How to invest in gold in the UK

Find out why investors flock to gold when markets look uneasy and how you can invest in gold.

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16 January 2023: Investors are saying that gold and battery metals are all the rage this year. Prices of these metals will be heavily dictated by the US and Chinese Government. 2023 is the year which will demonstrate the rising importance of battery metals and gold. Lithium, copper, vanadium, Cobalt, nickel and tin are likely to remain popular and continue to be able to attract speculative capital.

To most people, gold may be synonymous with expensive jewellery and Olympic medals, but to many others, gold is considered a valuable investment. This is especially the case in times of economic uncertainty or volatility, as gold is considered a “safe haven” asset that may retain its value better than other investments.

But how do you actually invest in gold, and is it really a worthwhile investment?

What is a safe haven?

A safe haven investment is typically stable in times of market volatility. A safe haven is also useful for investors looking to diversify their portfolio, decreasing exposure to riskier assets or investments.

Why is gold a ‘safe haven’?

There are many reasons people view gold a safe haven for investors. For example:

  • Gold is a physical asset
  • It is not easily created or destroyed
  • It does not change (it is resistant to oxidation, gold looks the same hundreds of years from now)
  • Cultural and historical value – gold predates modern currency, and has always been seen as beautiful and special
  • This is partly why governments turn to gold in times of financial crisis, which in itself adds to gold’s stability

Ways to invest in gold in the UK

There are a number of ways you can invest in or buy gold, from physically buying gold bullion or gold coins, to investing in gold-related stocks (such as mining companies), exchange-traded funds (ETFs) or gold derivatives like futures.

The main ways to invest or buy gold are:

  • Gold-mining stocks
  • Gold ETFs
  • Physical gold (gold bullion/jewellery)
  • Gold futures/contracts for difference (CFDs)

What is the best way to invest in gold?

This will depend on the type of investment you want to make and your risk tolerance, but investing via a gold-focused exchange-traded fund (ETF) can be a low cost, accessible way to invest in gold. By investing in a gold ETF, you can avoid the cost and hassle of buying and storing physical gold, while still getting full exposure to any potential increases in the price of gold.

However, as with any investment, there are still certain risks associated with buying a gold ETF, and if the price of gold falls, so too will the value of your investment.

Strategy 1:

Buy gold mining stocks

One option is to invest in gold mining firms. You can find many large firms listed on the FTSE 100 – although if you’re concerned about investing in Russian companies during the Russia-Ukraine war, you’ll want to look at where your chosen gold companies operate. The Alternative Investment Market (AIM) can offer access to smaller, newer enterprises. Through investing in mining stocks, you’re directly linking your capital to the success of these companies, and the changing value and price of gold.

While heavily correlated, the performance of gold mining stocks will not perfectly match the price of gold. Unlike the resource itself, companies are subject to a number of external factors such as employees taking strike action, geo-political implications for the area, natural disasters, and business decisions.

Here are some gold mining stocks you could consider:

anglo platinum logo

Barrick Gold

Barrick Gold is a Canadian-based gold mining company. Until 2019, it was the world’s largest gold mining company, when Newmont Corporation acquired Goldcorp. In 2019, Barrick Gold had 71 million ounces of gold reserves (that’s about 20 blue whales).

It has 16 different operating sites in 13 countries, including:

  • Argentina
  • Canada
  • Chile
  • Côte d’Ivoire
  • Democratic Republic of the Congo
  • Dominican Republic
  • Mali
  • Papua New Guinea
  • Saudi Arabia
  • Tanzania
  • USA
  • Zambia

Compare brokers to buy Barrick Gold shares

anglo platinum logo

Hochschild Mining

Hochschild Mining is a British gold and silver mining company. It operates in North, Central and South America, but is listed on the London Stock Exchange and is part of the FTSE250.

Hochschild Mining has mines in Peru and Argentina.

Compare brokers to buy Hochschild Mining shares

anglo platinum logo

Centamin

Centamin is a gold mining company that operates the Sukari Gold Mine in Egypt. It is listed on both the London Stock Exchange and the Toronto Stock Exchange and is part of the FTSE 250.

The Sukari mine is Egypt’s first modern gold mine with estimated reserves of 15.4 million ounces of gold.

