4 Ways on How to Invest in Gold for Beginners in 2025

Why is Gold Valuable? 

Despite shifting to a fiat currency system, where the government issues the currency, gold retains its high value and is highly sought after as a commodity and investment asset. For instance, central banks maintain gold holdings as part of their reserves to ensure liquidity.  

Since 2021, companies have been purchasing record levels of gold. Gold spot prices in 2024 have been on a steady incline, peaking around the end of October.  

Is Gold a Good Investment? 

Though it can provide diversity and stability to a portfolio, gold has a poor track record of being a consistent investment asset.  

(Chart via Macrotrends) 

The above is a 100-year chart that compares the historical percentage return for the Dow Jones Industrial Average (blue) against the return for gold prices (orange). The grey bars are periods of recession.  

In terms of total returns, the Dow Jones Industrial Average yields higher returns, increasing by over 900%, while gold grew by over 500%. Thus, traders who invested more in Dow Jones stock will have made more profit than those who invested solely in gold.  

However, having gold (XAUUSD) in your portfolio still provides benefits. As the chart shows, gold performs better than stocks during recessions. This reinforces gold's uniqueness as an asset class and may signal a low or even negative correlation with equities.  

Considering its value, gold is a great addition to any trader’s portfolio, as it hedges against market risk and inflation.  

Why Do Investors Like Gold? 

Liquidity  

This refers to the ease and speed with which an asset can be bought and sold in a secondary market. Stocks have high liquidity and can be sold quickly when needed; in contrast, real estate has low liquidity, as it takes weeks or months to sell.  

Gold is one of the most liquid markets. Physical gold holdings worldwide are estimated to be worth around $5.1 trillion, with an additional $1 trillion in open interest through derivatives. This high liquidity translates into flexibility in executing trades. Traders can also enter and exit positions quickly, facilitating risk management.  

Diversification  

Diversifying your portfolio hedges against risk. By spreading your investments across different assets, you can reduce the risks and effects of market volatility.  

Gold’s low correlation to the stock market makes it a great investment option. During the Great Financial Crisis of 2008, hedge funds, real estate, and equities fell. On the other hand, gold retained its value and increased its price by 21%.  

Store of Value 

Gold has high demand and is influenced by supply and demand as a limited resource.  

Gold has withstood the test of time, maintaining its value throughout history. Traders can protect their capital by investing in gold. 

Returns  

Gold also consistently appreciates over time. While other asset classes, such as stocks, have higher volatility, gold is the most reliable investment in the long term.  
 

How to Invest in Gold for Beginners? 

Gold IRA 

By transferring a portion of their Individual Retirement Account (IRA) into one that invests in gold, traders can diversify their portfolios and benefit from the asset class.  

Owning Physical Gold  

Owning gold in bullion, bars, and coins is a great option. Traders can purchase gold from dealers, jewelry stores, or pawn shops.  
 
But remember, storing physical goals can be a hassle, and investment-grade gold must be at least 99.5% pure. Furthermore, it’s difficult to produce jewelry with such a high purity percentage; thus, if traders choose to have gold jewelry in their portfolios, they must understand that it will decrease their worth.  

Gold CFDs 

Contracts for differences offer traders a different method of investing, such as speculating on the price. Not only does this allow investors to profit from falling and rising prices, but it also eliminates the hassle of storing gold.  

Gold Futures 

These are contracts between buyers and sellers to buy a certain amount of gold at a specific price on a set date, regardless of market conditions.  

Futures are a good way to hedge against swinging markets, but investors can also use gold futures to forecast price movements.  

Gold ETFs and Gold Mining Stocks 

Gold ETFs and gold mining stocks are another alternative to physically owning metal. Gold ETFs offer investors various industries and companies from which to choose. If you’re uncertain about which ETF to go for, choose gold ETFs with a good track record.  

On the other hand, gold mining stocks are issued by companies involved in mining or distributing physical gold.