Ways to invest in gold

• There are more ways to buy gold than most people realize, including gold-backed exchange traded funds (ETFs) and mutual funds as well as coins and mining stocks.
• Some options are simple and low maintenance, while others require storage, insurance, or advanced know-how.
• Understanding the pros and cons of each option can help you choose the approach that fits your goals and investing style.

Gold has a way of sparking wildly different imagery in people’s minds.

Heaping stacks of bars locked inside a military-grade vault. Gold doubloons spilling out of wooden chests. And for some of us, it’s those late-night “cash for gold” ads featuring acting that…let’s just say didn’t win any awards.

Investing in gold today looks almost nothing like any of those depictions. Modern investors have far more practical (and far less theatrical) ways to add gold to a portfolio, including physically backed ETFs and mutual funds, shares of gold mining companies, futures—and yes—even gold coins and bars (pirate chest not included).

There are pros and cons to each option. Understanding those differences can help you choose the right approach for your goals, risk tolerance, and investment strategy.

Comparing different ways to buy gold

Gold-backed ETFs

Gold-backed ETFs are one of the most modern, accessible ways to invest in gold. Instead of buying and storing physical gold, you can buy shares of an ETF that holds gold in secure vaults—gold exposure without the hassle.

You get the transparency of seeing what the fund holds, the convenience of trading it on an exchange, and the flexibility to trade during market hours through a low-transaction vehicle with minimal bid-ask spreads and tracking error.

Investors should carefully review the fund’s holdings to understand how much of the ETF is actually invested in gold. This is especially important when comparing gold mining ETFs and gold mutual funds that allocate only a small portion of their assets to gold.

Benefits

• Simple and convenient: Buy and sell during the trading day, like stocks.
• No storage headaches: The fund manages vaulting and security.
• Lower costs: Storing and insuring physical gold yourself can be a pain in the wallet.
• Transparent holdings: Many gold-backed ETFs publish their holdings and storage details.
• Efficient for long-term allocation: Easy to maintain and track within a diversified portfolio.

Considerations

• Not all ETFs hold gold: Some funds own miners or gold-related stocks instead.
• Expense ratios vary: Some funds charge higher fees for the same exposure.
• No shiny bars to show off: Which is either a bummer or a relief, depending on how you feel about displaying your gold.

Gold mining stocks and ETFs

Gold mining stocks and ETFs are a different kind of gold exposure—one that’s tied to both the price of gold as well as the performance of the companies that dig it out of the ground.

While gold mining companies typically hold some physical gold, their primary goal is to mine, process, and sell it. So, you’re really investing in the business itself: its profitability, operational efficiency, production costs, management decisions, industry standing, and even geopolitical dynamics.

In other words, gold mining companies are not a direct substitute for owning gold or gold-backed funds. Sort of like investing in a fishing boat instead of a singular fish.

Benefits

• Leverage to gold prices: Mining stocks can outperform when gold prices rise.
• Company-level opportunities: Investors can look for strong management, low production costs, or growth potential.
• Thematic or diversified exposure: Mining ETFs bundle multiple companies into one trade.

Considerations

• Higher volatility: Company-specific risks and headwinds can lead to significant swings.
• Not direct gold exposure: Mining stocks may rise or fall independently of gold’s price, which defeats some of the purpose.

Gold mutual funds

Gold mutual funds are similar to gold-backed ETFs in that they both offer gold exposure and can be bought in brokerage accounts. But the underlying structure works differently.

Mutual funds trade only once per day, after the market closes. For some investors, that’s perfectly fine. For others, especially those who value intraday flexibility, it can be limiting. Just as importantly, mutual funds tend to have higher total expense ratios than comparable ETFs.¹

Benefits

• Easy access: Investors can buy and sell shares of gold mutual funds on exchanges. 
• No storage headaches: Like ETFs, gold mutual funds are responsible for maintaining their physical gold.
• Daily liquidity: Though not intraday, investors can still buy and sell gold mutual funds at the end of each trading day.

