Welcome back to Gold Week on the Rude. Today, we’ll tackle the different ways to buy gold.

About 18 months ago, Byron King and I were planning a Rickards Uncensored Call. Paradigm’s Grand Poobah Matt Insley couldn’t attend, so he asked me to host. Byron and I were wondering what to discuss, and then Byron came up with a gem.

Byron said, “You know, Sean… I think we should talk about how to buy gold. Not everyone knows…”

It turned out to be precisely what the doctor ordered.

So today, Byron and I will show you how to buy gold, depending on your situation. We talked about it on that Rickards Uncensored call, and now we’re putting it in print for you to bookmark in case you need it.

We don’t know your portfolio and want to clarify that this isn’t personal investment advice. Our goal is to educate and inform, leaving the decision of how to implement this information entirely up to you.

Let’s get to it.

The Ways to Buy Gold

We’re going to go in the order of least risky to riskiest. We believe that holding the gold in a safe in your house is the safest. If you live in an urban community full of artists, your mileage will vary on that assumption.

Individual Coins and Bars

Hard Assets Alliance

Paradigm Press has had a relationship with Hard Assets Alliance for a long time. We want you to know that for two reasons. One is that we’ve got a duty of care we owe you. The second reason for the long relationship is that HAA excels at what it does and takes care of our subscribers.

Hard Assets Alliance allows you to buy gold at your pace and then take physical delivery once you own enough full bars or coins.

If you’re new to buying gold — or if you’ve tried online dealers and the complexity has put you off — there’s no easier way to buy and hold real physical metal at exceptionally low cost.

You can also buy and store your metal in one of five audited vaults worldwide.

It’s the easiest way to start with gold, silver, and other metals.

The US Mint

If you prefer to buy coins directly from your country’s mint, that’s an option. However, we’ve noticed the mints tend to charge well over the spot price for whichever metal you’re buying.

For example, as I type, the spot price of gold on the market is $2,635 per ounce. The American Eagle 2024 One Ounce Gold Proof Coin costs $3,550.00 in the US Mint Catalog. That’s a 34.7% premium over the spot price.

It's not the best deal… unless you’re a genuine coin collector.

Contrast that with the Hard Assets Alliance. The same coin is $2,806.52. That’s only 6.5% over spot. And a one-ounce gold bar is only $2,713.36. You get much more value for your fiat.

Gold ETFs

Next, we look at the precious metals ETFs, specifically gold ETFs.

ETFs, or Exchange-Traded Funds, are investment funds traded on stock exchanges like individual stocks. They are designed to track the performance of an underlying index or basket of assets, such as stocks, bonds, commodities, or currencies.

These two ETFs track the price of gold…

GLD

The GLD ETF, or SPDR Gold Shares, is one of the largest and most popular ETFs investing in physical gold. It provides investors with an easy and cost-effective way to invest in gold without having to own and store physical gold themselves.

The physical gold is held in a vault in London. GLD shares represent 10% of an ounce of gold minus the fees and tracking error. So when investors buy shares of GLD, they’re effectively buying a portion of the underlying gold GLD holds.

The GLD closed yesterday at $224.17. That’s 8.5% of the price of a gold ounce.

One thing about GLD is the taxes. From Investopedia:

Still, investors should be careful when making a long-term investment in the fund. The Internal Revenue Service (IRS) has determined that GLD is deemed a collectible. Any profits are taxed at a much higher rate of 28% versus the normal long-term capital gains rate of 15% or 20%.

This tax wrinkle has caught many investors off guard. There are two ways to get around this: exit any position in under a year, or hold the shares in an IRA or another tax-deferred retirement account.

SGOL

If that’s a bit too pricey for you, that’s ok. Another option is the SGOL ETF.

SGOL invests in physical gold, which is held in a vault in Switzerland.

The SGOL ETF is similar to the GLD ETF, but some differences exist.

For example, the SGOL ETF is backed by gold held in a vault in Switzerland, while the GLD ETF is backed by gold held in a vault in London. Additionally, the SGOL ETF has a lower expense ratio than the GLD ETF.

SGOL closed yesterday at $25.24, under 1% of the spot price of an ounce of gold. So, this is a cheaper way to start with gold ETFs.

Gold Miners ETFs

The Gold Miners ETFs invest in companies involved in gold mining and exploration. Since there are 56 companies in the GDX and 104 companies in the GDXJ, investors are well diversified within the miners’ space.

GDX

The GDX ETF, or the VanEck Vectors Gold Miners ETF, invests in gold mining companies. Its objective is to track the performance of the NYSE Arca Gold Miners Index.

It invests in a diversified portfolio of gold mining companies, such as gold producers and exploration companies. The ETF's holdings are spread across various countries, with a significant portion in Canada, the United States, and Australia.

Right now, GDX is trading around $39.03.

GDXJ

The GDXJ ETF, or the VanEck Vectors Junior Gold Miners ETF, invests in smaller gold mining companies and tracks the performance of the MVIS Global Junior Gold Miners Index.

It invests in a diversified portfolio of gold mining companies, but these companies have smaller market capitalizations than those in the GDX ETF.

These companies are generally considered riskier investments than their larger counterparts, but they may also offer more potential for growth.

Yesterday, GDXJ traded for about $47.78.

“Pure Plays” – Single Stocks

It’s important to understand that single stocks expose investors to two big risks: systematic and unsystematic risk.

Systematic, or market, risk is the risk your stock may fall through no fault of its own; its price may fall just because the market has a bad day.

Unsystematic, or specific, risk is the risk that your stock falls even if the market is having a great day. This risk is specific to your stock, which may have bad management or an earnings miss.

These two risks are amplified if you own gold mining, exploration, or royalty companies.

Single Established Companies

If you’re willing to take a bit more risk, you can choose any one of the GDX's constituent companies.

Companies like Newmont Mining, Barrick Gold, and Franco Nevada are well-known and respected.

But like any single stock undertaking, investing in single stocks carries more risk than investing in an index.

Even established gold miners are riskier than the average stock.

Small Cap Mining and Exploration Companies

There are even riskier companies that can increase your wealth substantially.

Byron likes to say, “Investing in these companies can sometimes take you from this side of town to that side of town.”

That is, one winner with these companies can create life-altering generational wealth.

Gold Futures

Lastly, I’ll mention gold futures.

We don’t want you to trade these. They’re just too risky.

But gold is unique in that the futures price leads the physical price and not vice versa.

The gold futures market is critically important. Stay informed about what’s happening in it.

But if you’re new to gold investing, our other choices above are far better suited to your needs.

Wrap Up

I hope you got a lot out of this piece.

It’s more of a reference column than anything else.

Hopefully, it will give you food for thought when considering your next move in the gold market. Please email me here to let me know what you think.

Have a great rest of your week!