View source for Gold as an investment

{{Short description|none}}
{{pp-semi-indef|small=yes}}
{{Infobox currency
| currency_name     = Gold
| iso_code          = XAU
| symbol            = XAU
| using_countries   = Investors
}}

[[File:2006reserves (forex and gold).PNG|thumb|right|Reserves of [[special drawing rights|SDR]], forex and gold in 2006]]
[[File:Gold bullion 2.jpg|thumb|A [[Good Delivery]] bar, the standard for trade in the major international gold markets.]]
[[File:InvestmentGold.jpg|thumb|Size of a 100-gram gold bar - packaged inside an assay for proof of [[authentication|authenticity]] - compared to a playing card.]]
Gold, alongside [[Platinum as an investment|platinum]] and [[Silver as an investment|silver]], is highly popular among precious metals as an [[investment]]. Investors generally buy [[gold]] as a way of diversifying risk, especially through the use of [[futures contract]]s and [[Derivative (finance)|derivative]]s. The gold market is subject to [[speculation]] and [[volatility (finance)|volatility]] as are other markets. 

==Gold price==
[[File:Gold-nominal-constant-usd.svg|thumb|Gold prices (US$ per troy ounce), in nominal US$ and inflation adjusted US$ from 1914 onward.]]
[[File:Price of gold.webp|thumb|Price of gold 1915–2022]]
[[File:Gold price in USD.png|thumb|Gold price history in 1960–present]]
[[File:Gold Spot Price per Gram from Jan 1971 to Jan 2012.svg|thumb|Gold price per gram between Jan 1971 and Jan 2012. The graph shows nominal price in US dollars, the price in 1971 and 2011 US dollars. The notable peak in 1980 followed the [[Soviet Union|Soviet]] military involvement in [[Afghanistan]], after a decade of inflation, oil shocks, and American military failures.]]

Gold has been used throughout history as [[money]] and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented [[gold standard]]s in the latter part of the 19th century until these were temporarily suspended in the financial crises involving [[World War I]].<ref>{{cite web|url=http://www.history.com/topics/world-war-i |title=World War I - Battles, Facts, Videos & Pictures |publisher=History.com}}</ref> After [[World War II]], the [[Bretton Woods system]] pegged the United States dollar to gold at a rate of US$35 per [[troy ounce]]. The system existed until the 1971 [[Nixon shock]], when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a [[fiat currency]] system. The last major currency to be divorced from gold was the [[Swiss franc]] in 2000.<ref>{{Cite news|url=https://www.nytimes.com/1999/04/19/world/swiss-narrowly-vote-to-drop-gold-standard.html|title=Swiss Narrowly Vote to Drop Gold Standard|agency=Associated Press|date=April 19, 1999|work=The New York Times|access-date=March 19, 2018|language=en-US|issn=0362-4331}}</ref>

Since 1919 the most common benchmark for the price of gold has been the [[London gold fixing]], a twice-daily telephone meeting of representatives from five [[bullion]]-trading firms of the [[London bullion market]]. Furthermore, gold is traded continuously throughout the world based on the intra-day [[spot price]], derived from [[Over-the-counter (finance)|over-the-counter]] gold-trading markets around the world ([[ISO 4217|code]] "XAU"). The following table sets out the gold price versus various assets and key statistics at five-year intervals.<ref>{{cite web |url=http://www.dailygoldpro.com/ |title=Gold Price USA |publisher=Daily Gold Pro |date=August 3, 2013 |access-date=February 12, 2014 |url-status=dead |archive-url=https://web.archive.org/web/20140111180034/http://www.dailygoldpro.com/ |archive-date=January 11, 2014 }}</ref>

