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How to Invest in Gold?

By Brendan Mathews - Mar 21, 2014 at 2:06PM

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Is there a right way to invest in gold?

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "Realizing gold is a risky and volatile investment, do you still have any recommendations for certificates or funds?"

Investing in gold is quite a controversial subject. On one hand, it tends to be relatively uncorrelated to other assets in your portfolio. Thus, it offers some diversification benefits. But, on the other hand, it hasn't historically produced very good returns. If you want to invest in gold, the best option for most retail investors, according to Brendan, is the iShares Gold Trust ETF ( IAU 0.86% ) because it has the lowest fees. If you're a very large investor, then SPDR Gold Trust ETF ( GLD 0.84% ) could be a better choice, as it's the most liquid gold ETF.

However, at present, none of The Motley Fool's premium services recommend holding gold. We prefer to invest in stocks, which represent a fractional share of a business. Businesses create products, provide services, and generate value for shareholders, customers, employees, etc. Gold, meanwhile, just sits around incurring storage costs. So by far our preferred investments are stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

SPDR Gold Trust Stock Quote
SPDR Gold Trust
GLD
$166.63 (0.84%) $1.39
iShares Gold Trust Stock Quote
iShares Gold Trust
IAU
$33.93 (0.86%) $0.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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