Gold price hits record high – here's how to buy it

Jonathan Jones
·3-min read
gold - REUTERS/Bobby Yip/Files
gold - REUTERS/Bobby Yip/Files

The gold price hit an-all time high this week as fears around money printing by governments and an uncertain economic outlook has pushed investors to buy the "safe haven asset".

Gold is viewed as a store of value for investors in times of uncertainty. It now trades at $2,030 (£1,550) an ounce and has risen 33pc in value this year. 

The metal has divided the investment world for centuries. Some love it as a way of spreading risk, while others remain unconvinced of its intrinsic value.

But its track record of holding value during times of market stress is undeniable. When stocks are falling and the world looks as though it is coming to an end, investors turn to gold.

Adrian Ash, of precious metals trader BullionVault, said: "Anyone saying gold has no intrinsic value overlooks its use in all ages and all cultures as the ultimate store of spending power. With the level of economic uncertainty today, it's natural for investors and savers to seek safety in precious metals."

Its latest rise could see investors return to the precious metal in force, should global problems persist. Below, Telegraph Money looks at the ways ordinary investors can buy gold.

Exchange-traded funds (ETFs)

The most common way to invest in gold is to buy an ETF or an exchange traded commodity (ETC). These are shares that act like funds (so you can buy and sell them as you would shares) but that track an index, aiming to match its performance.

They can be bought and sold via stockbrokers or investment brokers, as with any other share.

Peter Sleep of Seven Investment Management recommended the $13.5bn Invesco Physical Gold ETC. The fund costs just 0.19pc, making it attractive as high fees can eat into returns quickly. 

The Royal Mint recently launched its own version.

Unit trusts

There are a number of funds that offer exposure to gold, although they typically a basket of several precious metals or in conjunction with silver, or through gold-related stocks, such as miners.

The largest gold fund is the £1.4bn Ruffer Gold portfolio, managed by Paul Kennedy. It invests in gold miners rather than the physical asset itself. It charges a fee of 1.24pc per year.

BlackRock Gold & General is perhaps the best-known gold fund. Run by Evy Hambro and Tom Holl, the £1.5bn fund also invests in shares of gold-related companies. It costs 1.17pc.

Fund companies Merian, Smith & Williamson and Investec run similar strategies.

Physical Gold

One other option for investors is to actually buy physical gold through trading platforms where gold bullion can be bought in small quantities and is placed in a secure vault on your behalf, such as BullionVault.Coins and bars are also available from outlets including the Royal Mint.

However, it is important to know that not all dealers will buy gold and when they do there will likely be a ‘spread’. This means when you buy it you will probably pay slightly more than its value, while when you sell it it will be at a lower price.

There have also been reports of a shortage of physical gold bars and coins often bought by DIY investors. Investors need to be confident in the price of gold rise high enough to more than cover this spread before you buy.