How to Invest in Gold
The price of gold is taking off as inflation rises and geo-political tensions take centre stage. We review 4 proven strategies to help you invest in gold, and consider their pros and cons.
Invest in gold and other precious metals without commission with the following CFD brokers and providers:
Best brokers
- FP Markets
Best FX Broker Australia 2021 - AvaTrade Best Mobile Trading Platform 2021
- LiteFinance Best ECN Broker, Africa 2020
- PrimeXBT Best Platform for Margin Trading, 2020 - ADVFN
- 4XC Best Customer Service 2022
Broker reviews
FP Markets is a true ECN broker with razor-thin spreads and deep liquidity. Trade CFDs on over 1,000 stocks, indices, commodities and currency pairs through MetaTrader 4 or 5. FP Markets supports all trading styles and EAs.
- Markets: Forex (CFD), Cryptos (CFD)*, Stocks (CFD), Indices (CFD), Metals (CFD), Energy (CFD), Commodities (CFD), Bonds (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4, MetaTrader 5, Copy trading
- Regulators: Australia, Cyprus (EU), Saint Vincent and the Grenadines
$100 | 1:500 | Market | |
$100 | 1:500 | Market | |
$100 | 1:500 | Market | |
$100 | 1:500 | Market | |
AvaTrade (AvaTrade.com) is an award-winning online broker. Trade CFDs on Forex, crypto-currencies, shares, metals and more on MetaTrader 4 or 5. AvaTrade accepts all Expert Advisors except those with a focus on arbitrage.
- Risk warning: 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- Markets: Forex (CFD), Cryptos (CFD)*, Stocks (CFD), Indices (CFD), Metals (CFD), Energy (CFD), Commodities (CFD), Bonds (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4, MetaTrader 5, Copy trading
- Regulators: Australia, BVI, Cyprus (EU), Gibraltar, Israel, Japan, South Africa, UAE
$100 | 1:400 | Instant | |
$100 | 1:30 | Instant | |
$100 | 1:400 | Instant | |
$100 | 1:30 | Instant | |
$100 | 1:400 | Instant | |
LiteFinance (LiteFinance.com), formerly LiteForex, is a global ECN broker. Trade CFDs on a wide range of markets on Metatrader 4 or 5, with flexible leverage up to 1:1,000. LiteFinance accepts all EAs and trading styles, including scalping and news trading.
- Risk warning: 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- Markets: Forex (CFD), Cryptos (CFD)*, Stocks (CFD), Indices (CFD), Metals (CFD), Energy (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4, MetaTrader 5, Copy trading, Mirror trading
- Regulators: Cyprus (EU), Saint Vincent and the Grenadines
$50 | 1:1000 | Market | |
$50 | 1:500 | Market | |
Start trading in minutes, without ID verification, when you fund your account with crypto. Easily buy crypto through its platform if you have none. PrimeXBT.com's trading platform was voted "Best Platform for Trading with Leverage" in 2020 and "Best Crypto and Forex Broker" in 2019.
- Markets: Forex (CFD), Cryptos (CFD)*, Indices (CFD), Metals (CFD), Energy (CFD)* Availability subject to regulation.
- Platforms: Copy trading, Mirror trading
- Regulators: Saint Vincent and the Grenadines
$40 | 1:1000 | Market | |
4xc.com is an offshore broker founded by Forex industry veterans. Trade Forex, metals, oil and stocks with leverage up to 1:500. 4XC accepts all trading styles and Expert Advisors on MT4 and 5.
- Risk warning: Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors as you could sustain losses in excess of your deposits. You should carefully consider your financial situation and experience level before trading.
- Markets: Forex (CFD), Cryptos (CFD)*, Stocks (CFD), Indices (CFD), Metals (CFD), Energy (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4, MetaTrader 5
- Regulators: Cook Islands
$10 (MT4), $ 100 (MT5) | 1:500 | Market | |
$100 | 1:500 | Market | |
$25000 | 1:500 | Market | |
Trade without restrictions with OctaFX (OctaFX.com), an international broker headquartered in St. Vincent & The Grenadines. Access CFDs on currency pairs, indices, precious metals and commodities on MetaTrader 4, MetaTrader 5 or cTrader.
