The simplest thing is to buy an ETF that replicates gold: for example, the GLD, or in its European version, in euros, the PHAU. In this way, you do not have to acquire and keep gold, which is a slower process, and above all, it has more costs to buy or sell.
Gold ETFs track the price of an ounce of gold, either by purchasing physical gold or by using gold-based derivative products such as futures.
And they are very easy to acquire as if they were shares, and the commissions of the company that manages them are minimal.
In fact, GLD, which is the ETF marketed by the SPDR manager, is very liquid and efficient. This is the gold price chart superimposed on the price of the GLD ETF:
The green candles are the price of the GLD ETF, and the blue line is the price of one ounce of gold. As you can see, the ETF very accurately replicates the price of gold in dollars.
I use ETFs when I want to use gold as a hedge, I don’t get more complicated.
However, there is a problem with ETFs: they are “virtual” products. I mean, you don’t really have the gold. What happens if the company goes bankrupt or scams you?
It must be said that the probability of a large ETF company, such as SPDR, Blackrock, or Vanguard, going bankrupt and losing your investment is minimal.
However, black swans do exist, and they are always unexpected.
Who would have thought, at the beginning of 2020, that there would be a global pandemic with dire consequences for the entire globe? It had never happened.
Therefore, if we want to protect our heritage with total security, we must buy bullion.
Buying physical gold
To buy bullion, you have to go to a gold-buying/selling company.
And by the way, ingots and investment gold, in general, do not have VAT. On the other hand, gold jewelry does pay VAT.
The typical shops at street level that sell and buy gold are not usually the most recommended for commissions.
There are specialized bullion companies with all kinds of gold assets that you can visit and buy in person.
There are many more. But they don’t have gold-buying and selling offices in every city.
In addition to bullion, you can buy pure gold coins, such as the famous 1-ounce Krugerrand coins, or the British or Austrian:
Although they are beautiful (if you like these things), it is not highly recommended to buy them because you pay a certain extra cost, for the numismatic value. In fact, it is also not advisable to buy very small ingots because the purchase-sale commission is a high cost.
These would be the approximate costs of buying bars of different sizes. They are average cost, it depends a bit on the provider, although the differences are not great.
As you can see, the purchase commission is very high for small bars, and it would only be accepted from 20 grams, or better, more. Although it depends: if we are talking about long-term equity investment, that cost becomes irrelevant over the years.
The problem with physical gold is that it could be stolen from you if you have it at home.
It would be a classic robbery, old as civilization itself.
Many gold sales companies offer custody services; although they are expensive services, they are only worth it for large amounts.
Although if you don’t have a lot of gold, the truth is that they are easy to hide: The 20-gram ingot measures 4 cm x 2 cm: it is like a stamp, and it is hidden anywhere: in a storage room, inside a book, which is me.
Or if you’re afraid, for little money, you buy one of those built-in safes, with 2 cm steel doors that no one can open.
I personally, who spend all day looking at the stock market, save myself the trouble of saving gold and prefer ETFs. But if you want to protect yourself from any crisis, physical gold.
Every time I know more people who have physical gold, the truth is that it seems to me a highly recommended insurance.
