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A beginner's guide to investing in gold

Journalist: Marc Shoffman, Freelance

ended 08. November 2022

I am writing a beginner’s guide to investing in gold for MoneyWeek. I am keen to get comments on the pros and cons of investing in gold and the best/worst ways to do it. It also needs to cover where people can go to invest in gold and what some of the best funds or other place are. I am also keen on if now is a good time to buy gold and why. I would ideally need comments back by Tuesday morning if possible.

3 responses from the Newspage community

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Philip Dragoumis
Director and Owner at Thera Wealth Management
Gold is not an asset that we include in client portfolios. It produces no income or cash (unlike company shares or bonds), it has little utility (unlike copper or silver) and its price is purely dependent on what other people are willing to pay for it. You can’t value gold just as you value a company on the profits that it will make. In this respect, it is similar to cryptocurrencies in that you eventually attempt to sell to the “greater fool “. The argument also is that if paper money is worthless, gold will eventually become the only means of exchange. This is a Mad Max or Dawn of the Dead-type scenario where arguably other things might be more valuable than gold such as petrol, guns, cans of tinned food and farms. In this case, we would have a lot more to worry about than the value of our investments.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Gold has been an intrinsic store of value for centuries and is a go to asset in uncertain times. That's certainly what we are in at the moment so we should be seeing a surge in gold prices. However, because the dollar is so strong, as it's also a popular investment during periods of volatility, gold hasn't seen as much as a bounce as expected... yet. The greenback's strength won't continue for ever. The Fed know that they are in the mouth of a recession and rates will need to come down from their peak, expected in the Spring. That means it's a good time to buy gold now. Of course, you can invest directly in physical gold. You can buy coins or even bullion and hold this and watch its value increase. However this comes with concerns over safety and maybe storage costs. Alternatively you could buy a gold EFT that tracks the spot price of gold. These are cheap to invest in and you can hedge the currency to ensure that foreign exchange movements don't dent your profits. However, you could also invest in gold miners' shares or a fund of miners that would profit from an increase in prices. Centerra Gold Inc would be my pick of the gold miners if you wanted to directly invest in one company. They are a Canadian-based miner with a trailing P/E ration of only 3.6. As well as their Canadian operations, they also have a mine in Turkey.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
One does not invest in gold; one speculates on gold.