Investing in gold: what is it and how do you do it?

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Investing in gold

Gold can be a stable, attractive investment. For example, in the form of jewellery or stocks. But how can you invest in gold? In this article, you’ll discover everything about it and read how you can start investing in gold with BUX today.

Gold: meaning in short

Gold is a precious metal that has been used as a valuable investment for centuries. Gold offers protection in times of economic uncertainty and high inflation. You can invest in gold in various ways, such as via physical gold, gold-ETFs, or stocks in gold mining companies. Although it doesn’t yield interest, it can help diversify your portfolio and preserve value in the long term, though there are always risks involved.

What is gold?

Gold is a precious metal that has been used as a means of payment and store of value for centuries. It is not only used for coins and jewellery but also as a raw material in industry, for example, in electronics and dentistry. Gold has unique properties: it does not rust, it does not perish, and it naturally remains particularly scarce. This makes it ideal as a store of value. Consequently, even in the modern financial world, gold remains a fascinating and valuable investment for investors.

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Which factors influence the price of gold?

The price of gold never stands still and is driven by various forces. As an investor, you naturally want to know which factors influence the gold price. Let’s list them for you:

US dollar: Gold is often priced globally in US dollars. A stronger dollar makes gold more expensive for other currencies, which can lower demand. Conversely, a weaker dollar makes gold cheaper, which can increase demand.
Monetary events: Central banks, such as the European Central Bank, influence the gold price through interest rates and printing money. A lower interest rate makes gold more attractive, as it does not yield interest but serves as a store of value.
Economic data: News about economic growth, inflation figures, and unemployment can significantly influence the gold price. Poor economic outlooks or high inflation often drive people towards gold as a safe haven.
Uncertainty: Geopolitical tensions, conflicts, or major economic crises often lead to a flight to gold. In times of turmoil, everyone seeks certainty, and gold is then seen as a safe investment.

The pros and cons of investing in gold

Investing in gold can be a smart move for your portfolio , but as with any investment, there are both sunny and less sunny sides. Let’s clearly set out the pros and cons of investing in gold side-by-side:

Advantages of Gold

Disadvantages of Gold

Stable value
Gold is an investment that often retains or even increases in value during economic uncertainty. This makes gold attractive as a hedge against inflation and currency devaluation.

No dividend or interest
Gold does not generate passive income. The profit is achieved through the appreciation of gold’s value. Though some gold mining stocks do pay a dividend.

Liquidity
You can often buy and sell gold without delay. However, this depends on how you invest in gold.

Short-term volatility
The price of gold can fluctuate significantly in the short term.

Diversification
Gold helps to spread risks, especially during market fluctuations.

Risks
Although gold is considered a relatively safe investment, it, like all other investments, carries risks.

Globally accepted
Gold is globally recognised as a store of value and has universal appeal.

Stable purchasing power in the long term
Historically, gold is among the best-performing investments. The gold price has risen steadily in recent years.

Buying gold as an investment? 6 ways you can do it

Now that you know what makes investing in gold special , it’s time to discover how you can invest in it. There are several paths that lead to this shiny precious metal, each with its own appeal. For example, stocks or other investment forms such as ETFs and jewellery. Below you will find the possible options.

1. Buying physical gold

You can buy and store physical gold bars or gold coins. These must be at least 99.5% pure. Be aware that you need a safe storage place and that you will face costs on top of the gold price.

2. Gold jewellery

Gold can also be purchased in the form of jewellery. Although this is more a purchase of aesthetic value. The price of gold is only a small part of the total cost, as craftsmanship and design can significantly drive up the price. Gold jewellery is only a good investment if you can get a good price for it.

3. Gold certificates

A gold certificate represents a certain amount of gold without you physically holding it. This is convenient for storage, but you are dependent on the issuing institution.

4. Gold stocks

With this stock investment, you invest in gold mining companies or companies related to gold mines that are listed on the stock exchange. You benefit from the rise in the gold price, but also from the performance of the specific company. You can read more about it on our page about investing in stocks.

5. Gold-ETFs and funds

With an Exchange Traded Fund (ETF) or investment fund, you invest in dozens or hundreds of companies at once, which ensures a diverse portfolio and low transaction costs. There are also funds that deal with the price fluctuations of gold. You are essentially buying a small piece of a larger pot of gold, without this being physical gold, which ensures diversification and convenience. You can read more about it on our page about investing in ETFs.

6. Gold-ETCs

An Exchange Traded Commodity (ETC) is an investment product that tracks the price of a commodity, such as gold. These are often physically backed by gold, which offers direct exposure to the gold price without the hassle of storage. They are comparable to ETFs, but specifically focused on commodities.

Investing in gold: tips for beginners

Are you ready to start investing in gold? Here are a few tips to help you get started:

Start small: Start with amounts that feel comfortable for you and build up gradually. This way, you get to know the market.
Choose the investment product that suits you: There are various ways to invest in gold. Think carefully about whether investing in gold is sensible for you. Then choose the product that best suits you. Whether it is physical gold, ETFs, or stocks. Consider what aligns with your goals and risk tolerance.
Understand your chosen investment product: Ensure you know exactly how your investment works. Know the pros and cons, the costs, and the risks.
Look at the long term: Gold is not a quick profit-maker. See it as a long-term strategy for potential wealth building.
Be aware of the consequences: Investing carries risks. You can lose part or all of your investment. Make sure you also have a financial buffer alongside your investments.

Investing in gold: how can you buy gold?

You can invest in gold via a broker, such as BUX. With us, you will find a wide range of financial instruments, including gold-related stocks, ETFs, and ETCs.

Do you prefer a hands-off approach? Then opt for the BUX Investment Plan. Easily set up your personal investment plan in the BUX app and determine the amount you want to deposit each month. This is possible from as little as €10. Then select the products that suit your goals, and we will ensure your deposit is automatically invested. All you have to do is choose a fixed day of the month and set your goal. This way, you build your returns and your financial future step by step.

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Investing involves risks. You can lose your investment.

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.