Gold has been seen as a reliable store of value since ancient times. Today, it's commonly considered to be a stable investment that doesn't experience the same volatility as stocks and other tradable assets, making it well worth considering if you're looking for a way to protect your wealth.
But if you want to buy gold bullion or invest in gold through the stock market, how do you go about it? To find out, let's take a closer look at how and where to buy gold in Australia.
When most people hear the term gold bullion, it immediately conjures up images of bank vaults stacked to the ceiling with chunky gold bars. In reality, gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Bullion is the form in which gold is traded on commodities markets around the world.
If you want to gain exposure to gold, there are a couple of ways to go about it. You can physically buy and store gold or you can invest in gold prices or companies via the stock market.
Compare online brokers that trade gold stocks and ETFs
Updated November 18th, 2019
Investing in gold on the stock market
It's possible to invest in gold through the stock market by profiting from gold prices rather than physically owning gold. Stock market investors can buy shares in companies that have gold exposure, such as gold miners, or they can buy units in a gold-themed exchange traded fund (ETF). With this approach, you don't actually buy any gold – rather you're investing in the performance of the gold industry.
If you want to invest in gold via the stock market, you need a full-service broker or you can do so using an online trading platform. The table above offers a list of options to consider.
This approach allows you to invest in gold without having to go through the hassle of buying, storing and insuring it. However, because you don't actually own any gold, it exposes you to all the usual risks that the stock market carries, such as market volatility, company bankruptcy and the possibility of losing your investment.
When you buy units in a gold-themed ETF, you're tracking the price movements of the commodity itself or stocks in multiple companies with gold exposure – read our comprehensive ETF guide for information. Gold-themed ETFs listed on the Australian Stock Exchange include:
VanEck Vectors Gold Miners ETF (ASX: GDX)
BetaShares Global Gold Miners ETF - Currency Hedged (ASX: MNRS)
ETFS Physical Gold (ASX: GOLD)
Perth Mint Gold (ASX: PMGOLD)
BetaShares Gold Bullion ETF – AU Hedged (ASX: QAU)
If you want to buy stocks in companies with gold exposure, there are dozens to choose from on the Australian Stock Exchange. Some of the most well-known are included in the table below.
ASX-listed gold stocks and ETFs
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Invest in gold via CFDs
An alternative to buying gold stocks or units in an ETF is to speculate on price movements through CFD investing in the futures market. CFD investors seek to profit from bond price movements – whether up or down. That means that even if gold prices are falling, CFD investors can still make a profit. However, because CFDs can be highly risky and are complex derivative products, CFDs are better suited to advanced traders. You can read more about CFDs in our comprehensive guide.
Investing in physical gold
This is the traditional approach and involves buying gold as a physical asset and owning it yourself. It allows you to get your hands on a tangible asset and avoid the counterparty risks associated with exchange-traded funds.
If you decide to buy physical gold, you'll then need to consider what form you'd like to acquire. You can buy gold bullion in bars or in coins. Bars are larger and therefore more expensive, but they are an effective option if you're looking to make a sizeable investment. Gold coins are smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment.
Gold bars
Gold bars generally range in size from 1/10oz (ounces) to 1kg, but there are bars of up to 500oz available. However, remember that precious metals use troy ounces and that one troy ounce equals 31.1 grams.
There are two types of gold bars: cast bars and minted bars. Cast bars are produced by pouring molten gold into an ingot mould, while minted gold bars are manufactured via a minting or stamping process. Cast bars are cheaper to produce, but minted bars look better and are generally easier to sell.
Gold coins
Mints around the world also produce gold bullion coins. Typically smaller than bars and ingots, they're generally considered to be a more convenient option for many investors. Not only are they cheaper to buy, but they also make it easier to liquidate a small portion of your investment when you need cash. Coins contain between 1/10oz and 1oz of pure gold.
These coins also have a nominal monetary value and can be accepted as legal tender in the country where they're made – examples include the Australian Kangaroo, the American Gold Eagle, the Canadian Maple Leaf and the UK's Gold Sovereign.
Compare gold bullion dealers
Updated November 18th, 2019
Deciding where to buy gold
There are several options to consider when choosing where to buy gold, so make sure to consider the following factors before deciding where to buy:
Location. There are several gold dealers around Australia, so the location of those dealers will influence your decision if you plan on buying gold in person.
