Gold is one of the oldest and most widely recognized stores of value. Today, investors can gain gold exposure in several ways, from owning physical bullion to using ETFs. Let’s explore this topic in more detail.
Gold is often used as a diversification asset because it may behave differently from stocks and bonds. Some investors view it as a potential hedge during inflation concerns, currency weakness or geopolitical uncertainty.
Still, gold isn't a guaranteed safe haven. Prices can fluctuate significantly and gold doesn't produce income like dividends or interest.
A key starting point is understanding the difference between buying and investing: Buying gold usually means owning the metal directly, like coins or bars. Investing in gold is more about getting exposure to the price through products such as Exchange-Traded Funds (ETFs).
Method | What you own | Typical costs | Liquidity | Key risks/tradeoffs |
Physical gold (coins/bars) | Direct bullion ownership | Dealer premiums, storage, insurance | Lower | Storage risk, authenticity concerns, resale spreads |
Physically backed gold ETFs (trusts) | Shares backed by vaulted bullion | Expense ratio, bid-ask spread | High | Trust structure, tracking error, tax nuance |
Futures-based gold funds | Futures contracts, not bullion | Roll costs, fund fees | High | Contango/backwardation, tracking mismatch |
Derivatives (futures/options) | Contract exposure | Margin costs, complex fees | High | Leverage risk, complexity, potential large losses |
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Physical gold includes bullion coins and bars that investors can buy and hold directly. Coins are often produced by government mints, while bars are typically manufactured by private refiners.
Physical ownership means direct possession, which some investors prefer for long-term holding. But it also comes with some real-world logistics. You may need secure storage, insurance and careful sourcing to reduce counterfeit risk.
Premiums above spot price are also common, which means the purchase price may be higher than the quoted market price.
Paper gold refers to financial products that provide gold exposure without requiring physical ownership.
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There isn’t one ‘right’ way to invest in gold. The right approach depends on what you want to own, how long you plan to hold and what risks you are comfortable taking.
The first step is deciding whether you want physical ownership or financial exposure.
Physical gold provides direct possession, but storage, insurance and resale logistics matter. Market-based exposure includes ETFs, which may offer easier trading.
Other practical factors include:
Read about the difference between stocks and ETFs
A metal ETF is an exchange-traded fund that provides exposure to gold or other precious metals through shares traded on stock exchanges. Some ETFs are physically backed, meaning the fund holds bullion in custody. Many US gold ETFs are structured as trusts, which can affect taxation and legal structure.
Other metal ETFs may rely on futures contracts instead of holding gold directly. These may experience rolling costs that affect performance over time.
Gold ETFs are widely used because they provide liquid access without requiring physical storage. Many US gold ETFs are structured as trusts rather than traditional equity funds. Physically backed products typically hold bullion in vaults, though retail investors don’t have claim to specific bars.
Gold ETFs may experience tracking error, meaning performance can differ slightly from spot gold due to fees, spreads and trading frictions. Futures-based gold funds can diverge further because they roll contracts over time, which may be affected by contango or backwardation.
Eligible US users can access gold-related ETFs through Crypto.com Stocks.
Note: ETF availability, fractional shares and order types may vary depending on eligibility.
Gold prices are typically quoted using the spot price, which reflects the current market price for immediate delivery. Gold is priced per troy ounce, the standard unit used for precious metals. One troy ounce equals about 31.1 grams.
The price paid by retail buyers is often higher than spot due to dealer premiums, fabrication costs, shipping, insurance and bid-ask spreads. ETF investors may track spot prices more closely, but fund expense ratios and trading spreads can still reduce returns over time.
Investing in gold can involve more complexity than many beginners expect. Often, the differences come down to the details: How you gain exposure, what costs apply over time and how easily you can buy or sell when market conditions change.
Because gold doesn’t generate income like interest or dividends, investor outcomes depend heavily on price movements and the real-world frictions around holding it. That also means fees, spreads and product structure matter more than people sometimes assume – even if the gold price doesn’t move much.
It’s also important to understand that ‘gold exposure’ isn’t always identical across markets. Some vehicles track spot gold closely, while others may behave differently due to fund mechanics, trading liquidity or operational factors outside the price of bullion itself.
Before choosing any approach, it helps to look beyond the headline price and consider practical questions such as:
Costs vary widely and also differ depending on the method of exposure. Remember that small fees can add up over time.
Liquidity refers to how easily an asset can be bought or sold. Physical gold resale often depends on dealers and may involve wider spreads. Gold ETFs trade like stocks, allowing intraday buying and selling.
Gold isn’t risk-free – and understanding these trade-offs is essential. Key risks of investing in gold include:
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Different forms of gold exposure may be treated differently under US tax rules. While many investors think of gold ETFs as similar to stock index funds, some physically backed gold products are structured as trusts rather than traditional equity ETFs, which can affect how gains are taxed.
In practice, this means that holding physical bullion, certain gold trusts or other gold-linked vehicles may not always follow the same tax treatment as typical stocks or diversified funds.
Crypto.com Stocks doesn’t provide tax advice and investors should consult a qualified tax professional for guidance.
Explore ways to get gold exposure through US-listed ETFs, with portfolio tracking in one app.
Is buying physical gold better than a gold ETF?
Neither form of exposure is inherently ‘better’, and each comes with certain risks. Physical gold provides direct ownership, but storage and resale costs apply. ETFs offer liquidity and ease of trading, but include fees and structural factors.
What’s the difference between a physically backed gold ETF and a futures-based gold fund?
Physically backed products hold bullion. Futures-based funds use contracts, which can lead to tracking differences over time.
Do gold ETFs pay dividends?
Most gold ETFs don’t pay dividends, because gold doesn’t produce income like stocks or bonds. Returns typically come from changes in the gold price rather than cash distributions.
What does spot price mean?
Spot price refers to the current market price of gold for immediate delivery.
What is a troy ounce?
A troy ounce is the standard weight unit used for precious metals, equal to about 31.1 grams.
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