Compare brokers to buy Centamin shares

Pros and cons of investing in gold mining stocks

Pros
  • You can pick and choose a range of stocks through a Stocks and Shares ISA, and cash out when you want.
Cons
  • Like any investment, mining stocks are not immune to risk.

Compare brokers to buy gold shares

Strategy 2:

Invest in gold exchange-traded funds (ETFs)

ETFs are another option worth considering. ETFs give access to a whole load of assets, without having to put all of your money into one or two firms. If you need to brush up on ETFs, check out our guide.

Simply, ETFs allow investors to minimise risk, while taking advantage of the performance and general popularity of a particular sector – in this case gold.

There are loads of gold-based ETFs to select from, covering off a whole host of different companies within the industry. There are mining companies, exploration companies, as well as the actual asset itself. Gold ETFs are a pretty good choice for those who are new to investing, as well as those looking to secure their portfolio.

Pros
  • ETFs allow for instant diversification across the whole gold industry, at a low price.
Cons
  • By investing in gold ETFs, you are trusting your gold portfolio to a robo—advisor, and so you naturally relinquish some control over the split of assets.

Compare brokers to buy gold ETFs

Gold ETFs in the UK

ETFTickerAnnual cost
iShares Physical Gold ETCSGLN0.25%
Invesco Physical Gold ETCSGLD0.29%
WisdomTree Physical GoldPHAU0.39%
Gold Bullion Securities LtdGBS0.40%
WisdomTree Physical Swiss GoldSGBS0.19%
WisdomTree Physical Gold GBP Daily HedgedGBSP0.39%
WisdomTree Physical Gold GBPPHGP0.39%
WisdomTree Physical Precious MetalsPHPM0.44%

If the trading platform you use has access to the US stock market and other international markets, you should also be able to invest in a range of foreign gold ETFs.

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Strategy 3:

Buy solid gold

For some people, part of the appeal of gold is being able to hold it. If you’re one of those people then good news, buying solid gold has never been easier. Traditionally, you can buy gold Bullion via the Royal Mint.

Where to buy gold in the UK

The Royal Mint is the government-owned mint that produced the UK’s coins, and is the best place to buy gold in the UK in terms of accessibility and trustworthiness. Head to The Royal Mint site and you’ll be able to choose from a range of Gold Bars. From 1g up to 1kg, you can buy it online, sometimes with a typical share dealing provider.

Alternatively, there are plenty of UK-based dealerships that will buy and sell gold for competitive prices.

Before you buy physical gold, you should make sure of the following:

  1. You have a way to store it securely. If you plan on holding the gold yourself, you should have a safe or another secure way to store the gold.
  2. The gold is real and certified. Make sure the seller is legitimate and that the gold has been tested before buying.
  3. The price is fair. It’s important that you are paying a market rate, or at least a price that you believe represents good value.

If you want to own gold but not store it yourself, many dealers will sell it and then store it on your behalf. Instead of receiving the physical gold, you will receive a gold certificate for the amount you bought. However, these certificates are only as good as the company that issues them, and it may be hard to sell off your gold.

Pros
  • You have a tangible asset which is yours to hold, store, or pass on to someone else.
Cons
  • You will need to factor in the cost of secure storage and insurance if you plan to build up a stockpile of gold. These costs will stack up over time, even if the value of your gold decreases.

Compare brokers to buy gold shares

How much is gold worth now?

Here’s a live graph of the price of gold.

Why is gold a ‘safe haven’?

There are many reasons people view gold a safe haven for investors. For example:

  • Gold is a physical asset
  • It is not easily created or destroyed
  • It does not change (it is resistant to oxidation, gold looks the same hundreds of years from now)
  • Cultural and historical value – gold predates modern currency, and has always been seen as beautiful and special
  • This is partly why governments turn to gold in times of financial crisis, which in itself adds to gold’s stability

Compare providers for access to gold ETFs and more

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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Frequently asked questions

Bottom line

Investors tend to turn to gold when markets are volatile as it’s considered to be a “safe-haven”, but that doesn’t mean it’s safe. You should make sure you know what options are available to you, that you’re aware of the risks involved in investing in gold and that you know about the costs involved.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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