Since ancient times, Gold has been considered a safe investment option. It is a great option to buy gold to diversify your portfolio and protect it against economic and political instabilities.
If you are thinking about investing in gold, then this introductory guide will help you. It discusses the importance of gold investment, its pros and cons, and different ways and places to buy gold in Australia.
1. What Makes Gold A Good Investment?
Gold is treasured for its rarity, distinguishing shine, and durability. It doesn’t corrode, react quickly with other chemicals, become stained, or diminish in size. These qualities make it an attractive option to store wealth. Moreover, tech advancements have made it easier to invest in this precious metal online.
Gold is a vital tool that helps preserve wealth serving as a hedge against inflation. The benefits of gold investment don’t end here. Here is why you should consider investing in gold:
Safe and stable instrument to park your money. It is mostly unimpacted by the market volatility as shares.
It serves as a hedge against the declining dollar and increasing inflation
A great way to diversify your investments
Protects your overall financial standing when the market takes a downturn.
Easy to buy online and offline
It doesn’t corrode and get destroyed by water or fire damage
Serves as a defensive investment when economic threats arise
Easy to convert to cash whenever the need arises
2. Are There Any Drawbacks Of Gold Investment?
However, there are also a few downsides linked to investing in gold. Let's find out what they are:
Gold investment doesn’t offer huge returns. Its long-term returns are comparatively lower than other investment options.
It attracts fees such as dealer commission, delivery charges, storage charges, security fees, and insurance.
Storing a physical form of gold is risky
No ongoing income in the form of dividends (stocks), rent (real estate), etc.
3. How To Buy Gold In Australia?
Once you have decided to invest in gold, the next step is to find what is the best gold investment option for you.
Due to the mark-ups and low resale value, investment in jewellery may not be a good option.
If you want to buy gold in physical forms, you can look for other options such as gold bars and coins.
The Physical Form of Gold
Many people like this precious metal in tangible form. If you are one of them, buying gold bars and coins are ways to invest in this asset. Gold coins are the cheapest way to buy gold due to their small size. They are convenient to buy and liquidate when needed.
Gold bars are comparatively larger and more expensive than the former option. When choosing this option, you need to consider the mark-up prices and make proper arrangements for the storage and security of gold.
Buying gold in this form gives you direct exposure to gold and avoids the need to physically own it. Gold certificates are usually issued by the company that owns gold. The Perth Mint is one of the popular places to buy gold certificates.
Being supported by the Western Australian government makes it a credible place for your investment objectives.
Gold ETFs are a great way to own gold as it takes away the hassle of storing physical gold or dealing with volatility, fast pace, and margins of the futures market.
ETF is a better option over bullion as it is easily redeemable for cash at the prevailing market price on any trading day. Also, gold ETFs offer more liquidity and convenience than physical gold.
However, you should note that, just like stocks, ETFs are subjected to market volatility and incur commission and management fees.
With no mark-ups and storage risks, it is more convenient to manage than physical gold. Not only does it protect your investment, but it helps obtain the most value for your holdings.
Here are the most common Gold-themed ETFs that you can find on the ASX:
BetaShares Global Gold Miners ETF
BetaShares Gold Bullion ETF
ETFS Physical Gold
Perth Mint Gold
VanEck Vectors Gold Miners ETF
Gold Mining Shares
One of the reasons why physical gold is unappealing among investors is because it is an unproductive asset with no growth potential. In other words, the value of gold is likely to remain the same even after ten years.
Considering this, many investors have switched to gold mining shares. In this method, you buy shares of gold mining firms whose value fluctuates just like the gold commodity price.
By choosing this option, investors benefit from an increase in share value with the rise in miners’ profits and the increase in the company’s production over time.
However, to decide on the best share for gold investment, pay attention to the company's mining cost, current mine portfolio, and growth opportunities in current and new mining fields. It is best to deal with only reputed mining firms and avoid small miners.
