Independent Gold Guide
This independent guide to buying gold is not affiliated with any suppliers. It deals with the important questions to consider, so that you can make decisions with confidence.
This guide is provided for educational purposes only and is not intended to constitute financial, investment, legal, or tax advice. Readers should consult their own professional advisers before making decisions.
The author, Dudley Haigh, has bought gold in many different ways for more than 20 years. Dudley has a degree in Engineering Science. He trained as a financial management consultant with a Big 4 accounting firm before becoming freelance. His interest in gold arose from his interest in the economy, specifically UK house prices.
Hedge, invest or speculate?
This can be determined by understanding your primary goal, time horizon and attitude to risk, as summarised below:
| ? | Hedge | Invest | Speculate |
|---|---|---|---|
| Goal | reduce risk with an offsetting position | grow wealth with assets based on fundamental value | fast profits from price swings |
| Horizon | short to long term | long term (years to decades) | short term (hours to months) |
| Risk | risk averse | moderate risk | risk seeking |
Physical Gold, Paper Gold or Gold Mining Shares?
Physical gold refers to gold that has been delivered to you or your storage operator. Gold bullion refers to physical gold manufactured in the form of coins, rounds or bars (with a high standardised purity).
Paper gold refers to a written agreement to receive the market value of gold in the future. Paper gold includes gold certificates issued by banks & mints, shares in exchange traded commodities (ETC’s) and options & futures contracts.
Gold mining shares are equities representing ownership in a company that explores for, extracts and refines gold.
These 3 different ways of obtaining exposure to gold are suitable for different types of buyer, as summarised below:
| ? | Hedge | Invest | Speculate |
|---|---|---|---|
| Physical Gold | Yes | Yes | No |
| Paper Gold | No | Yes | Yes |
| Gold Mining Shares | No | Yes | Yes |
Physical gold offers unique benefits compared to other ways to buy gold and other investments.
You can also get exposure to gold via paper gold and mining shares, but you will not achieve these unique benefits.