How to invest in gold for beginners

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If you want to learn how to invest in gold for beginners, we will cover the basics on how to do it, what the best ways to invest in gold easily for beginner investors are and how you can profit from it.

When the economy gets rough or international conflicts like the Russo-Ukrainian war make the markets unstable, investors often turn to gold as their safe haven, especially in times like these when inflation is reaching astonishingly high rates and the stock market has been bearish for more than 6 months.

“Gold and silver are money… everything else is credit” – J.P. Morgan

What is the best way to invest in gold?

Mutual funds and ETFs are by far the easiest and safest way to invest in gold, especially for beginner investors who are willing to take a dive into the gold markets. You can purchase an ETF or a mutual fund as a share of these securities represents a fixed amount of gold.

Best of all is that you can easily buy and/or sell these securities the brokerage or retirement account of your choosing.


How Gold ETFs and mutual funds work in a nutshell

Gold Exchange-traded funds (ETFs) and mutual funds are accounts that purchase gold on behalf of investors.

The shares that make up these funds represent a fixed amount of gold and said shares can be bought and sold with the same ease as stocks.

These funds allow the investor to work and invest in gold without having to deal with the problems and extra cost that come with owning the physical asset (like gold insurance or storage costs).

There are however fees associated with buying and selling gold through ETFs or mutual funds, but they are much lower when compared with the management fees of other assets, let alone the costs of owning the real solid asset.

Is gold a good choice for beginner investors?

Gold is an excellent investment choice for beginner investors due mostly to the relative low risk and reward it offers compared to other assets and securities.

You can also easily access gold either from a brokerage account to purchase gold securities or you could also buy physical gold by bullion a local gold store from your town. However, said stores do have higher prices than other dealers.

To get the best gold for your buck I do recommend you check out any of the online gold dealers as they usually charge lower prices (spreads) for the gold you purchase.

Gold bullion

This is one of the more traditional and honestly emotionally satisfying ways to own gold. You can purchase a gold bullion in bars or coins and although it may be pricier than simply buying an ETF, you’ll have the satisfaction of looking at and touching the gold.

Like we mentioned above, owning physical gold is satisfying but can come with some drawbacks and one of them is that you need to ensure your gold to safeguard it (unless of course you want to run the risk of it being stolen)

Where to purchase gold bullion?

You can purchase gold bullion in many different ways, here are some listed:

  1. Through your local pawn shop
  2. A certified gold dealer
  3. Through an online brokerage suck as APMEX of JM Bullion to mention some

TIP: Keep in mind gold’s spot price in the markets (this is the price per ounce right now in the market) as you’re buying so you can get the best deal you can with any of the gold brokers mentioned above.

Here are the best gold bullion brokers in a nutshell:


Should I invest in gold bars or coin?

If you want to buy large amounts of gold, then we would suggest you buy gold bars as they are more in touch with the actual spot price of gold and gold coins on the other hand can be more expensive due to the sentimental value and/or historical value attached with the coin.

On the other hand, if you want to buy lower quantities of gold and take advantage of the tax benefits coins offer as well as having highly collectable pieces then we suggest you consider buying gold coins.

How can I sell my Gold for cash?

The easiest way to sell your gold is to sell it online or through a local buyer in your town, you can also sell your gold to local jewelers.

The best way however is still to sell your gold through a reputable buyer, as you’ll get a better price than you would selling it to a local pawn shop or jewelry store.

Here is a small comparison table if you want to get an idea to the main advantages, disadvantages or differences of selling gold in these ways:

Selling Gold OnlineSelling Gold Bullion OnlinePawn ShopLocal Jewelers
Price paid for your goldHighHighestLow to mediumLow to medium
Paid within24-48 hours24-72 hoursInstantlyInstantly
Minimum purchaseUsually noneUsually $1,000+VariesVaries
Price guaranteeUsually availableVariesVariesVaries

Gold ETFs or gold unit trusts

Now, we’re already covered ETFs but we will go into them a bit deeper in this section. ETFs are Exchange-traded funds and they basically purchase gold on behalf of the investor.

So whenever you buy a share of an ETF you are buying the equivalent of that amount in gold, just not physically of course.