{| class="wikitable" style="text-align:right; table-layout: fixed;"
|-
!rowspan=2|Year
!rowspan=2|Gold{{nobold| [[United States dollar|USD]]/<br />[[troy ounce|ozt]]<ref>LBMA [http://www.lbma.org.uk/stats/goldfixg Gold Fixings] {{Webarchive|url=https://web.archive.org/web/20090301052649/http://www.lbma.org.uk/stats/goldfixg |date=2009-03-01 }} yearly close, rounded to nearest $</ref>}}
!colspan=2|[[Dow Jones Industrial Average|DJIA]]
!colspan=2|[[Gross world product|World GDP]]
!colspan=2|[[National debt of the United States|US Debt]]
!colspan=2|[[List of countries by external debt|Debt per capita]]
!rowspan=2|[[Trade-weighted US dollar index|Trade-weighted<br />US dollar<br />index]]{{nobold|<ref>[http://www.federalreserve.gov/releases/h10/Summary/indexb_m.txt Nominal broad dollar index] US Federal Reserve. Gives the comparative international value of the USD against a basket of the currencies of the US's major trading partners. Base date for index (100.0000) was Jan 1997. Index value shown as at June of the relevant year, rounded to nearest 1/10 of a point</ref>}}
|-
!{{nobold| USD<ref>{{cite web|url=https://finance.yahoo.com/q/hp?s=^DJI+Historical+Prices |title=^DJI Historical Prices &#124; Dow Jones Industrial Average Stock - Yahoo! Finance |publisher=Finance.yahoo.com |access-date=February 12, 2014}}</ref>}}
!{{nobold| XAU}}
!{{nobold| USD (trillions)<ref>The [[UN]] Statistics Division [http://unstats.un.org/unsd/snaama/resultsGDP.asp?Series=2&RCode=0&Year=1970%2C1971%2C1972%2C1973%2C1974%2C1975%2C1976%2C1977%2C1978%2C1979%2C1980%2C1981%2C1982%2C1983%2C1984%2C1985%2C1986%2C1987%2C1988%2C1989%2C1990%2C1991%2C1992%2C1993%2C1994%2C1995%2C1996%2C1997%2C1998%2C1999%2C2000%2C2001%2C2002%2C2003%2C2004%2C2005%2C2006%2C2007&SLevel=0&Selection=basic world GDP]{{dead link|date=April 2016}}</ref>}}
!{{nobold| XAU (billions)}}
!{{nobold| USD (billions)<ref>[http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm Historical Debt Outstanding&nbsp;– Annual 1950&nbsp;– 1999] {{Webarchive|url=https://web.archive.org/web/20120206164959/http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm |date=2012-02-06 }}, [http://www.treasurydirect.gov/NP/BPDLogin?application=np The Debt to the Penny. Total Public Debt Outstanding (including Intragovernmental Holdings)] {{Webarchive|url=https://web.archive.org/web/20110418203433/http://www.treasurydirect.gov/NP/BPDLogin?application=np |date=2011-04-18 }}, rounded to nearest billion $</ref>}}
!{{nobold| XAU (billions)}}
!{{nobold|USD<ref>{{Cite web|url=https://www.usgovernmentspending.com/spending_chart_1970_2010USm_15s4lo011scn_H0f_Public_Debt_and_Population|title=Public Debt and Population United States 1970-2010 - Federal State Local Data|website=www.usgovernmentspending.com|access-date=Sep 26, 2020}}</ref>}}
!{{nobold| XAU}}
|-
| 1970 ||    37 ||    839 || 22.7 ||  3.3 ||  89.2 ||    370 || 10.0 ||  1,874 || 50.6 ||
|-
| 1975 ||   140 ||    852 ||  6.1 ||  6.4 ||  45.7 ||    533 ||  3.8 ||  2,525 || 18.0 || 33.0
|-
| 1980 ||   590 ||    964 ||  1.6 || 11.8 ||  20.0 ||    908 ||  1.5 ||  4,013 ||  6.8 || 35.7
|-
| 1985 ||   327 ||  1,547 ||  4.7 || 13.0 ||  39.8 ||  1,823 ||  5.6 ||  7,657 || 23.4 || 68.2
|-
| 1990 ||   391 ||  2,634 ||  6.7 || 22.2 ||  56.8 ||  3,233 ||  8.3 || 12,892 || 33.0 || 73.2
|-
| 1995 ||   387 ||  5,117 || 13.2 || 29.8 ||  77.0 ||  4,974 || 12.9 || 18,599 || 48.1 || 90.3
|-
| 2000 ||   273 || 10,787 || 39.5 || 31.9 || 116.8 ||  5,662 || 20.7 || 20,001 || 73.3 || 118.6
|-
| 2005 ||   513 || 10,718 || 20.9 || 45.1 ||  87.9 ||  8,170 || 15.9 || 26,752 || 52.1 || 111.6
|-
| 2010 || 1,410 || 11,578 ||  8.2 || 63.2 ||  44.8 || 14,025 ||  9.9 || 43,792 || 31.1 || 99.9
|-
! colspan=11 | 1970 to 2010 net change, in %
|-
|      || 3,792 ||  1,280 || ... || ... || ... || 3,691 || ... || 2,237 || ... || ... 
|-
! colspan=11 | 1975 (post US off gold standard) to 2010 net change, in %
|-
|      ||   929 ||  1,259 || ... || ... || ... || 2,531 || ... || 1,634 || ... || ... 
|}

===Influencing factors===
[[File:Gold as an investment.webp|thumb|center|300px|
{{legend-line|#F4CF11 solid 3px|Price of [[gold]]}}
{{legend-line|#00A2FF solid 3px|10 year [[United States Treasury security|Treasury]] [[Real interest rate|real yield]] ([[inverted yield curve|inverted]])}}
]]
[[File:Price of gold vs price of copper.webp|thumb|center|300px|Price of gold vs price of copper
{{legend|#FFD700|Price of gold (left)}}
{{legend|#FF871E|Price of [[copper]] (right)}}
]]
Like most commodities, the price of gold is driven by [[supply and demand]], including speculative demand. However, unlike most other commodities, saving and disposal play larger roles in affecting its price than its [[Consumption (economics)|consumption]]. Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewelry, with little value over its [[fine weight]], hence it is nearly as liquid as bullion, and can come back onto the gold market.<ref name="howstuffworks">{{cite web|url=http://money.howstuffworks.com/question213.htm |title=Howstuffworks "All the gold in the world" |date=April 2000 |publisher=Money.howstuffworks.com |access-date=March 16, 2010}}</ref><ref name="indestructable">{{cite web|url=http://www.gold.org/value/markets/supply_demand/recycled.html |title=World Gold Council > value > market intelligence > supply & demand > recycled gold |publisher=Gold.org |access-date=March 16, 2010}}</ref> At the end of 2006, it was estimated that all the gold ever mined totaled {{convert|158000|t}}.<ref>{{cite web | url=http://www.invest.gold.org/sites/en/why_gold/demand_and_supply/ | title=World Gold Council | access-date=July 4, 2008 | archive-url=https://web.archive.org/web/20080511212013/http://www.invest.gold.org/sites/en/why_gold/demand_and_supply/ | archive-date=May 11, 2008 | url-status=dead }}</ref>

