Gold prices are hitting record highs, but you don’t have to buy bars to get in on the action.
Amid economic uncertainty and geopolitical volatility, investors are often drawn to the safe-haven asset. And so far this year, gold prices haverisen 15%.
Investors also gravitate toward gold IRAs, ETFs and related products to help them diversify portfolios and hedge against inflation.
There are some drawbacks to investing in gold, though. In addition to issues with security and storage if you buy the physical asset, you only make money off gold if you sell it at a higher price—there is no income from interest or dividends.
If you’re interested in investing in gold, here’s how you can get started.
Why invest in gold?
When the geopolitical environment is tumultuous, investors look to gold as a more stable alternative. Here’s what you should consider:
Gold offers diversification
As an investor, diversification can help you avoid putting all of your eggs in one basket.
A diverse portfolio can include more than just a balance of stocks and bonds: Assets like real estate, cash and gold can round things out.
“Gold historically performs well when there’s a lot of uncertainty in the markets and people are looking for alternative ways to park their money and to protect their capital,” said Joy Yang, head of product management and marketing at MarketVector Indexes, a provider of multi-assets and digital asset index solutions.
Economic factors, as well as domestic and international politics, play a role in the demand for gold, and can influence the price. “Historically, we see that gold is kind of correlated with interest rate peaks or instability,” Yang said.
Since these factors can also affect the performance of the stock and bond markets, gold’s stability can make it an excellent diversifier.
It has a long history of holding value
Gold has long been a desirable investment. “We’ve had centuries of gold data now to look at and how people interact with gold,” Yang said.
While its spot price—or the market price for one ounce—fluctuates, gold has largely been seen as a hedge against inflation. It has also occasionally outperformed indexes like the S&P 500.
One factor that keeps the price up is based on simple economics: supply and demand. “With gold, you have to dig it out of the ground. You have to mine it. So there’s a limited supply,” Yang said. When demand spikes, prices rise, she added.
While gold’s price isn’t a constant, it is treated as a store of value that is independent, with little correlation to other assets like stocks and bonds.
How to invest with a gold IRA
A gold IRA allows consumers to invest in the precious metal while receiving the same tax benefits as a traditional IRA. Since the IRS considers gold coins and bullion as collectibles (like art or antiques), they can’t be put in a traditional IRA. Instead, gold IRAs are overseen by a broker-dealer or other IRS-approved custodian. To be sure, as with a traditional IRA, withdrawals from a gold IRA before age 59.5 are subject to a 10% penalty tax.
Rosland Capital has one of the top gold IRAs on the market thanks to its transparent setup and maintenance fees. Additionally, with a minimum purchase requirement of only $2,500, is a good pick for newer investors.
Rosland Capital
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Initial purchase requirements
Minimum purchase requirement of $2,500
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Account minimums
Minimum account balance of $2,000
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Fees
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Annual $105 Maintenance fee
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Storage Fees of $100 or $150 per year, depending on the type of storage chosen
Birch Gold Group scores high in customer service, providing clear information about its fee structure online. Founded in 2003, it’s earned an A+ from theBetter Business Bureauand an AAAfrom the Business Consumer Alliance.
Birch Gold Group
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Initial Purchase Requirements
Minimum initial purchase requirement of $10,000
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Account Minimums
Minimum account balance of $10,000
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Fees
Buy Gold ETFs
One way to buy gold is just like you’d buy a stock. “You can buy gold in an exchange-traded fund (ETF) rather than a bar of gold,” Yang said. “The benefit of an ETF is that you’re sharing the costs, it’s managed by a fund issuer who takes care of the custody, storage, insurance and liquidity.”
You can buy shares of a gold ETF with any brokerage account. CNBC Select previously named Fidelity as a top pick for its variety of investment options and no commission fees on many trades. Charles Schwab also stood out for its $0 minimum deposit for active investing and extensive planning tools.
Fidelity Investments
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go®account, but minimum $10 balance for robo-advisor to start investing
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Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
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Bonus
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Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:Fidelity Investments 529 College Savings; Fidelity HSA®
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Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Limited-time special offers
- Abundant educational tools and resources
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
- Some of Fidelity’s mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One®Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One®Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One®Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Award-winning thinkorswim®trading platforms and all their cutting-edge tools are now available at Schwab.
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Purchase physical gold
If you want to buy physical gold, consider shopping at Costco — the members-only wholesale club sells bars for a small markup with free shipping.
You can also buy from reputable gold dealers online.
However, you’ll need to plan for how to safely and securely store the asset. And eventually, if you want to convert the gold to cash, you’ll need to make a plan to sell it. You’ll need to connect with a gold dealer, and you may also have to pay taxes on the earnings as capital gains.
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Gold investing FAQs
How can a beginner invest in gold?
If you’re new to investing in gold, buying a gold ETF through a brokerage account or setting up a gold IRA are easy ways to invest in gold without having to buy and store a bar yourself.
What are the pros of investing in gold?
Investing in gold can help you diversify your portfolio. Gold is seen as a safe-haven investment, and is often popular in times of economic or political instability.
What are the cons of investing in gold?
Investing in gold can have drawbacks, especially if you’re buying physical gold that would require secure storage and can be difficult to liquidate into cash. While things like gold IRAs can help with these issues, you may pay quite a few fees for the convenience.
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Meet our experts
AtCNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewedJoy Yang, head of product management and marketing at MarketVector Indexes.
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At CNBC Select, our mission is to provide readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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