- Markets: Forex (CFD), Cryptos (CFD)*, Indices (CFD), Metals (CFD), Energy (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4, MetaTrader 5, Copy trading
- Regulators: Cyprus (EU), Saint Vincent and the Grenadines
$100 | 1:500 | Market | |
$100 | 1:500 | Market | |
Trade Forex as well as CFDs on cryptocurrencies, stocks, indices and commodities with an STP/ECN broker. EagleFX (EagleFX.com) allows all trading styles and Expert Advisors on MetaTrader 4.
- Markets: Forex (CFD), Cryptos (CFD)*, Stocks (CFD), Indices (CFD), Metals (CFD), Energy (CFD)* Availability subject to regulation.
- Platforms: MetaTrader 4
- Regulators: Dominica
$10 | 1:500 | Instant | |
$10 | 1:500 | Market | |
In this article:
- Gold CFD (Contracts for Difference)
- Gold ETF (Exchange Traded Fund)
- Shares in gold miners
- Gold bullions (bars or coins)
Gold CFD (Contracts for Difference)
A contract for difference (CFD) allows you to speculate on the price of an underlying asset, without owning it. For example, if you expect the price of gold to rise above US$ 1,000 per ounce (imaginary price), you could buy 10 CFDs for US$ 10,000. If the price of gold were to rise by $100, you would net a US$ 1,000 profit (excluding trading fees).
CFDs are popular with retail traders because brokers like FPMarkets.com and AvaTrade.com offer significant leverage. For example, you could open a position worth $10,000 with a low $20 initial deposit through FP Markets, as this broker offers 1:500 leverage. If the price of gold were to rise by $100, as above, you would again make a US$ 1,000 profit on your $20 investment. Please note that the maximum amount of leverage available to you may vary based on your country.
In practice, leverage is a double-edged sword that can increase your potential gains and losses. If prices move against you, your broker will ask you to make further deposits and mazy close your position if you cannot meet a margin call. This is why we recommend using little to no leverage, and opening an account with a broker that offers negative balance protection, like FPMarkets.com, AvaTrade.com or any broker regulated in the EU. Negative balance protection means that you cannot lose more than your account's balance.
When leverage is used, gold CFDs are best suited for day traders and other investors with a short time horizon. However, gold CFD are also suitable for long term investors when no leverage is used.
Gold ETF (Exchange Traded Fund)
You could also speculate on the price of gold through an Exchange Traded Fund (ETF). Because ETFs are listed on exchanges, you can buy and sell them in the same way you invest in shares or CFDs.
The SPDR Gold Shares ETF (GLD) is the largest gold ETF, with over US$ 65 billion in assets under management. This ETF is physically backed by gold bars held in vaults, and charges a 0.40% annual management fees to cover its expenses. The iShares Gold Trust (IAU) is the second largest gold ETF and has a low 0.25% annual management fee.
Physically-backed gold ETFs are suitable for long-term investors who expect the price of gold to continue rising. If you're interested in investing in gold through an ETF, we suggest contacting your preferred broker to check whether this product is available through their service.
Shares in gold miners
Alternatively, you could buy shares in gold mining companies, or CFDs on those shares, to benefit from higher gold prices. However, share prices are driven by many factors above and beyond the price of gold. You should carefully assess the companies you plan to invest in on their own merits. A company's management team, the strength of its balance sheet and operations are some of the factors to consider.
Gold bullions (bars or coins)
Last but not least, you've probably herd of the gold bars held by central banks. These gold bricks weigh a standard 400 oz or 12.4 kg. However, gold bars come in many different sizes and shapes, from just 1 gram to 1 kilogram.
If you can't afford a gold bar, you could purchase gold coins instead. Examples include the American Golden Eagle, the Australian Gold Nugget and the British Sovereign. Some of these coins, called numismatic coins, are more expensive than others because they have rarity value as collectibles.
Together, gold bars and coins are known as bullions. You can even buy them online without having to visit a shop. However, you'll need to carefully consider where to store your gold: at home, or in a safe deposit box with a bank for example. You may also want to consider specialised insurance to protect your investment from loss or theft. Together, storage and insurance costs can add up over time.
Printable cheat sheet