Given the huge quantity of gold stored above ground compared to the annual production, the price of gold is mainly affected by changes in sentiment, which affects market supply and demand equally, rather than on changes in annual production.<ref>{{Citation |url=http://webarchiveproject.org/520811/ |work=World Gold Council |title=Frequently Asked Questions |url-status=dead |archive-url=https://web.archive.org/web/20160420230114/http://webarchiveproject.org/520811/ |archive-date=April 20, 2016 }}</ref> According to the [[World Gold Council]], annual mine production of gold over the last few years has been close to 2,500 tonnes.<ref name=autogenerated1>{{cite web |url=http://www.gold.org/deliver.php?file=/value/stats/statistics/pdf/Supply_Demand.pdf |title=World Gold Council |publisher=Gold.org |access-date=March 16, 2010 |url-status=dead |archive-url=https://web.archive.org/web/20100916033528/http://www.gold.org/deliver.php?file=%2Fvalue%2Fstats%2Fstatistics%2Fpdf%2FSupply_Demand.pdf |archive-date=September 16, 2010 }}</ref> About 2,000 tonnes goes into jewelry, industrial and dental production, and around 500 tonnes goes to retail investors and exchange-traded gold funds.<ref name=autogenerated1 />

====Central banks====
Central banks and the [[International Monetary Fund]] play an important role in the gold price. At the end of 2004, [[central banks]] and official organizations held 19% of all above-ground gold as [[official gold reserves]].<ref>{{cite web|url=http://www.gold.org/value/markets/supply_demand/central_banks.html |title=Official gold reserves |publisher=Gold.org |access-date=March 16, 2010}}</ref> The ten-year [[Washington Agreement on Gold]] (WAG), which dates from September 1999, limited gold sales by its members (Europe, United States, Japan, Australia, the [[Bank for International Settlements]] and the International Monetary Fund) to less than 400 tonnes a year.<ref>{{cite web|url=http://www.gold.org/pr_archive/html/Wr991006.htm |title=400 tonnes/year |publisher=Gold.org |date=September 26, 1999 |access-date=March 16, 2010}}</ref> In 2009, this agreement was extended for five years, with a limit of 500 tonnes.<ref>{{citation |publisher=Financial Times |url=http://www.ft.com/cms/s/0/9acfe00e-83b1-11de-a24e-00144feabdc0.html |archive-url=https://web.archive.org/web/20090812112730/http://www.ft.com/cms/s/0/9acfe00e-83b1-11de-a24e-00144feabdc0.html |archive-date=August 12, 2009 |url-access=subscription |url-status=bot: unknown |title=Central banks revive gold bulls |date=August 8, 2009 |access-date=June 12, 2010 }}</ref> European central banks, such as the [[Bank of England]] and the [[Swiss National Bank]], have been key sellers of gold over this period.<ref>{{cite web|url=http://www.bankofengland.co.uk/publications/news/1999/036.htm|archive-url=https://web.archive.org/web/20050527073838/http://www.bankofengland.co.uk/publications/news/1999/036.htm|archive-date=May 27, 2005 |title=UK Treasury & Central Bank Gold Sales |publisher=Bankofengland.co.uk |access-date=March 16, 2010}}</ref> In 2014, the agreement was extended another five years at 400 tonnes per year. In 2019 the agreement was [[Washington Agreement on Gold#2019 lapsing of the agreement|not extended again]].{{Citation needed|date=August 2021}}

Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005.{{citation needed|date=March 2023}} In early 2006, [[China]], which only holds 1.3% of its reserves in gold,<ref>{{cite web |url=http://gold.seekingalpha.com/article/16299 |title=A Gold Play on the Dollar's Demise [SPDR Gold Trust (ETF), iShares Gold Trust(ETF), CurrencyShares Euro Trust&#93; - Seeking Alpha |publisher=Gold.seekingalpha.com |date=September 5, 2006 |access-date=February 12, 2014 |url-status=dead |archive-url=https://web.archive.org/web/20070706155619/http://gold.seekingalpha.com/article/16299 |archive-date=July 6, 2007 }}</ref> announced that it was looking for ways to improve the returns on its official reserves. Some bulls hope that this signals that China might reposition more of its holdings into gold, in line with other central banks. Chinese investors began pursuing investment in gold as an alternative to investment in the Euro after the beginning of the Eurozone crisis in 2011. China has since become the world's top gold consumer {{as of|2013|lc=y}}.<ref>{{cite web |url=http://www.ft.com/cms/s/0/5a48854c-8427-11e3-9903-00144feab7de.html |archive-url=https://web.archive.org/web/20140125044339/http://www.ft.com/cms/s/0/5a48854c-8427-11e3-9903-00144feab7de.html#axzz2rEgLxwyU |archive-date=2014-01-25 |url-access=subscription |url-status=bot: unknown |title=China becomes top gold consumer in 2013 |publisher=Ft.com |access-date=January 23, 2013 }}</ref>

The price of gold can be influenced by a number of macroeconomic variables.<ref name="eprints.hud.ac.uk">{{Cite web |url=http://eprints.hud.ac.uk/23829/3/NtimAccepted_version_March_2015.pdf |title=Archived copy |access-date=2015-05-27 |archive-date=2015-05-27 |archive-url=https://web.archive.org/web/20150527122338/http://eprints.hud.ac.uk/23829/3/NtimAccepted_version_March_2015.pdf |url-status=dead }}</ref> Such variables include the price of oil, the use of [[quantitative easing]], currency exchange rate movements and returns on equity markets.<ref name="eprints.hud.ac.uk"/>

{| class="wikitable"
|-
! Years !! Amount of gold sold by [[IMF]]<ref>{{Cite web|url=http://www.imfsite.org/imf-effect-on-gold-prices/imf-gold-sales-history/|title=IMF Gold Sales History|access-date=Sep 26, 2020}}</ref><ref>{{Cite web|url=https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/42/Gold-in-the-IMF|title=Gold in the IMF|website=IMF|access-date=Sep 26, 2020}}</ref> !! sold to
|-
| 1970–1971 || "as much gold as IMF bought from [[South Africa]]" ||
|-
| 1976–1980 || 50 million ounces (1555 tons) ||
|-
| 1999–2000 || 14 million ounces (435 tons) ||
|-
| rowspan=5|2009–2010 ||rowspan=4| 13 million ounces (403 tons) ||200 tons to [[India]]
|-
||10 tons to [[Sri Lanka]]
|-
||10 tons to [[Bangladesh]]
|-
||2 tons to [[Mauritius]]
|-
| colspan=2|IMF holds a balance of 2,814.1 metric tons of gold
|}

====Hedge against inflation====
Gold, similar to other precious metals such as [[platinum]] and silver, may be used as a [[Hedge (finance)|hedge]] against [[inflation]] or currency [[devaluation]].<ref>{{Cite web|url=https://medium.com/hedgehound/hedgehound-fridayfinance-on-hedging-inflation-with-gold-375f3ce09cfe|title=On hedging inflation with gold|last=Valenta|first=Philip|date=June 22, 2018|website=Medium|access-date=November 30, 2018}}</ref>

{| class="wikitable"
|+ Deutsche Bank's view of the point at which gold prices can be considered close to fair value (on October 10, 2014)<ref>Versus long term averages [http://www.etf.db.com/CHE/DEU/Download/Research-Commodities/55984c89-9f08-44ad-a5de-bac0be822f86/Special-Report.pdf Deutsche Bank Markets Research]</ref>
|-
!
!USD/oz
|-
| In real terms (PPI)|| 725
|-
|In real terms (CPI)|| 770
|-
|Relative to per capita income|| 800
|-
|Relative to the S&P500|| 900
|-
|Versus copper|| 1050
|-
|Versus crude oil|| 1400
|}

====Jewelry and industrial demand====
[[Jewelry]] consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA.<ref>{{cite web|url=http://www.gold.org/investment/why_how_and_where/why_invest/demand_and_supply/ |title=Demand and supply |publisher=World Gold Council |url-status=dead |archive-url=https://web.archive.org/web/20110122124718/http://www.gold.org/investment/why_how_and_where/why_invest/demand_and_supply/ |archive-date=January 22, 2011 }}</ref>

Industrial, dental and medical uses account for around 12% of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelry and industrial demand have fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the [[2008 financial crisis]].<ref>{{cite web|url=http://www.gold.org/world_of_gold/market_intelligence/gold_demand/gold_demand_trends/ |title=Gold Demand Trends |publisher=World Gold Council |url-status=dead |archive-url=https://web.archive.org/web/20101205182917/http://www.gold.org/world_of_gold/market_intelligence/gold_demand/gold_demand_trends/ |archive-date=December 5, 2010 }}</ref>

