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Gold
Bid : 3,083.16/oz
Ask : 3,092.41/oz
Silver
Bid : 36.91/oz
Ask: 37.02/oz
Platinum
Bid: 1,371.54/oz
Ask : 1,407.20/oz
Refresh in 00:00

Beginner’s Guide On How To Invest in Gold in Australia

September 15, 2023

Gold has long been seen as a stable and secure investment. In times of economic uncertainty, investing in gold can provide valuable diversification for your portfolio. As an Australian investor, there are several accessible ways to gain exposure to gold. This article will outline the top considerations for investing in gold in Australia.

Why is Gold Valuable?

Gold has maintained its value throughout human history due to its unique technical and monetary qualities. On a technical level, gold is an extremely rare metal that is both beautiful and highly durable. It does not corrode, tarnish or destroy easily like other precious metals. As a result, gold maintains its luster over centuries, unlike other commodities.

From a monetary perspective, gold exhibits many of the ideal traits that make an element well-suited for use as a currency. It is divisible, extremely portable and easy to verify in terms of purity due to its density. One gram of gold can be broken down into smaller units with precision scales. Gold’s rarity also means it inherently retains purchasing power over time as a stable store of value, making it less susceptible to the inflation that equivalently erodes fiat currencies over decades.

On a more conceptual level, gold evokes an emotional appeal linked to perceptions of prosperity, luxury, and social status. Its optical brilliance leaves an enduring impact, unlike other dull materials. This deep psychological connection to gold is a large part of why civilizations throughout history have chosen it to represent wealth in coins, jewelry, and gifting. 

Even today in times of geopolitical or economic uncertainty, gold continues fulfilling its role as a safe haven investment asset to offset risks elsewhere.

When considering the perpetual practical, technical, and psychological qualities of gold, its continued widespread value as a tangible wealth reserve asset becomes clear. These unique attributes are why gold maintains a special place in our global monetary and cultural heritage that is unlikely to diminish.

Why Invest in Gold?

Investing in gold can help protect your long-term savings from inflation and currency devaluations. During uncertain times, demand often rises as investors look to diversify their holdings. Having a portion of your portfolio in gold assets allows for further diversification beyond just stocks and bonds. Gold also tends to hold its value or increase during market downturns, serving as an effective balancing component for your overall investments.

Additionally, gold serves as a safe haven asset during periods of heightened volatility and uncertainty in financial markets. When geopolitical tensions flare up or fears of recession loom, gold often appreciates substantially as investors seek its stability. Merely having a position can provide important downside protection during broad portfolio sell-offs.

From a more practical standpoint, modern gold investments offer convivence alongside this ability to preserve wealth. Physical gold bars and coins can be acquired and securely stored within dedicated retirement accounts. 

Meanwhile, exchange-traded funds provide instant market exposure without the hassles of storage. These options give investors flexible means to implement strategic gold allocations.

On a networking level, Buying physical bullion in Brisbane may also bring social benefits. In times of extreme turmoil or systems failure, gold’s intrinsic worth is universally accepted and can facilitate bartering if paper currencies become compromised. This serves as a form of “real money” insurance for concerned wealth preservationists.

Ultimately, the price stability, liquidity, and crisis-resiliency qualities of gold make it a prudent investment for mitigating multiple risks within a balanced, diversified portfolio. These advantages are why wise investors keep a long-term strategic allocation.

Is Gold A Good Investment?

While gold prices are volatile in the short term, it has historically performed well as a long-term investment. Over periods of 20 years or more, gold has seen average annual gains that match or beat stocks in many instances. 

For Australian investors, simply holding an allocation of around 5-10% of your portfolio in physical gold or gold stocks/funds provides valuable diversification benefits. The key is taking a disciplined, long term cost-average approach to investing small amounts in gold regularly over time.

What is The Best Way To Invest in Gold in Australia?

The most accessible gold investment options for Australian investors include physical gold bullion, gold exchange traded funds (ETFs) as well as established gold mining stocks. Each have its own advantages:

Physical Gold  

Purchasing physical gold allows investors to directly own the precious metal in the form of gold bars or coins. Popular platforms like Bullion Vault and the Perth Mint Certificate Program allow buying bars as small as 1g online. Investors need to consider secure storage options and potential insurance costs for physical holdings.

Gold ETFs 

Exchange traded funds provide a cost-effective way to gain market exposure to gold prices without having to deal with the storage of physical bullion. Popular Australian gold ETFs track spot prices passively, with diversified holdings in London Good Delivery bars. Management fees are lower than funds. No precious storage is required.

Large gold mining stocks 

Companies that engage in gold mining and production, like Australian giants Newcrest Mining and Evolution Mining, offer share market growth potential along with leveraged exposure to rises in the price of gold over time. Fundamental stock analysis skills are important for those choosing company shares over generic market funds or bullion. Returns are also impacted by operating costs and currency variations versus just gold bullion.

Gold Investment Common Mistakes

When investing in any asset, it’s important to avoid common pitfalls like buying at price peaks or selling in panic. With gold, discipline is key – focus on cost averaging over time rather than trying to time the markets. Maintain a long term perspective and never put all your investment eggs in one basket.

Buying at the Height of Excitement

Many tempted investors make the mistake of thinking the highest price is the best time to buy. In reality, buying when prices hit extremes often means entering at inopportune moments. Gold’s price fluctuates based on shifts in supply and demand factors tied to broader market and economic conditions. Jumping in solely due to a parabolic rise could easily see new positions open just ahead of a correction. A wiser approach is cost-averaging purchases over time to achieve an average entry point.

Letting Emotions Override Discipline

Relatedly, some panic and decide to sell holdings purely due to short-term price volatility. But gold’s objective is to provide a counterbalance, performing best when other assets struggle. Bailing out of positions after a 10% drop means missing opportunities for gold to then rally significantly as a safe haven during worrisome periods. Taking a long-view approach by ignoring noise and staying invested according to a strategic plan results in greater chances of achieving desired results over the investment horizon.

Choosing a Platform to Invest in Gold

For Australian investors, popular options for direct gold investment include the Perth Mint, Bullion Vault and Gold Stackers. These allow the purchase of physical bullion securely online. For those after a more hands-off approach, an ASX gold ETF provides an easy way to gain exposure without the hassles of storage or price timing concerns. Always research any platform thoroughly prior to funding an account. Check Gold Secure the best gold dealers in Brisbane.

Conclusion

Including some exposure to gold assets can provide valuable diversification for Australian investment portfolios. Taking a measured, long term approach to investing small regular amounts in physical gold, gold ETFs or quality gold mining stocks allows investors to benefit from gold’s role as a store of value and a hedge. The key is maintaining discipline and patience as you cost average into this appealing portfolio stabilizer over the years.