose for purchasing gold
• The time horizon you expect to hold the gold (physically or in a brokerage account)
• How your portfolio is currently allocated.

Your budget for your investment is also important to consider. For example, if you have a small amount to invest in gold or are new to investing in gold, I recommend a gold ETF or coins.

If you have a high risk tolerance or capacity, you may be well-suited for gold futures or options. Of course, your goals, budget, current portfolio, and risk tolerance will determine this. 

If you aren’t comfortable making this decision on your own, I recommend seeking a financial professional for assistance and ideally establishing a financial plan to ensure adding gold to your portfolio is optimal.

Erin Kinkade, CFP®

Where do I buy gold?

The best place to buy gold is from a reputable dealer that offers transparent pricing and secure storage. You can find gold dealers online, through financial institutions, or locally. 

The best practice is to look for companies with positive customer reviews on platforms like Trustpilot, which are accredited by the Better Business Bureau (BBB), and have no hidden fees. 

Our comprehensive guide on the best gold dealers provides you with detailed reviews and ratings to kick-start your due diligence. Here are some of our top recommendations.

American Hartford Gold

Best Overall

4.9 _/5

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Why American Hartford Gold is one of the best

Founded in 2015, American Hartford Gold offers an extensive range of gold and silver coins and bars, many of which are IRA-eligible. The company stands out for its educational resources, including free guides, interactive charts, and expert market commentary, making it a reliable option for those new to gold investing. 

Customers also benefit from its personalized service, and although you need to call for pricing, its transparency in product details helps buyers make informed decisions.

Priority Gold Group

Best Price Charts

4.6 _/5

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Why Priority Gold is one of the best

Priority Gold’s strength lies in its interactive price charts, allowing investors to track precious metals prices and compare them to stock market returns. The company offers gold and silver coins and bars that can be viewed online, complete with detailed specifications. 

Although pricing is provided over the phone, its commitment to transparency and helping investors make informed decisions makes it a top choice for those who want to stay on top of market trends.

Patriot Gold Group

Best for Quick Setup

4.4 _/5

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Why Patriot Gold Group is one of the best

Patriot Gold Group is well-suited for beginners because of its investment support. It offers an informational guide you can request either online or via a phone call. If you submit a request online, a representative will call you to confirm your address and answer any questions you may have. 

You can work with Patriot Gold Group to buy and sell gold and silver. It is a well-known, trusted metals dealer with strong customer reviews from many sources.

How we rated our gold dealer recommendations

LendEDU evaluates gold dealers to help readers find the best precious metal IRAs and inventories for direct purchase. Our latest analysis reviewed 550 data points from 25 dealers, with 22 data points collected from each. This information is gathered from company websites, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.