Reasons to Invest in Non-Physical Gold

It’s hard to deny the extent to which gold has been a sought-after investment vehicle for many years. Much of this has to do with the way the precious metal can retain its value, regardless of what may become of Fiat currency.

Have a look at history to see how investors flocked to gold to keep their holdings safe, especially during times of political or social tension.

The prospect of investing in physical gold can be daunting. Therefore, we prepared this brief, yet effective set of information to help you understand how to invest in non-physical gold.

Options on Gold Futures

Investing in options on gold futures is one path you can go down, which allows you the right to buy or sell the said futures at a said price before a set date comes. Though you have the right to sell, we want to remind you that you’re not obligated to do so. This is a complex investment option, so bear in mind that it’s not suited for everyone.

Gold Receipts or Gold-based Savings Plans

Depending on which bank or financial institution you look at, there may be an option for gold certificates or gold-based saving plans. It’s a quick and easy way for you to invest in gold without needing to physically hold it.

Gold Mining Stocks

Gold mining companies can be lucrative, and this is one of the driving factors behind the decision to invest in these kinds of gold stocks. As the name implies, they represent part ownership status in a gold mining company. Of course, as is the case with any kind of share-based company ownership, you get to participate in the profits that the firm makes.

Exchange-traded Funds or Mutual Funds

Exchange-traded Funds or Mutual Funds

Exchange-traded funds are known for the sheer diversification potential that comes with them since you are investing in a collection of gold-related assets. These can be gold mining stocks, or they can be futures contracts. Sure, you could have an ETF that is backed by physical gold but based on what we’re trying to teach you here, that kind would not be relevant.

Gold Futures Contracts

Futures contracts are a lot like options on gold futures, allowing you to buy or sell at a predetermined price on a set date. Bear in mind though that the contracts are pretty complex too.

What Kind of Risks Come with Using Alternative Methods to Invest in Gold?

This is an investment discussion after all, which means that you cannot escape the possibility of risks. Some of the immediate ones include liquidity risks, credit risks, market risks, and management risks.

While ETFs and mutual funds allow for diversified investments, there is a management risk associated with them.

Gold-based savings plans are a great way to invest without needing to physically hold gold, but if you’re looking for something liquid, this may not be the option for you.

As far as the futures go, liquidity and market risk are bad enough, but there is also the potential for a loss with margin calls in the mix.

The Bottom Line

We’ve gone through a few notable ways that you can invest in gold if you’re interested in doing so without physically holding it. As beneficial as that can be, remember to take the time to consider the risks of each investment type tool before making your final decision.

More Options for Gold Investment:

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started IRA Investing to share his expertise in using his Self-Directed IRA for alternative investments. His views on retirement investing have been highlighted in USA Today, Business Insider, Tech Times, and more. He invested with Goldco.