Considerations

• Tracking error: If the fund holds miners or other assets, it may not mirror the performance of actual gold. 
• Costs can be higher: Mutual funds are often more expensive to hold than ETFs.²
• No intraday trading: Shares can only be bought and sold once at the end of the day.

Gold bars and coins

Whether it’s a stack of coins in a safe (or treasure chest, we don’t judge) or a handful of deceptively heavy bars, physical gold is the classic way to own the precious metal. It’s timeless, tangible, and still surprisingly common—even Costco sells physical gold, although with purchase limits.

Tangibility has a price though. Physical gold typically costs more than the market, thanks to dealer premiums. Storage, insurance, transportation, and security all add to the total cost, which hamper the benefits you’re after. Selling physical gold can also be slower and less flexible than simply trading an ETF or mutual fund.

Physical gold appeals to investors who value the idea of direct ownership. For everyone else, the logistics may be too demanding.

Benefits

• Ownership and transparency: While there’s more responsibility, you know exactly what you own and where it is.

Considerations

• Premiums: Bars and coins tend to cost more than the market price of gold.
• Storage and insurance costs: Safes, vaults, and coverage can eat into the financial benefits. 
• Less liquidity: Selling physical gold is not as simple as pushing a button—there are more steps and likely wider spreads.
• Heavy, cumbersome, and not exactly portable: A standard gold bar weighs almost 28 pounds (glass half full: it doubles as a decent dumbbell).

Gold futures

Gold futures are one of the more complex ways to add gold to your portfolio. They’re generally used by professionals or institutions rather than everyday investors.

Gold futures contracts are not physically backed by gold. Instead, they’re an agreement to buy or sell gold at a set price on a future date. Traders use them to hedge risk or gain leveraged exposure—in other words, small price swings can lead to bigger gains (or losses). Futures trade on commodity exchanges and are subject to expiration dates and rollover obligations, which also need to be factored into the total cost of ownership.

In short, gold futures require unique knowledge about the gold market, derivatives, leverage, and risk management. So, they’re not the best vehicle for the typical investor.

Benefits

• Tactical: Useful for hedging, positioning, or short-term strategies. 
• Liquid: Futures markets are active and efficient. 
• Leverage: Small price moves can amplify gains (but the same goes for losses).

Considerations

• Complex and high risk: Leverage magnifies losses just as easily as gains.
• Not physically backed: Futures do not give you ownership of gold.
• Contracts expire: Requires rolling positions to maintain exposure, which adds cost and complexity.
• Margin calls: Traders must keep collateral on hand and meet strict margin requirements.

Why choose ETF for gold exposure

Gold ETFs have reached record levels in terms of popularity and assets under management. Since 2004, when State Street introduced the first US-listed physically backed gold ETF, SPDR® Gold Shares (GLD®), gold investing via gold-backed ETFs has grown to $559 billion in assets.⁵

It’s not hard to see why. Gold-backed ETFs are arguably the simplest, most cost-effective way to gain exposure to gold⁶ without needing a safe or secret floorboard in your home.

They also fit neatly into portfolios. Want to add gold as a diversifier during volatile markets? Or perhaps you’d prefer to maintain a small, steady allocation to gold over time? ETFs make it convenient to do so.

And because gold-backed ETFs are professionally managed and held in secure vaults, you’re getting institutional-grade access without the institutional-grade complexity.

That combination of simplicity, transparency, and low maintenance is exactly what might tip the scales in favor of ETFs over other options.

A modern take on an ancient asset

There isn’t really a right or wrong way to invest in gold—just different vehicles for different preferences. That said, gold-backed ETFs tend to stand out because they combine the staying power of gold with the convenience of modern investing. And thanks to the innovation that helped bring the first US-listed gold-backed ETF to market over two decades ago, investors today have a much easier path to owning gold than ever before.

Curious how gold compares to other alternative investments? Start with our guide on gold as a distinct and independent asset class. Or, consider exploring two of the most widely used physically backed gold ETFs: GLD® and GLDM®.