====War, invasion and national emergency====
When dollars were fully convertible into gold via the [[gold standard]], both were regarded as money. However, many people preferred to carry around paper [[banknotes]] rather than the somewhat heavier and less divisible [[gold coin]]s. If people feared their bank would fail, a [[bank run]] might result. This happened in the USA during the [[Great Depression]] of the 1930s, leading [[Franklin D. Roosevelt|President Roosevelt]] to impose a [[national emergency]] and issue [[Executive Order 6102]] outlawing the "hoarding" of gold by US citizens.  There was only one prosecution under the order, and in that case the order was ruled invalid by federal judge [[John M. Woolsey]], on the technical grounds that the order was signed by the President, not the Secretary of the Treasury as required.<ref>{{cite magazine| url=http://www.time.com/time/magazine/article/0,9171,746366,00.html | archive-url=https://web.archive.org/web/20091115093303/http://www.time.com/time/magazine/article/0,9171,746366,00.html | url-status=dead | archive-date=November 15, 2009 | magazine=Time | title=Sequels, Nov. 27, 1933 | date=November 27, 1933}}</ref>

Gold prices surged to a near two-month high in June 2025, driven by heightened geopolitical tensions between Israel and Iran, prompting investors to seek refuge in safe-haven assets like gold and [[Platinum as an investment|platinum]].<ref>{{cite news |last=Ray |first=Soumili |title=Gold prices hit near two-month high amid escalating Israel-Iran tensions |url=https://www.hindustantimes.com/business/gold-prices-hit-near-two-month-high-amid-escalating-israel-iran-tensions-101750046735652.html |work=Hindustan Times |date=June 16, 2025 |access-date=June 23, 2025}}</ref>

==Investment vehicles==
{{More citations needed|section|date=July 2021}}

===Bars===
{{Main|Gold bars}}
[[File:1 oz of Gold.jpg|thumb|right|{{convert|1|ozt|g}} gold bar with certificate]]
The most traditional way of investing in gold is by buying bullion [[gold bar]]s. In some countries, like [[Canada]], [[Austria]], [[Liechtenstein]] and [[Switzerland]], these can easily be bought or sold at the major banks. Alternatively, there are bullion dealers that provide the same service. Bars are available in various sizes. For example, in Europe, [[Good Delivery]] bars are approximately {{convert|400|ozt|kg}}.<ref>{{citation|publisher=LBMA |url=http://www.lbma.org.uk/docs/gdlvarious/GD%20Rules%2020100511.pdf |title=The Good Delivery Rules for Gold and Silver Bars |date=May 2010 |access-date=May 21, 2010 |url-status=dead |archive-url=https://web.archive.org/web/20100705095149/http://www.lbma.org.uk/docs/gdlvarious/GD%20Rules%2020100511.pdf |archive-date=July 5, 2010 }}</ref> {{convert|1|kg|ozt|1}} bars are also popular, although many other weights exist, such as the {{cvt|10|ozt|g}}, {{cvt|1|ozt|g}}, 10&nbsp;g, 100&nbsp;g, 1&nbsp;kg, 1&nbsp;[[tael]] (50&nbsp;g in China), and 1&nbsp;[[Tola (unit)|tola]] (11.3&nbsp;g).

Bars generally carry lower price premiums than gold bullion coins. However larger bars carry an increased risk of forgery due to their less stringent parameters for appearance. While bullion coins can be easily weighed and measured against known values to confirm their veracity, most bars cannot, and gold buyers often have bars re-[[Metallurgical assay|assay]]ed. Larger bars also have a greater volume in which to create a partial forgery using a [[tungsten]]-filled cavity, which may not be revealed by an assay. Tungsten is ideal for this purpose because it is much less expensive than gold, but has the same density (19.3 g/cm<sup>3</sup>).

[[Good delivery bar]]s that are held within the [[London bullion market]] (LBMA) system each have a verifiable chain of custody, beginning with the refiner and assayer, and continuing through storage in LBMA recognized vaults. Bars within the LBMA system can be bought and sold easily. If a bar is removed from the vaults and stored outside of the chain of integrity, for example stored at home or in a private vault, it will have to be re-assayed before it can be returned to the LBMA chain. This process is described under the LBMA's "Good Delivery Rules".<ref>{{cite web |url=http://www.lbma.org.uk/assets/GD_Rules_4.pdf |title=LBMA : The Good Delivery Rules for Gold and Silver Bars |publisher=Lbma.org.uk |access-date=February 12, 2014 |archive-date=September 7, 2014 |archive-url=https://web.archive.org/web/20140907223739/http://www.lbma.org.uk/assets/GD_Rules_4.pdf |url-status=dead }}</ref>

The LBMA "traceable chain of custody" includes refiners as well as vaults. Both have to meet their strict guidelines. Bullion products from these trusted refiners are traded at face value by LBMA members without assay testing. By buying bullion from an LBMA member dealer and storing it in an LBMA recognized vault, customers avoid the need of re-assaying or the inconvenience in time and expense it would cost.<ref>{{cite web|last=Townsend |first=Erik |url=http://www.financialsense.com/contributors/erik-townsend/so-you-think-you-own-gold?device=desktop |title=So You Think You Own Gold? Understanding the nuances of paper vs. physical and allocated vs. unallocated metal &#124; Erik Townsend |publisher=Financial Sense |access-date=February 12, 2014}}</ref> However this is not 100% sure; for example, Venezuela moved its gold because of the political risk for them. And as the past shows, there may be risk even in countries considered democratic and stable; for example [[Executive Order 6102|in the US in the 1930s gold was seized by the government]] and legal moving was banned.<ref>{{cite news|last=Cancel |first=Daniel |url=https://www.bloomberg.com/news/2011-08-16/venezuela-may-move-reserves-from-u-s-to-allied-countries-says-lawmaker.html |title=Venezuela May Move Reserves From U.S. to 'Allied' Countries, Says Lawmaker |publisher=Bloomberg |date=August 16, 2011 |access-date=February 12, 2014}}</ref>

Efforts to combat gold bar counterfeiting include [[kinebar]]s which employ a unique holographic technology and are manufactured by the Argor-Heraeus refinery in Switzerland.

