How to buy gold stocks

Gold shares or ETFs on the stock market

It’s possible to invest in gold through the stock market rather than physically owning gold. Stock market investors in Singapore can buy stocks in companies that have gold exposure, such as gold miners, or 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 or the mining company. You can thus invest in gold without 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.

Gold 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 in Singapore.

Gold certificates

Purchasing gold certificates (also commonly known as ‘paper gold’) is similar to acquiring physical gold – without having to cart them home or stash them in a secure location yourself. In this case, you’ll be issued a certificate that can be exchanged for physical gold or cash at any time. Gold certificates have no expiration date, so you don’t have to worry about having to liquidate them.

As with all financial products in Singapore, always deal only with well-regulated entities. In the case of gold certificates, you’ll need to trust that the issuing authority will be able to uphold its legal obligations to exchange your certificates for cash or physical gold upon demand and that they’re not selling the rights for the same physical gold to multiple investors.

Gold savings accounts

Similar to gold certificates, a gold savings account allows you to trade gold as a ledger, without having to deal with the physical delivery of the precious metal. Your gold holdings will be reflected in your account balance as grams and you can transact in varying amounts.

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 in Singapore, 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 mold, 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 bullion 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 American Gold Eagle, the Canadian Maple Leaf and the UK’s Gold Sovereign.

• Gold jewellery

  

  One of the most common (but hardly the most cost-effective) way of investing in gold is in the form of wearable jewellery, such as gold wedding bands, earrings, bangles and necklaces. However, do note that gold only qualifies as Investment Precious Metal (IPM) and is exempted from Goods and Services Tax (GST) when it’s shaped in the form of bar, ingot, wafer or coin.

  With gold jewellery, you’d also have to bear the extra cost from its design and craftsmanship, which is usually included in its hefty price tag.

Compare share trading platforms to buy gold stocks

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Name	Product	Locations	Product types	Standard storage fees	Standard delivery fee	Available metals
BullionStar		Singapore, Online	Bars, Coins, Jewellery, Collectibles	0.09 - 0.59% p.a	Calculated on weight and location	Gold, Silver, Platinum		loading Fetching your data...

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What are Singapore’s gold stocks?

Some gold stocks and ETFs to consider on the Singapore Stock Exchange include:

1. SPDR Gold Trust ETF (SGX:O87)
2. CNMC Goldmine Holdings (SGX:5TP),
3. Wilton Resources Corporation (SGX:5F7)
4. Anchor Resources (SGX:43E).

Why invest in gold stocks?

• 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 stock 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 methods to buy gold — from physical owning the asset to buying shares in a gold mining stock.

The risks

• Risk of theft. Physical gold is expensive to protect and could be stolen.
• Potential volatility. Investing in specific gold mining companies exposes you to a potential downside if operational issues occur.

How do I choose the best gold stocks?

If you’re searching for ways to protect your wealth or diversify your investment portfolio, gold may be a practical solution. However, it’s important to weigh your options before investing in gold.

To find the best gold stocks for you, do some 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. Find companies with stable operations, balanced finances and promising returns according to analyst ratings. This will help you make an informed decision about which stock is right for you.