How to Invest in Gold

Publication Type: Investment Cases , Investments
How to Invest in Gold

In this blog, we look at gold and how investors can access it through Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs) to include in their investment portfolios.  The reason why gold holds appeal for investors is that is a store of value that can provide protection both against inflation and also as a diversifier in a portfolio made up of equities and bonds.  In an environment when inflation has been at historically low levels, it is generally for this latter reason that investors will look to include gold in a portfolio. 

Put simply, investors expect gold to do relatively well when financial markets become stressed.  Growing investor uncertainty, sometimes reflected in a rise in the VIX index of volatility, is often the time when you will see growing investor interest in gold.  There is no typical allocation to gold in a portfolio.  It will depend on investor preferences, but allocations probably typically fall in the range of 3-10%. 

Way to invest in gold

In this section, we will look at the different types of exposure that investors can take to gold, focusing on products that are listed on London Stock Exchange.  In the first category, we look at exposure to the gold through physically-backed products, those are products that are backed by London Bullion Market Association (LBMA) Good Delivery bars that weight approximately 400 troy ounces.  For more on Good Delivery, please visit the LBMA website

Physically-backed gold ETCs

These products have proved particularly popular because of their metal backing and have been used by different types of investor from pension funds through to individual investors.  They track the spot price of gold less the product management fee.  For investors who want to remove the US dollar exposure, it is possible to take currency-hedged exposure. 

Product name ISIN Ticker

Amundi Physical Gold ETC



Gold Bullion Securities



HANetf The Royal Mint Physical Gold ETC Securities



Invesco Physical Gold A



iShares Physical Gold ETC



WisdomTree Physical Gold



WisdomTree Physical Swiss Gold



Xtrackers Physical Gold ETC



Physical Gold (GBP Hedged)


Invesco Physical Gold GBP Hedged ETC



WisdomTree Physical Gold - GBP Daily Hedged



Xtrackers Physical Gold GBP Hedged ETC




Index-tracking gold ETC

In this category, the ETC tracks a Bloomberg Gold Subindex, which is priced off gold futures, with exposure being rolled between a pre-determined future at a set interval as set out in the index methodology.  This ETC will appeal to more sophisticated investors, particularly those who believe that there may be scope for outperformance through exposure to the underlying gold futures relative to those generated from exposure to the spot price.  This ETC obtains its performance through a collateralised swap.

Product name ISIN Ticker

WisdomTree Gold




Short and leveraged gold ETCs

These exposures are for sophisticated investors who want to express high conviction, directional views on gold or to use the ETC to hedge risk.  These ETPs obtain their performance through a collateralised swap.

Product name ISIN Ticker

WisdomTree Gold 3x Daily Leveraged



WisdomTree Gold 2x Daily Leveraged



WisdomTree Gold 3x Daily Short



WisdomTree Gold 1x Daily Short




Gold mining UCITS ETFs

Another way that investors can take exposure to gold is to invest in ETFs that provide exposure to gold miners, which can sometimes be highly geared to the gold price, meaning that their prices can rise faster than the gold price.  While this may be the case, investors need to consider that by buying an equity ETF they are taking on broad equity market and stock-specific risks, which may lead to adverse performance and something that would not occur with direct exposure to the metal itself.

Product name ISIN Ticker

VanEck Vectors Junior Gold Miners UCITS



VanEck Vectors Gold Miners UCITS ETF



Market Access NYSE Arca Gold Bugs UCITS ETF



L&G Gold Mining UCITS ETF



iShares Gold Producers UCITS ETF




Ten fun facts about gold

  1. 187,200 tonnes – Around 187,200 tonnes of gold have been mined since the beginning of civilisation.
  2. 2316 troy ounces – The largest ever true gold nugget weighed 2316 troy ounces when found at Moliagul in Australia in 1869. It was called the “Welcome Stranger”.
  1. 49ers – The 40,000 miners who joined the California Gold Rush in 1849 were called “49ers”. Only a very small number of them ever got rich.
  1. 90% – Over 90 per cent of the world’s gold has been mined since the California Gold Rush.
  1. 21 metres cubed – All of the gold ever mined would fit into a crate of 21 metres cubed.
  1. 2 million – If all of the existing gold in the world was pulled into a 5 micron thick wire, it could wrap around the world 11.2 million times.
  1. One ounce of gold can be beaten into a translucent sheet 0.000018 cm thick and covering 9 square metres; or pulled into a wire 80 km (50 miles) long
  1. 1oz – It is rarer to find a one ounce nugget of gold than a five carat diamond.
  1. 103 grams – There are just over 31 grams in a troy ounce of gold.
  1. 49% – Around half of all gold mined today is made into jewellery, which remains the single largest use for gold.

Source:  World Gold Council, Gold Facts


Final thoughts

Gold has been a store of value and much sought after since ancient times, and, based on continuing demand for jewellery, it is probably safe to say that it won’t be going out of fashion any time soon.  As an investment, the first physically-backed gold ETC was listed on London Stock Exchange in 2004 to meet the need of investors who want exposure to the metal as a diversifier.   In October 2020, there are over 10 physically-backed gold ETCs listed in London reflecting the breadth of investor interest in taking exposure to the yellow metal either as a ‘safe haven’ asset or simply because they have a positive view on the outlook for gold prices.

As with any investment, it is important to recognise that the price of gold will move up and down, and there will be periods when gold is out of favour.  Gold remains very much a bellwether of sentiment about the state of the global economy and its price will be driven by factors such as the strength of the US dollar, interest rates and their outlook, as well as the levels of jewellery demand and buying by central banks.  The global Covid-19 pandemic and associated economic crisis have made 2020 one of those years when gold has been very much in demand by investors.

If you are you a sophisticated investor looking for alternative investment solutions, then GraniteShares short and leveraged single stock ETPs on UK blue chips and US tech stocks could be exactly what you’ve been looking for!

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