Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Guide on how to make money from gold investment

gold investment

Once you have decided to purchase gold, the obvious question is – how to make money from gold investment? The whole business of buying gold can seem daunting, especially to the beginner and you may think it’s an affair best left to experts. However, this need not be the case at all, but you need to be sure about your goals. Before answering the question about how to buy gold, the would-be purchaser needs to first decide in what form they plan to hold their gold and where they choose to buy it from.

Forms of gold

Physical vs. Digital vs. ‘Paper’ gold

The immediate choice is between physical gold, digital gold, or a “paper” version, such as an Exchange-Traded Fund (ETF), a type of security that tracks gold but trades on the stock market, like a share.

Should the buyers opt for physical gold, for example, new choices will present themselves. Should they buy gold bars or coins? Will the buyer take possession of the gold or store it in a vault? And if the latter, will the gold be “allocated” – in other words, will specific bullion be earmarked with the owner’s name on it – or will it be “unallocated” – a cheaper storage option that simply entitles the owner to gold of a certain value?

How to make money from gold investment on the internet?

Despite being the oldest monetary medium dating back millennia, buying and selling gold is now heavily done over the internet.

Even if the buyer prefers to buy gold through a more traditional route, such as over the telephone or even on the vendor’s premises, the internet is probably the best research tool in terms of comparing dealing charges, services, and other factors.

Buying gold ETFs

Gold ETFs are available through a stockbroker or a bank. Despite their “paper” or electronic status, they are usually backed by physical gold of a certain standard, although this gold may be stored in a different country or continent. Ultimately, it is highly unlikely that the buyer will ever lay eyes on it.

Buying physical gold

Physical gold can also be bought through a bank or, perhaps more commonly, through bullion dealers. Along with the up-front charges, when buying gold, it is important to compare any other fees and to look at the provision, or lack of provision, of carriage and insurance in cases where the buyer wishes to take delivery of the bullion. For those considering how to make money from gold investment via a bank or dealer, there will be vaulting charges to pay, which can vary considerably from one institution to another.

Buying gold coins or bars

In such cases, the decision between buying coins and bars usually settles itself by reference to the funds available to the buyers; coins are more suitable for those making a modest outlay, while bars offer a straightforward means of acquiring larger quantities. It is usually the case that the larger the bar, the lower the premium over the value of the gold contained within it.

That said, larger bars lack flexibility in terms of changing the size of someone’s holdings, or buying and selling – an advantage provided by buying gold coins. Furthermore, coins, being legal tender, are Capital Gains Tax (CGT) exempt in the UK.

It is also important to be aware of the differences between bullion coins and commemorative coins that carry a premium because of their numismatic value and appeal to coin collectors. When thinking about how to make money from gold investment, ensure you select only standardised bullion coins, as they offer a lower premium over the precious metal value.

Buying digital gold

Digital precious metal programmes offer an alternative way to access the precious metals market by purchasing part shares in larger gold bars.

Each part share that you own is clearly allocated and stored in a vault, meaning you do not have to deal with any storage and insurance. If you are considering how to make money from gold investment in a digital way – it is more flexible and affordable than buying bullion coins or smaller bars outright, this programme allows you to invest as much or as little as you want, making it appealing if you’d like to invest a certain amount each month while enjoying the economies of scale offered by larger bars.

Buying bullion from The Royal Mint

Buying bullion direct from The Royal Mint couldn’t be easier if you are considering how to make money from gold investment. Create and verify your Royal Mint Invest account in less than 10 minutes, add funds and purchase gold, silver, or platinum bullion immediately. All bullion is purchased at real-time prices, and you can choose to have it delivered or store your gold in The Royal Mint’s Vault. Additionally, for gold stored in The Vault, there is a guaranteed buy-back service at a competitive market price.

Investment demand

Gold also sees demand from exchange traded funds that hold the metal and issue shares that investors can buy and sell. SPDR Gold Trust (GLD) is the largest and held over 1,078 tonnes of gold in March 2021. All in all, gold purchases from various investment vehicles in 2019 were 1,271.7 tonnes, according to the World Gold Council, representing over 29% of the total demand for gold.

Production

Major players in worldwide gold mining include China, South Africa, the United States, Australia, Russia, and Peru. The world’s gold production affects the price of gold, another example of supply meeting demand. Gold mine production was roughly 3,260 tonnes in 2018 up from 2,500 in 2010.

However, despite the increase over a ten-year span, gold mining production has not changed significantly since 2016. One reason is that the “easy gold” has already been mined; miners now have to dig deeper to access quality gold reserves. The fact that gold is more challenging to access raises additional problems: miners are exposed to additional hazards, and the environmental impact is heightened. In short, it costs more to get less gold. These add to the costs of gold mine production, sometimes resulting in higher gold prices.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.