Online options. There are also many online dealers that allow you to conveniently buy gold bullion over the Internet. As well as specialist dealers, you can also buy gold through marketplaces such as eBay and even arrange purchases through precious metal forums. However, as is always the case when spending money online, you'll need to make sure you know who you're dealing with – do some research to find out whether the seller is reputable and trustworthy.
How the gold was produced. You'll also need to find out where the dealer gets their gold from. Is it refined and produced by an established and recognised manufacturer?
Premiums and commissions. Read the fine print to find out what fees the dealer charges. Expect to pay a commission to the dealer, which is usually folded into the purchase price, as well as an assay fee to check the purity of the gold and to verify its authenticity, but shop around for the best value.
Compare price to Australian gold price. Gold prices are commonly quoted in US dollars, so make sure you compare the price offered by a dealer with the current price of gold in Australian dollars.
Delivery. Find out how and when the gold will be transported to you or to its place of storage. Is it insured if anything goes wrong during the delivery process?
Storing your gold
Once you've purchased your gold, you'll also need to find a safe place to store it. There are several options to consider, including the following:
Bullion dealers. Many gold dealers will also offer a storage service where you can keep your gold bars or coins for a fee, so ask about the storage options available when you make your purchase.
Safety deposit boxes. You can rent a safety deposit box at a bank to securely store your gold bullion.
Secure vault storage. For high-level security, you may want to research vault storage companies near you and the storage options they offer.
At home. You can also choose to store your gold at home. This obviously may not be as secure as some other options, so you may want to get a home safe installed. You'll also need to update your home and contents insurance to make sure your precious metal is covered by your policy.
Things to consider before buying gold
If you're searching for ways to protect your wealth or diversify your investment portfolio, gold may be a practical solution. However, please be aware that just like any other type of investment, buying gold comes with certain risks.
Do your research to make sure you understand the risks involved in buying gold, including the costs of storage and security as well as the fact that the returns may not match those provided by other investments. This will help you make an informed decision about whether buying gold is the right choice for you.
Protect your wealth. Gold has long been seen as a reliable store of value that is largely unaffected by the factors that influence other investments. For example, when share prices plummet, the price of gold usually rises as investors look for somewhere "safe" to park their money.
Diversify your portfolio. Gold's "safe haven" status also makes it well worth considering if you're looking to diversify your investment portfolio and protect your overall financial position during periods of market downturn.
Easy to buy. There are many dealers who specialise in buying and selling gold, so getting your hands on this precious metal may be easier than you think.
It's a tangible asset. If global financial systems were to somehow collapse, such as what happened during the Great Depression, owning gold as a physical asset offers financial protection. Gold also can't be destroyed by fire or water damage and won't corrode over time.
Liquid. Gold is also easy to convert to cash whenever you need to do so.
Cons
Long-term returns may be lower. Gold is commonly seen as a steady investment, so it may not offer the same potential for big returns as other investments.
There are fees to consider. You'll need to factor additional costs such as dealer fees, delivery, storage, security and insurance into your calculations.
Not as convenient as ETFs. ETFs offer a simple and cost-effective way to gain exposure to gold and may be a more convenient option than buying physical gold for many people.
No ongoing income. Unlike owning property or shares, which can both provide an ongoing source of income in the form of rent and dividends respectively, gold doesn't provide regular income.
Frequently asked questions
Some banks do sell gold to customers, but many do not. If you're interested in buying from a bank, do some research to find out which banks offer this service.
Yes, it is safe to buy gold online, provided you're purchasing from a reputable gold dealer. Make sure you thoroughly research the legitimacy of any dealer by checking to see whether they're accredited with any trade associations and by checking their reputation and how long they've been operating before deciding whether to buy.
Aside from purchasing gold as a physical commodity, there are a couple of other ways you can potentially make money from gold. For example, it's possible to invest in exchange-traded funds that track the price of gold or invest in gold mining companies. Of course, these options also come with a certain level of risk attached, and there's no guarantee of making a profit.
If you buy or sell gold in an investment form (gold of at least 99.5% purity), GST is not payable. However, if your gold bullion increases in value from the time you buy it to the time you sell it, capital gains tax may apply. Contact the ATO or your accountant for more details.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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