===Coins===
[[Gold coin]]s are a common way of owning gold. [[Bullion coin]]s are priced according to their [[fine weight]], plus a small premium based on [[supply and demand]] (as opposed to [[numismatic]] gold coins, which are priced mainly by supply and demand based on rarity and condition). The sizes of bullion coins range from {{convert|0.1|to|2|ozt|g|lk=in}}, with the {{convert|1|ozt|g}} size being most popular and readily available.

Common gold bullion coins include the [[Krugerrand]], [[Australian Gold Nugget]] (Kangaroo), Austrian Philharmoniker ([[Euro gold and silver commemorative coins (Austria)#Vienna Philharmonic Coin|Philharmonic]]), [[Coins of the Austro-Hungarian krone|Austrian 100 Corona]], [[Canadian Gold Maple Leaf]], [[Chinese Gold Panda]], [[Kijang Emas|Malaysian Kijang Emas]], [[Napoleon (coin)|French Napoleon]] or Louis d'Or, [[Centenario (coin)|Mexican Gold 50 Peso]], [[Sovereign (British coin)|British Sovereign]], [[American Gold Eagle]], and [[American Buffalo (coin)|American Buffalo]].

Coins may be purchased from a variety of dealers both large and small. Fake gold coins are common and are usually made of gold-layered alloys.<ref name=":0">{{Cite news|url=https://www.cbsnews.com/news/chinas-latest-export-boom-fake-gold-coins/|title=China's latest export boom: Fake gold coins|access-date=January 20, 2018|language=en}}</ref>

===Gold rounds===
{{more citations needed section|date=October 2014}}
''Gold rounds'' look like gold coins, but they have no [[currency]] value.<ref>{{cite web | url=https://www.jmbullion.com/investing-guide/james/buying-bars-rounds-coins/ | title=Should you Buy Bars, Rounds, or Coins? | date=14 January 2015 }}</ref><ref>{{cite web | url=http://www.gainesvillecoins.com/learn/difference-between-coins-and-rounds | title=What Is the Difference Between Coins and Rounds? | access-date=2017-06-14 | archive-date=2019-04-03 | archive-url=https://web.archive.org/web/20190403164513/https://www.gainesvillecoins.com/learn/difference-between-coins-and-rounds | url-status=dead }}</ref> They range in similar sizes as [[gold coin]]s, including {{convert|0.05|ozt|g}}, {{convert|1|ozt|g}}, and larger. Unlike gold coins, gold rounds commonly have no additional metals added to them for durability purposes and do not have to be made by a government [[Mint (coin)|mint]], which allows the gold rounds to have a lower overhead price as compared to gold coins. On the other hand, gold rounds are normally not as collectible as gold coins.

===Exchange-traded products===
[[Gold exchange-traded product]]s may include [[exchange-traded fund]]s (ETFs),<ref>{{cite web |last1=Ernst |first1=Kelly |title=What is a gold ETF? |url=https://www.cbsnews.com/news/what-is-a-gold-etf/ |website=CBS News |date=3 May 2023 |publisher=CBS Media |access-date=3 May 2023}}</ref> [[exchange-traded note]]s (ETNs){{citation needed|date=May 2024}}, and [[closed-end fund]]s (CEFs), which are traded like shares on the major stock exchanges.{{citation needed|date=May 2024}} The first gold ETF, [[Gold Bullion Securities]] (ticker symbol "GOLD"), was launched in March 2003 on the [[Australian Stock Exchange]], and originally represented exactly {{convert|0.1|ozt|g}} of gold. {{as of|2010|November|}}, [[SPDR Gold Shares]] is the second-largest exchange-traded fund in the world by [[market capitalization]].<ref>{{cite web|url=http://etfdb.com/compare/market-cap/|title=Largest ETFs: Top 25 ETFs By Market Cap|publisher=ETFdb|access-date=November 3, 2010}}</ref>

