How to invest in gold through the stock market
There are three routes: bars or coins, an exchange-traded fund holding physical gold (such as GLD or IAU) and shares of gold miners. A fund tracks the gold price and charges a small annual fee; miners move more than gold in both directions. Gold itself pays no dividends or interest.
A bar has to be stored somewhere, and a bank buys it back for less than it sells it. A fund share is bought and sold at the market price on any trading day.
GLD and IAU hold physical gold in vaults; one share is worth a fraction of an ounce. They differ in fee and in the price of a single share.
Gold miners have nearly fixed costs, so a rise in the gold price hits their profit harder, and so does a fall. The GDX fund holds the largest of them.
Gold earns nothing by itself and can go nowhere for years. It is usually held as a small part of a portfolio against crises, not as the main investment.
- GLD (gold) over 12 months: +2.5%, year to date: −5.3%
- GDX (gold miners) over 12 months: +22.2%, year to date: −0.0%
FAQ
Which is better, a bar or a fund?
If your money is already with a broker, a fund is more convenient: no storage and no bank buy-sell spread. A bar is for those who want to own metal outside the financial system.
Does gold pay dividends?
No. The only return is the price change, and a fund also deducts its fee.
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