1. Physical gold
Physical gold is gold held in its tangible form, including gold bullion and gold jewellery. It refers to gold assets that can be physically touched, held, and stored, rather than being held through a financial instrument or digital record.
Gold bullion is physical gold produced primarily for investment purposes with a stated weight and purity, which includes gold bars, ingots, coins, and gold biscuits. Investment-grade bullion is typically at least 99.5% pure, while standard gold bars traded in global markets range from 1 gram to 400 troy ounces, with the 400-ounce bar being the benchmark used by central banks and bullion vaults. Gold jewellery is gold shaped into wearable items, where value comes from both gold content and craftsmanship. Investors typically prefer bullion because its pricing more closely tracks the spot gold price than jewellery, which includes additional manufacturing and retail costs.
You can buy physical gold through bullion dealers, banks, government mints, jewellery retailers, and precious metals exchanges. According to the World Gold Council, global physical gold demand consistently exceeds 4,000 tonnes per year, driven mainly by jewellery consumption, bar and coin investment, and central bank purchases. Ownership requires arranging storage, such as a home safe, bank safe-deposit box, or professional vaulting service. Buyers must also account for insurance and security.
The key benefit of physical gold investment is tangible ownership with no reliance on financial intermediaries. Physical gold carries no counterparty risk and has historically retained value during periods of extreme market stress, currency devaluation, inflation, and deflation. While physical gold is less liquid and more costly to store than digital gold products, its direct ownership and independence from financial systems give it long-term defensive value for wealth preservation.
2. Gold certificates
Gold certificates are documents that represent ownership of a specific amount of gold stored by an issuing institution. Each certificate corresponds to a defined gold weight, commonly measured in grams or troy ounces, rather than physical possession by the investor.
Gold certificates are typically issued in allocated or unallocated form. Allocated certificates represent ownership of specific gold bars that meet investment-grade purity standards of at least 99.5%, while unallocated certificates represent a claim on a pool of gold held by the issuer. Certificate denominations can range from as small as 1 gram to kilogram-level holdings, depending on the issuer.
You can obtain gold certificates from banks, bullion dealers, government-linked programs, and authorized precious metals institutions. Participation usually involves purchasing certificates directly from the issuer, with ownership recorded through documentation rather than physical delivery.
The key benefit of buying gold certificates is exposure to gold ownership without handling or storing physical gold. Gold certificates provide a simpler and more cost-efficient way to gain gold exposure than physical gold, although ownership depends on the issuer’s ability to honor the claim.
3. Gold ETFs
Gold ETFs are exchange-traded funds that give investors exposure to gold without owning physical gold. They are a specific category of ETFs designed to track the price of gold, either by holding gold bullion directly or by using gold-linked instruments. Gold ETFs are often described as paper gold because ownership is recorded electronically rather than through physical possession.
Examples of gold ETFs widely used by investors include SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), both of which hold physical gold bullion in vaults to mirror the performance of the gold price. SPDR Gold Shares in particular has become one of the largest and most liquid gold-backed ETFs globally, with assets reaching over US$134 billion at times.
You can buy gold ETFs through stock exchanges using a brokerage account. Gold ETF units trade like shares during market hours, allowing investors to buy or sell them at market prices through standard equity trading platforms.
The key benefit of buying gold ETFs is highly liquid and cost-efficient access to gold price exposure. Investors do not need to arrange physical storage or insurance. This makes gold ETFs a practical option for both individual and institutional investors seeking diversification and participation in gold markets.
4. Gold saving plans
Gold saving plans are structured investment plans that allow individuals to accumulate gold by depositing a fixed amount at regular intervals, most commonly monthly. Contributions are converted into gold based on prevailing prices, with balances tracked in grams of gold rather than currency.
Most gold saving plans operate over a fixed tenure, typically ranging from 6 to 24 months. Minimum monthly contribution amounts can start from as low as small currency-denominated sums, allowing investors to accumulate gold in fractional gram quantities over time instead of purchasing whole bars or coins upfront.
Jewellery-based gold saving plans usually credit deposits toward a future gold purchase, often measured against the spot gold price on the date of redemption. Digital gold saving plans convert each contribution into gold stored in vaults, with holdings commonly recorded to four decimal places in grams, enabling precise accumulation.
You can participate in gold saving plans through jewellery retailers, banks, fintech platforms, and digital gold providers. Enrollment usually involves setting a fixed contribution amount and investment duration, with gold accumulation tracked electronically rather than through physical delivery during the saving phase.
The key benefit of gold saving plans investment is gradual accumulation with lower capital commitment. By contributing smaller amounts over time, investors can build measurable gold holdings without the need for a large upfront investment.
5. Tokenized gold
Tokenized gold is a blockchain-based representation of physical gold, created by converting ownership of real gold into digital tokens. Each token represents a defined quantity of physical gold, commonly 1 troy ounce or 1 gram, that is stored in secure vaults, with ownership recorded and transferred on a blockchain rather than through paper or traditional accounts.
Common examples of tokenized gold include PAX Gold and Tether Gold. These tokens are backed by allocated physical gold that typically meets investment-grade purity standards of at least 99.5%, with each token linked to a specific amount of vaulted gold. Tokenized gold allows investors to hold fractional amounts of gold, often as small as 0.01 gram, making small-denomination ownership possible.
