Gold has long been seen as a symbol of wealth and security. Today, it remains a popular option for investors seeking to diversify their portfolios and protect against uncertainty.
But is gold right for you? In this guide, we explain the benefits, risks, and ways to invest — tailored for UK individuals and businesses considering gold as part of their financial strategy.
Please note: This article is for informational purposes only and does not constitute financial advice. Always speak to a professional adviser before making investment decisions.
Why Invest in Gold?
Gold plays a unique role in global finance. Historically used as a currency, it’s now primarily seen as a “safe-haven” asset during economic volatility. Here’s why investors still turn to gold:
Outperformance Potential
While gold can be volatile in the short term, over longer periods it often outperforms traditional assets like stocks and property, particularly during market downturns.
Inflation Hedge
Gold tends to retain or increase its value when inflation rises. This makes it attractive during times of increasing living costs, helping to protect your purchasing power.
Diversification
Gold doesn’t move in line with stock markets. When stocks fall, gold often holds steady or rises, making it a valuable asset for diversifying risk across your portfolio.
Risks of Investing in Gold
As with any investment, gold carries risks. It’s important to be aware of the potential downsides:
Price Volatility
Gold prices are largely driven by investor sentiment rather than business performance or income. Demand can fluctuate rapidly, making gold a more volatile investment.
No Income or Dividends
Unlike stocks or bonds, gold doesn’t generate any income. You only profit when you sell your holdings, meaning your investment relies solely on price appreciation.
Storage and Insurance Costs
Physical gold must be securely stored, often incurring extra costs for safety deposit boxes, insurance, or specialist storage facilities.
Environmental Impact
Gold mining has significant environmental consequences, including deforestation and pollution. These factors could influence future supply, demand, and the ethical appeal of gold investment.
How to Buy Physical Gold
If you prefer the tangible security of physical gold, you can purchase it in several forms:
- Gold Bullion Bars – typically for serious investors looking for value based on gold weight and purity.
- Gold Coins – some coins also carry collector (numismatic) value beyond their metal content.
- Jewellery – although stylish, jewellery often carries a high retail markup and may not offer good investment returns.
Alternative Ways to Invest in Gold
For those seeking exposure without the complications of physical ownership, consider:
Gold Investment Funds
- Gold ETFs (Exchange-Traded Funds) – Track the price of gold without needing to hold physical metal.
- Gold ETCs (Exchange-Traded Commodities) – Structured as debt securities backed by gold.
These can often be held inside a Stocks and Shares ISA, meaning any profits are free from Capital Gains Tax.
Shares in Gold Mining Companies
Buying shares in companies that mine gold is another option — though it’s much riskier. Factors like management quality, geopolitical risks, and mine productivity can affect share prices independently of the gold market.
Final Thoughts: Should You Invest in Gold?
Gold can play an important role in a well-diversified portfolio, offering protection during economic instability and a hedge against inflation.
However, it’s important to balance its benefits against risks like volatility, lack of income, and storage costs.
If you’re considering adding gold to your investment mix, working with an experienced financial adviser can help you make the best decisions for your goals.
Want more insights like this?
Subscribe to the Accounting People newsletter for expert financial tips, investment updates, and smart tax strategies — straight to your inbox.