The ETF tracks the commodity price so whenever the underlying asset price (Which in this case is gold) increases, then the value of your ETF increases semi proportionally to the rise of price in said asset.

Gold ETFs you can buy

Here are the three of the largest ETFs, these include:

ETFExpense ratio
SPDR Gold Shares (GLD)0.4
iShares Gold Trust (IAU)0.25
Aberdeen Standard Physical Gold Shares ETF (SGOL)0.17

Where to buy gold ETFs

You can buy gold ETFs through an online broker, here we have a brief list of the best brokers you can buy gold ETFs with:


Another great upside to owning an ETF over a physical gold bullion is that it’s more liquid (meaning it’s much easier to sell the asset and turn it into cash), this is because it is readily exchangeable for cash at market price.

You can trade the ETF on any day so long as the market is open for the prevailing price, it is just like selling a stock.

So Gold ETFs are more liquid than physical gold, and you can buy and sell them with your favorite broker from home.

Gold mining stocks

Gold stocks can be one of the easiest and most lucrative ways to invest in gold, this is a great way to take advantage of rising gold prices because when you buy a gold mining company stock you own the business that produces the commodity itself.

This can be one of the best alternatives for investors who do not want to get hands on physical gold and don’t want to pay the (low) operating cost of gold ETFs.

Gold stocks can be (depending on the company of course) one of the most stable long growth stocks you can buy on the market

Why? It comes down to two factors:

  • When gold price rises, the miners’ profits rise as well.
  • The mining company can raise production over time, even when gold prices are low, they can raise production to compensate for the fall in price of the asset.

Things to watch out for when buying gold mining stocks


With great management comes greater profits. A gold mining company with great management can reduce production costs and increase the company’s profitability.

PE ratios

One way to look at this is through the PE ratio of gold mining companies.

You want to make your due diligence when buying assets like gold mining stocks (or just any other financial asset) but for the purpose of this guide we will focus on the PE ratio.

What is a good PE ratio on a gold stock?

The P/E ratio is calculated by dividing the stock’s current price by its latest earnings per share. A high P/E ratio suggests that investors’ expectations regarding that stock are high, however if the P/E ratio is too high is may also mean that the stock is overvalued.

Good P/E ratios for gold mining stocks

Usually a good P/E ratio for gold stocks is between 25 and 50, anything below and you might be looking at an undervalued stock, but anything above the 50 may mean that the stock price is overvalued with regards to its earnings.

Is it better to save cash or gold?

We do not want to be the “It depends guys” but it really does depend on several factors, be it personal or macroeconomic factors.

For starters, gold is nowadays used as a safe haven asset whenever the stock market takes a steep turn downwards.

Because of its high liquidity, scarcity and historical value gold has been the ultimate form of money.

When is it better to have cash?

You might want to keep your cash whenever the markets start to go sideways, or whenever there’s a clear market bottom that’s when you can sell your gold for cash, cash in the returns and buy stocks at a cheaper price.

But you might not want to hold on to cash for the long run because inflation depreciates the value of any fiat currency.

FACT: Since 1959 the U.S dollar has lost more than 80% of its raw purchasing power

This means that if you held on to $1000USD since 1959 you would be able to purchase only $200USD worth of goods

When is it better to have gold?

Gold is convenient to park your cash in when the market starts go down because usually, when the stock market falls by a substantial amount, investors and banks alike start to buy up gold reserves thus driving the price up.

So, it is a smart decision to buy up gold when the market is on a continuing downtrend.

How can I make profit on gold?

As long as you apply the general rule of investing which is buy low sell high you will most likely make a profit on gold. You must, however be very careful with the timing.

 Analyze the market to determine whether selling your gold and turning it to cash is a good deal.

Otherwise, we would argue that is it better to hold on to gold for the long run as this asset is a safe haven and a hedge against inflation and dollar depreciation.

Bottom line

Investing in gold may or may not be for you depending on your aversity to risk, and it is best to seek the advice of a qualified financial advisor.  You can reach out to us in our contact page.

The correct amount and method of investing in this precious metal will depend based on your financial situation, risk profile and current market conditions -said factors all play a role in the best investment strategy for you.

We hope this article helped you, for more information on investing in precious metals, commodities, and jewelry we kindly ask you consider visiting our home page.

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