The Futures Market
Futures contracts are traded on the ASX. It is a contract between buyers and sellers to trade a certain amount of gold at a specified price and date.
With the fluctuations in the price of gold, the value of the contract also fluctuates. Futures contracts are a highly leveraged, time-consuming, and complex investment that can magnify gains and losses. Because of that, future market investments are not recommended for beginners.
4. What Is The Best Way To Invest In Gold In Australia?
There is no perfect way to buy gold because each option comes with its benefits and risks. Physical gold or gold bullion is a popular way to buy gold. However, you must research and ensure that you buy it only from reputable and registered dealers throughout Australia.
Also, as physical gold has no value appreciation and is prone to theft, you must plan for its safe storage.
ETFs help avoid the risks involved in possessing and protecting physical gold. In this investment option, you track the price movements of the commodity or stocks in companies having gold exposure. Before investing in individual stocks, you must understand the stock market volatility and the business.
Lastly, if you are interested in using leverage to make profits from increasing gold prices, then you can think of buying gold in the futures market. Brokers provide high leverage to enable investors to own a large amount of gold for a small amount of money.
However, if the market goes against your prediction, you can incur a huge loss in less time. So, always understand the risk linked with leverage-based holdings before you invest.
Here are the pros and cons of investing in different types of gold:
(Bar, coins, Bullion)
|Gold Mining Shares||
|Gold Miner ETFs||
5. How To Invest In Gold For Beginners?
Considering gold to be a volatile investment, beginners should only invest 10% of their total investment funds in gold to diversify their portfolios. Out of all the different investment options, gold Exchange Traded Funds or ETFs are a great way to invest in gold.
It gives you direct exposure to gold. Also, shareholders benefit from its high liquidity and ability to invest directly in different forms of physical gold such as bars, bullion, and coins. You can find online brokers offering the facility to invest in gold ETFs in Australia.
Having built your gold position, you must periodically balance your portfolio to maintain the same exposure to gold. When looking at the past ten years’ return, gold has given approx. 10% return to its investors.
So, to get decent returns from your gold investment, it is suggested to buy it in small amounts over time and hold it for a long time.
6. Is It Safe To Buy Gold Online?
It is safe to buy gold online. Thoroughly research the dealer to check whether they are registered, accredited, and legitimate before choosing their service.
7. How And Where To Buy Gold In Australia Online?
Online Gold investment is a favourable option for those who:
Are interested in buying and selling gold ETFs and stocks
Aiming for long-term growth
Want to diversify their portfolio
Want to own the underlying asset
Want to gain voting rights
Do you want to know how to buy gold online? Choose any of the following options to invest in this precious asset:
Buy and store physical form of gold
Invest in gold-themed ETFs or gold stocks through the stock market
A comparison of online brokers that trade in gold stocks, ETFs, and CFDs:
|Name||Markets Served||Standard Brokerage Charges||Inactivity Fee||Global Presence|
|eToro (Recommended)||ASX shares Global Shares ETFs||"||No||Yes|
|Think Markets||ASX shares||$8||No||No|
|Saxo Capital Markets||ASX shares Global Shares ETFs||$5||No||Yes|
|IG Share Trading||Global Shares ASX shares||$8||$50 per quarter for less than 3 trades in that duration||Yes|
|CMC Markets Invest||ETFs, ASX shares, mFunds, Global shares||$0||No||Yes|
|GO Markets||ASX shares, ETFs, CFDs, Forex||$7.70||No||No|
|Superhero share trading||ASX shares, ETFs, US Shares||$5||No||Yes|
8. Steps To Buy Gold Online
Step 1: Open a CFD or stock trading account that lets you buy and sell spot gold, gold ETFs, stocks, gold options, and futures. To buy gold in Australia with eToro, open an eToro Trading Account. It gives you access to various leading stock markets.
Step 3: Understand what factors move the gold markets, such as the US dollar, political insecurity, global demand, interest rate, and mining production.
Step 4: Decide on what basis would you want to invest in gold, such as Spot prices, Gold ETFs, Gold stocks, and Futures prices.
