Elevated inflation, high interest rates and turmoil overseas caused many investors to flee to the safety of gold in 2023. For many, the results didn't disappoint. According to the World Gold Council, the price of gold increased by 15% in 2023 and closed at a record annual high of $2,078 per ounce.
Gold can still be a worthwhile investment in 2024, as it's often seen as a hedge against inflation and an effective tool to stabilize your portfolio. Gold is available in many forms, from physical bars and coins to gold exchange-traded funds (ETFs). Below, we'll take a closer look at some common ways to invest in gold and how each type could benefit you.
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What gold type is best to invest in in 2024?
Here are three top gold investing types to consider this year.
Gold IRAs
Gold individual retirement accounts (IRAs) operate like standard IRAs, but they allow you to hold physical gold in your account. Like a traditional IRA, you can invest in a gold IRA with pre-tax dollars and pay taxes when you withdraw your funds, ideally in retirement when you'll likely be in a lower tax bracket. Roth gold IRAs are also available with tax attributes similar to regular Roth IRAs.
As Philip N. Diehl, president of U.S. Money Reserve, points out, gold can help you diversify your retirement portfolio because of its history of performing well when other assets don't. "Gold typically rallies when geopolitical tensions rise—just as it has with the conflicts in the Middle East and Ukraine—or when the economy falters—as it did during the Covid-19 recession and the 2008 financial crisis," said Diehl. "In this respect, a gold IRA acts as a form of tax-advantaged wealth insurance during hard times."
Learn more about your gold IRA options today.
Gold bars and coins
Physical gold is another type of gold investment that could deliver advantages in 2024. Unlike other tangible assets like real estate or art, which often require significant time to sell, physical gold is highly liquid. You can quickly sell gold to many dealers or buyers for fast cash or to capitalize on higher gold prices. Physical gold also differs from stock assets because you can hold it in your hand and inspect it, which many investors find assuring.
Another benefit is that gold is available in many sizes and weights. "The smallest bars worth buying are 1 kilo down to 100 grams," says James Rickards, the editor of the Strategic Intelligence financial newsletter. "For smaller amounts of gold, a buyer is much better off with gold coins instead of bars."
Gold ETFs
Gold exchange-traded funds hold gold assets and track the domestic physical price of gold. As such, these funds provide a convenient option to gain exposure to the price movements of gold without having to buy and store physical forms of this precious metal.
Gold ETFs may provide the easiest path to gold ownership. For starters, you can buy and sell gold ETFs like a stock quickly and easily through an online brokerage. Additionally, you can invest at a significantly lower cost than with other types of gold investing. For example, the price of one ounce of gold is $2,043 as of January 16, 2024. While you can invest in physical gold in smaller weights, you'll likely face higher dealer fees to do so. By contrast, you can invest in an ETF for the cost of a single share, which could range from around $15 to $190 per share.
As Rickards notes, you don't actually own or trade in gold with gold ETFs. "You're just getting price exposure," says Rickards. "These instruments are fine for investors who just want price exposure. If you want gold, it's better to buy physical gold from a reliable dealer and hold it in storage."
The bottom line
While gold is often viewed as a store of value and a hedge against inflation, it's important to note that it's impossible to predict with absolute certainty how gold will perform in 2024 or at any time. As such, financial experts often recommend limiting your overall gold investment to no more than 10% of your portfolio.
It's also essential to work with reputable gold dealers when investing in gold, particularly physical gold. Take care when considering an online dealer. "Ask how long they've been in business," says Rickards. "Do they have positive reviews from customers? You should make sure they are U.S. based because you will have very limited recourse against a foreign dealer."
