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How to add gold to your portfolio the easy way

by , 16 September 2015

Holding a minimum of 5% of your portfolio in physical gold is a great way to add diversification to your portfolio.

If you want to buy physical gold, but don't want to look after it yourself, one option you have is investing in a gold exchange traded fund (ETF).

So how do these ETFs work? And how can you invest in them?

Read on to find out…

How gold ETFs work

If you’re looking for a way to invest in gold without having to worry about storing it, ETFs can be the perfect solution.

By investing in a gold ETF you have all the benefits of investing in physical gold without having to buy an ounce of coins or bullion.

Gold ETFs give you an easy, cost-effective way to gain exposure to the yellow metal and are great for conservative investors.

Take Absa’s NewGold ETF. This ETF replicates the price of gold in rands. You can take delivery if you wanted to of the gold you hold, as long as you have a large enough holding in the fund and the necessary permits.

NewGold is very liquid, meaning you can easily buy and sell it. The ETF is perfect for building a long-term holding of gold.

The fund’s gold is stored in a vault by Barclays, which is periodically audited. Each ETF equates to around 1/100th ounces of gold.

Of course, there’s nothing to stop you investing in an overseas gold ETF, but the NewGold ETF is easily accessible to South African investors.

How to invest in gold ETFs

If you decide to invest in a gold ETF such as NewGold, you can buy it through your stock broker or through a site like etfsa.co.za.

If you want to invest in an overseas gold ETF, you’ll need to open an international investing account to enable you to do this.

So there you have it. How to add gold to your portfolio the easy way.

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How to add gold to your portfolio the easy way
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