Step 5: Choose between a gold market or your choice of gold stocks and ETFs to invest in.
Some of the largest and most popular ASX-listed gold stocks traded in Australia:
De Grey Mining shares
Regis Resources Limited
St Barbara Ltd
Northern Star Resources
West Africa Resources
Step 6: Create an investment strategy to decide whether you wish to invest in the gold CFD in the long or short term.
Step 7: Use in-platform trading and investing tools, technical indicators, trading signals, and expert technical and fundamental analysis to find the right investment opportunity.
Step 8: Start your first investment in gold by choosing your gold market/stock/ETF, specifying trade size, and clicking on the ‘buy’ or ‘sell’ button.
Step 9: Track your investment and close your position when you decide to.
9. Where To Buy Gold In Sydney?
Have you been thinking about the best place to buy gold? The Perth Mint is the largest exporter and manufacturer of precious metals. This globally recognized enterprise provides premium silver, gold, and platinum products to markets worldwide.
The Western Australian Government owns the company, which has been operating for over 120 years.
If you want to know how to buy gold from Perth Mint, you can visit the Perth Mint shop or their website. Select from their unique, impressive, and extensive treasures range, including gold nuggets, Aust collector coins, fashion jewellery, Souvenirs, and gifts.
10. How To Buy Gold Coins In Australia?
Consider the following tips when buying physical gold in Australia:
Go for a registered and reputable gold dealer as it gives assurance of authenticity and high-quality gold coins. Banks, online marketplaces like eBay, precious metal forums, or specialist online gold dealers are some places you can consider for purchase.
Ensure the purity of gold is at least 91%, which shows it is robust and can withstand the test of time. Check with the dealer whether the gold is refined and produced by a recognized and trusted manufacturer.
Ask about the commission and fees charged by the dealer. Compare them among different dealers to get competitive pricing.
Compare the dealer gold price (USD) with the gold prices in Australian dollars.
Find out when and how the gold will reach you. Also, check whether it is insured if things go wrong during its delivery.
Arrange for a secure location to store your gold investment, such as secure vault storage, safety deposit boxes, at home, or bullion dealers.
Get an insurance policy to protect yourself against natural disasters or theft.
Below is the comparison of the top gold coins dealers in Australia:
|Name||Area Served||Storage Fee||Delivery Fee|
|Online, Perth, and Sydney||1.5% per year||$25 per kg + 1% insurance fee|
|Online and Sydney||$0 to $1 million - 0.75% per year||$30 + $1.95 per oz|
|Online and Brisbane||$13/oz per year||Calculated based on location and weight|
|Online, Sydney and Melbourne||From $300 to $3,000 per year based on size||Calculated based on location and weight|
|Online and Sydney||$252 to $1018 based on size||Calculated based on location and weight|
11. How To Buy Gold Coins Safely?
Various offline and online stores sell gold coins in Australia. The Australian Bullion Company is the oldest and privately run precious metals wholesaler and retailer. If you want to know where to buy gold in Melbourne, this is the best place for all your gold needs.
Established in 1972, the company is nationally and globally recognized for selling a superior range of LBMA accredited ABC Bullion gold coins, bars, and bullion in Australia. In addition to it, there are a few banks and online gold bullion dealers that also sell gold coins.
12. Are Earnings From Gold Bullion Tax Deductible?
You do not need to pay GST if you buy or sell gold bullion (of at least 99.5% purity). However, you may incur capital gains tax if your investment increases in value and you sell.
The capital gains tax payable is determined based on the duration you have held your investment.
Whether you are looking to hedge against inflation, diversify your investment portfolio, or protect your wealth, gold can be a feasible choice. However, you must know that the investment in gold involves certain risks and fees and may not match the returns you get with other investment options.
Before investing, consider your circumstances, research and explore the pros and cons of available options. When in doubt, seek the help of a trusted financial adviser to ensure you make the best out of your investment.
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