4 Ways to Invest Gold as a Safe Haven Asset

According to the Investment Industry Regulatory Organization of Canada (IIROC), over two million new investment accounts were opened in 2020 in a bid to secure financial assets. However, experts warn new investors about trading without diversifying with safe havens. This is because when markets fluctuate—as they naturally will—having a safe haven will protect your portfolio from depletion, given its ability to act as a hedge. One of the most well-known and accessible safe havens—which also saw a recent 24% increase in valuation—is gold.

Why is Gold a Safe Haven Asset?

Because of its finite availability, gold acts as a hedge against both deflation and inflation. Moreover, its value peaks against fiat currencies during times of economic crises—which is also why now is the best time to explore investing in this asset. And to top it off, the safe-haven asset can be owned either physically or digitally. Thus, it is highly flexible for investors looking to diversify. That said, if you’re interested in gold as a safe-haven investment, here are a few ways you can go about it:

Different Ways to Invest in Gold:

  1. Gold JewelryPerhaps one of the most common ways to own gold is through jewelry. Though the gold used in jewelry is typically not the purest, it has the added advantage of being easy to store and maintain. Ideally, you’ll need to insure and store each piece in a safety deposit box or safe. Now, when choosing gold jewelry for investment purposes, those with 24K, 22K, or 18K categorizations are the most valuable. And due to their higher gold purity—99%, 91%, and 75%, respectively—they are easier to sell for cash later on. Just be mindful that the higher the purity, the more delicate these pieces are.

    2. Gold Coins and Bars

    Although it is a little harder and more expensive to come by, gold bars and coins have a much higher valuation. This is because these pieces are not mixed with other metals. Because bars and coins are often sold by third-party dealers rather than the factories that produce them, investors should also expect to pay up to 5% more. Additionally, it’s safest to go to an accredited dealer that can provide authentication. Some of the most trustworthy options include the Credit Suisse and Johnson Matthey gold bars as they can be added to retirement accounts. Meanwhile, the most valuable gold coins are American Eagles, Canadian Maple Leafs, and South African Krugerrands, due to their high gold composition. Remember, though, that coins and bars require a much higher level of security, storage, and maintenance.

    3. Gold ETFs

    Gold exchange-traded funds (ETFs) are a low-cost alternative that allows the investor to own gold without the premium or storage requirements of physical gold. Gold ETFs are investments in gold-backed assets available on the stock market. So although these ETFs don’t mean actually owning the physical gold commodity, it is a straightforward way of diversifying your portfolio. Currently, some of the top-performing gold ETFs include the SPDR Gold Trust ETF and GraniteShares Gold Trust. Both hold their gold bullion in vaults in London, and regularly offer reports on their status, so investors can easily keep track. Just like all other investments on the stock market, to purchase a gold ETF, you’ll need the assistance of a licensed broker.

    4. Gold Mining Shares

    A pricier but possibly more lucrative investment is in gold mining shares. By investing in gold mining companies like Franco-Nevada Corp. and Barrick Gold Corp., you are directly tying yourself to the miners’ output. So, when the price of gold is high and the mine you’ve invested in is recording high returns, that entitles you to better dividends. However, if a mine is struggling, you can expect that your share value may also plateau. Presently, even veteran investors (including Warren Buffet’s Berkshire Hathaway) are investing in more gold mining shares because the price of gold is predicted to reach over $11,000 CAD this decade.

    Investing in gold may seem a little traditional in this digital era. But if you want your investment portfolio to be diverse, secure, and resilient, then gold is a timeless asset you shouldn’t ignore. They’re a worthwhile addition to your list of 2021 investments, alongside the likes of properties, cryptocurrencies, and index funds.