Gold exchange-traded products (ETPs) represent an easy way to gain exposure to the gold price, without the inconvenience of storing physical bars. However exchange-traded gold instruments, even those that hold physical gold for the benefit of the investor, carry risks beyond those inherent in the precious metal itself. For example, the most popular gold ETP (GLD) has been widely criticized, and even compared with [[Mortgage-backed security|mortgage-backed securities]], due to features of its complex structure.<ref>{{citation | work = The Golden Sextant | title = Musings on the Realms of GLD | author = Bob Landis | year = 2007 | url = http://www.goldensextant.com/GLD.html }}</ref><ref>{{citation | work = Rapid Trends | title = Owning GLD Can Be Hazardous to Your Wealth | author = Dave Kranzler | date = February 12, 2009 | url = http://www.rapidtrends.com/2009/02/13/owning-gld-can-be-hazardous-to-your-wealth/ | access-date = July 18, 2010 | archive-url = https://web.archive.org/web/20100226142021/http://www.rapidtrends.com/2009/02/13/owning-gld-can-be-hazardous-to-your-wealth/ | archive-date = February 26, 2010 | url-status = dead }}</ref><ref>{{citation | work = [[Seeking Alpha]] | author = RunToGold.com | title = Is the GLD ETF Really Worth Its Metal? | date = February 19, 2009 | url = http://seekingalpha.com/article/121456-is-the-gld-etf-really-worth-its-metal }}</ref><ref>{{citation | work = Bullion Bulls Canada | author = Jeff Nielson | title = The Seven Sins of GLD | date = July 6, 2010 | url = http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=13341:the-seven-sins-of-gld&catid=48:gold-commentary&Itemid=131 | access-date = July 18, 2010 | archive-url = https://web.archive.org/web/20100710121708/http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=13341:the-seven-sins-of-gld&catid=48:gold-commentary&Itemid=131 | archive-date = July 10, 2010 | url-status = dead }}</ref>

Typically a small commission is charged for trading in gold ETPs and a small annual storage fee is charged. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each certificate, so the amount of gold in each certificate will gradually decline over time.

[[Exchange-traded fund]]s, or ETFs, are investment companies that are legally classified as open-end companies or [[unit investment trust]]s (UITs), but that differ from traditional open-end companies and UITs.<ref name="Exchange-Traded Funds ETFs">{{cite web|url=https://www.sec.gov/answers/etf.htm| title=Exchange-Traded Funds (ETFs)|access-date=May 5, 2010}}</ref> The main differences are that ETFs do not sell directly to investors and they issue their shares in what are called "Creation Units" (large blocks such as blocks of 50,000 shares). Also, the Creation Units may not be purchased with cash but a basket of securities that mirrors the ETF's portfolio. Usually, the Creation Units are split up and re-sold on a secondary market.

ETF shares can be sold in two ways: The [[investors]] can sell the individual shares to other investors, or they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be and may not call themselves [[mutual funds]].<ref name="Exchange-Traded Funds ETFs"/>

===Certificates===
{{See also|Gold certificate (United States)}} 
Gold certificates allow gold investors to avoid the [[risk]]s and costs associated with the transfer and storage of physical bullion (such as theft, large [[bid–offer spread]], and [[metallurgical assay]] costs) by taking on a different set of risks and costs associated with the certificate itself (such as commissions, storage fees, and various types of [[credit risk]]).

Banks may issue gold certificates for gold that is ''allocated'' (fully reserved) or ''unallocated'' (pooled). Unallocated gold certificates are a form of [[fractional reserve banking]] and do not guarantee an equal exchange for metal in the event of a [[bank run|run]] on the issuing bank's gold on deposit. Allocated gold certificates should be correlated with specific numbered bars, although it is difficult to determine whether a bank is improperly allocating a single bar to more than one party.<ref>{{cite web |url=http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html |work=King World News |date=April 7, 2010 |title=Interview: Harvey Organ, Lenny Organ, Adrian Douglas |url-status=dead |archive-url=https://web.archive.org/web/20100701170920/http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html |archive-date=July 1, 2010 }}</ref>

The first paper bank notes were gold certificates. They were first issued in the 17th century when they were used by goldsmiths in [[England]] and the [[Netherlands]] for customers who kept deposits of gold bullion in their vault for safe-keeping. Two centuries later, the gold certificates began being issued in the United States when the US Treasury issued such certificates that could be exchanged for gold. The United States Government first authorized the use of the gold certificates in 1863. On April 5, 1933, the US Government [[Executive Order 6102|restricted the private gold ownership in the United States]] and therefore, the gold certificates stopped circulating as money (this restriction was reversed on January 1, 1975). Nowadays, gold certificates are still issued by gold pool programs in [[Australia]] and the United States, as well as by banks in [[Germany]], [[Switzerland]] and [[Vietnam]].<ref>{{cite web|url=http://vietnamembassy.org.au/Economics.htm |work=Vietnam Economics |date=August 4, 2013 |title=The economy of Vietnam: gold standard |url-status=dead |archive-url=https://web.archive.org/web/20130725210441/http://vietnamembassy.org.au/Economics.htm |archive-date=July 25, 2013 }}</ref>

===Accounts===
Many types of gold "accounts" are available. Different accounts impose varying types of intermediation between the client and their gold. One of the most important differences between accounts is whether the gold is held on an allocated (fully reserved) or unallocated (pooled) basis. Unallocated gold accounts are a form of [[fractional reserve banking]] and do not guarantee an equal exchange for metal in the event of a [[bank run|run]] on the issuer's gold on deposit. Another major difference is the strength of the account holder's claim on the gold, in the event that the account administrator faces gold-denominated [[legal liability|liabilities]] (due to a [[Short (finance)|short]] or [[naked short selling|naked short]] [[Position (finance)|position]] in gold for example), [[asset forfeiture]], or [[bankruptcy]].