You can buy and hold tokenized gold through cryptocurrency exchanges, digital asset platforms, and blockchain wallets that support gold-backed tokens. Participation typically requires a digital wallet and access to platforms that list tokenized gold products, with transactions settled digitally and available 24 hours a day, 7 days a week rather than through a traditional brokerage account.
The key benefit of tokenized gold investment is digital ownership of real gold with fractional flexibility. Tokenized gold combines physical gold backing with blockchain-based transferability, allowing investors to own, transfer, and store gold digitally without handling physical assets.
6. Sovereign gold bonds
Sovereign gold bonds are government-backed debt securities denominated in grams of gold, typically issued in multiples of 1 gram. They allow investors to gain gold-linked exposure in digital form without owning physical gold, with the bond value tied directly to the price of gold rather than to interest rate movements alone.
The primary example of sovereign gold bonds is the Sovereign Gold Bond Scheme issued by the Reserve Bank of India on behalf of the Government of India. Under this scheme, bonds are issued in denominations starting from 1 gram of gold, with a minimum investment of 1 gram and a maximum subscription limit set per investor category. The bonds have a fixed maturity of 8 years, with an exit option available after the 5th year, and are settled based on the prevailing gold price at redemption.
You can buy sovereign gold bonds through banks, stockbrokers, post offices, and official government issuance platforms during designated subscription periods. After issuance, the bonds are listed on stock exchanges, where they can be traded in the secondary market, although trading volumes are generally lower than for gold ETFs.
The key benefit of sovereign gold bonds is government-backed gold exposure without storage or security concerns. Sovereign gold bonds remove the need for physical handling, insurance, and vaulting, while providing regulated access to gold-linked returns measured directly in grams of gold.
7. Gold mining stocks
Gold mining stocks are shares of publicly traded companies involved in the exploration, mining, production, or streaming of gold. Instead of owning gold itself, investors gain exposure to gold price movements through the business performance of companies that extract or finance gold production.
Common examples of gold mining stocks include Newmont Corporation, Barrick Gold, and Franco-Nevada. These companies operate across multiple regions and together account for a significant share of global gold output, with leading producers mining several million ounces of gold per year. Their share prices tend to show correlation with gold prices, although operating costs, production volumes, and reserve life also influence performance.
You can buy gold mining stocks through stock exchanges using a standard brokerage account. Investors participate by purchasing individual mining stocks or by holding diversified portfolios of mining companies listed on major equity markets.
The key benefit of buying gold mining stocks is leveraged exposure to gold price movements through business growth. Because mining companies generate revenue from gold production, their earnings and share prices can rise faster than gold prices during favorable market conditions. However, mining stocks are generally more volatile than physical gold due to operational, financial, and management risks.
Why invest in gold?
Gold is invested in because it holds enduring economic value that extends beyond short-term market cycles. This value is supported by 9 distinct characteristics that define gold’s economic role:
Gold has limited supply
Gold is valued for its visual appeal
Gold is used in industrial and technological applications
Gold is widely recognized as a store of wealth
Gold has historically anchored monetary systems
Gold serves a monetary role in the global economy
Gold protects purchasing power during inflation
Gold attracts demand during periods of economic stress
Gold reduces overall portfolio risk through diversification
These characteristics explain why gold maintains long-term value as a defensive asset in investment portfolios.
What are the limitations of gold investment?
There are 5 limitations of gold investment:
1. Gold does not generate income
Gold does not pay interest, dividends, or any form of passive income. Returns depend entirely on price appreciation rather than ongoing cash flow.
2. Gold prices can be volatile
Gold and other precious metals can experience sharp price swings, especially during periods of changing interest rates or market sentiment.
3. Physical gold involves storage and security costs
Holding physical gold requires secure storage, insurance, and sometimes transportation, which adds ongoing costs for investors.
4. Gold often trades at a premium to spot price
Investors typically pay premiums above the spot gold price when buying physical gold, especially for coins and small bars.
5. Gold can require higher upfront capital
Compared with fractional or income-producing assets, gold often requires a larger initial investment, particularly when purchasing physical forms.
Gold investment vs gold trading: what are the differences?
The key difference between gold investment and gold trading is purpose and time horizon.
Gold investment focuses on preserving and protecting wealth through long-term exposure to gold as an asset. Common gold investment instruments include physical gold, gold ETFs, and gold saving plans.
Gold trading focuses on profiting from short-term gold price movements and demands a higher involvement of time and energy. Common gold trading instruments include gold futures, gold options, and gold CFDs.
Why trade gold futures?
Gold futures are exchange-traded derivative contracts that obligate the buyer and seller to transact gold at a predetermined price on a specific future date.
Traders use gold futures to gain direct, standardized, and leveraged exposure to gold price movements, making them suitable for short-term speculation or hedging rather than long-term gold investment.
Why trade gold options?
Gold options are derivative contracts that give traders the right, but not the obligation, to buy or sell gold at a predetermined price by a specific date.
Traders use gold options instead of gold investment to take short-term directional or volatility-based positions with predefined risk, rather than committing capital to long-term gold ownership.
Why trade gold CFDs?
Gold CFDs are derivative contracts that allow traders to speculate on gold price movements without owning the underlying asset.
Traders use gold CFDs instead of gold investment to trade short-term price movements with leverage, flexible position sizing, and the ability to go long or short without holding gold.
