Gold is up over 50% this year with analysts saying it could get as high as $4,530 an ounce by the third quarter of 2026. The rise has been driven by a perfect storm of factors. You have the continued wars in Ukraine and the Middle East. Mix in the uncertainty of tariffs as well as future rate cuts by the Federal Reserve Open Market Committee and you have a situation in which there is both a flight to safety and a weakening of the U.S. dollar. Oh, and the government has been shut down for more than a week with on respite in sight. And France just had their Prime Minister resign after just 26 days. All of these have contributed to the rise in the spot price of gold. Over 50% this year after a double digit rise last year. Does that mean you should invest in gold right now? Chasing a rally can often be a mistake. The fact that the spot price of gold has exceeded $4,000 an ounce is not a good reason to invest. But it's not a reason to keep you away either. This is not investment advice but you should assess your portfolio and see what role gold can play as a hedge. The stock market has been performing quite well and if you wish to rebalance, gold may be a good place for this, especially if you don't hold much at all. Ray Dalio said you should have 15% of your portfolio in gold. He previously suggested 10-15% was a suitable percentage. Other experts have suggested smaller amounts, closer to 5-10%. The takeaway is that you should own some gold and your risk tolerance will dictate whether that percentage is closer to 5% or 15%. What's the best way to own gold? Here are some options.
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Gold Bullion
The best way to own gold is to buy gold bullion and store it in a safe. It plays the role of an investment hedge but also fulfills its original function – a store of value. If something happens, you want to be able to take your gold. The other options on this list give you investment exposure to gold but you never take possession. Buy gold from a reputable dealer like JM Bullion or APMEX. Don't bother with the beautiful coins that cost a lot more over spot, those are for collectors who are looking to appreciate the numismatic value of the coins. You will get the best deal if you can pay by check or wire transfer.
Gold IRA
If you want investment exposure to gold in a tax efficient vehicle, consider Gold IRAs. They are self-directed IRAs that allow you to invest in gold, though the gold is held at a IRS-approved depository. You can never take possession of the gold but it also means you don't need to keep it safe either. This is a strong option if you wish to invest in gold bullion in your IRA, which can come with tax advantages. The things to watch out for with Gold IRAs is that you want to buy the “cheapest” gold possible. Some will try to convince you to pay extra for nicer looking coins but avoid the temptation. Check out companies like Augusta Precious Metals and Birch Gold to compare your options.
Gold ETFs
If gold bullion put gold in your hands and Gold IRAs put gold in a tax advantaged vehicle, investing in a gold ETF is the cleanest way to invest in gold bullion without any of the headaches. You can invest in gold ETFs with any brokerage account, which is a good option if you don't want to pursue a Gold IRA. What's great about Gold ETFs is what's also great about other ETFs – it gives investors without as much capital a way to invest in gold. If the spot price of gold is $4,000 and the best prices will be on one ounce bars, then you'll need at least $4,000. If you're looking to get just 5% exposure to gold, it means your portfolio needs to be $80,000. With ETFs, you can buy them with as little as $1 and reasonably priced from an annual fee perspective. SPDR Gold Shares (GLD) has a 0.40% expense ratio.
Gold Miners
This option is the furthest removed from gold bullion – it's investing in the companies that mine the yellow stuff. They benefit when the spot price of gold goes up but indirectly. They also introduce a whole host of other factors that you may not want exposure to such as how they operate their business, capital expenditures, and the like. I include them on the list because it is an option and one that some people find appealing. I think the other options get you cleaner exposure to gold but for completeness I include this as an option. If you do consider this option, I'd recommend an ETF that invests in several miners and not just a single one.
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