Some [[Swiss bank]]s offer gold accounts where gold can be instantly bought or sold just like any foreign currency on a [[fractional reserve banking|fractional reserve]] basis<ref>{{Cite web|last=Lonergan|first=Martin|date=April 19, 2021|title=Swiss Banks offer allocated gold|url=https://www.financialsense.com/contributors/julian-phillips/swiss-bank-clients-unallocated-to-allocated-gold-accounts#:~:text=Swiss%20banks%20UBS%20and%20Credit,bullion%20in%20'allocated'%20accounts.}}</ref> or on a fully allocated basis. Pool accounts, such as those offered by some providers, facilitate highly liquid but unallocated claims on gold owned by the company. [[Digital gold currency]] systems operate like pool accounts and additionally allow the direct transfer of fungible gold between members of the service. Other operators, by contrast, allows clients to create a [[bailment]] on allocated (non-fungible) gold, which becomes the legal property of the buyer.

Typically, bullion banks only deal in quantities of {{convert|1000|ozt|kg}} or more in either allocated or unallocated accounts. For private investors, [[vaulted gold]] offers private individuals to obtain ownership in professionally vaulted gold starting from minimum investment requirements of several thousand U.S.-dollars or denominations as low as one gram.

===Derivatives, CFDs and spread betting===
[[Derivative (finance)|Derivative]]s, such as gold [[forward contract|forwards]], [[futures contract|futures]] and [[option (finance)|options]], currently trade on various exchanges around the world and [[Over-the-counter (finance)|over-the-counter]] (OTC) directly in the private market.  In the U.S., gold futures are primarily traded on the New York Commodities Exchange ([[New York Mercantile Exchange|COMEX]]) and [[Euronext.liffe]].  In [[India]], gold futures are traded on the [[National Commodity and Derivatives Exchange]] (NCDEX) and [[Multi Commodity Exchange]] (MCX).<ref>{{Cite web|url=http://www.ncdex.com/products/products_precious_gold100gms.aspx?Type=Gen|archive-url=https://web.archive.org/web/20061201055048/http://www.ncdex.com/products/products_precious_gold100gms.aspx?Type=Gen|url-status=dead|archive-date=2006-12-01|title=National Commodity & Derivatives Exchange Limited|date=Dec 1, 2006|access-date=Sep 26, 2020}}</ref>

==Investment strategies==

===Fundamental analysis===
Investors using [[fundamental analysis]] analyze the [[macroeconomics|macroeconomic]] situation, which includes international [[economic indicator]]s, such as [[GDP]] growth rates, [[inflation]], [[interest rate]]s, [[productivity]] and energy prices.<ref>{{cite web |last1=Rosenberg |first1=Dan |title=Fundamental analysis: How it can help you determine a stock's value |url=https://www.britannica.com/money/supermarket |website=Britannica Money |publisher=Encyclopaedia Britannica Inc.}}</ref> They would also analyze the yearly global gold supply versus demand.

===Gold vis-à-vis stocks===
[[File:Dow Gold Ratio.png|thumb|Dow/Gold Ratio 1968–2008]]

The performance of gold bullion is often compared to [[stock]]s as different investment vehicles. Gold is regarded by some as a store of value (without growth) whereas stocks are regarded as a return on value (i.e., growth from anticipated real price increase plus dividends). Stocks and bonds perform best in a stable political climate with strong property rights and little turmoil. The attached graph shows the value of Dow Jones Industrial Average divided by the price of an ounce of gold. Since 1800, stocks have consistently gained value in comparison to gold in part because of the stability of the American political system.<ref>Investments (7th Ed) by Bodie, Kane and Marcus, P.570-571</ref> This appreciation has been cyclical with long periods of stock outperformance followed by long periods of gold outperformance. The Dow Industrials bottomed out a ratio of 1:1 with gold during 1980 (the end of the 1970s bear market) and proceeded to post gains throughout the 1980s and 1990s.<ref>{{cite web |url=https://www.goldrepublic.com/news/the-best-inflation-hedge-gold-versus-stocks.html |title=The Best Inflation Hedge: Gold versus Stocks |publisher=GoldRepublic |date=March 25, 2014 |access-date=November 11, 2014|archive-url=https://web.archive.org/web/20141104093626/https://www.goldrepublic.com/news/the-best-inflation-hedge-gold-versus-stocks.html |archive-date=November 4, 2014 }}</ref> The gold price peak of 1980 also coincided with the [[Soviet invasion of Afghanistan|Soviet Union's invasion of Afghanistan]] and the threat of the global expansion of communism. The ratio peaked on January 14, 2000, a value of 41.3 and has fallen sharply since.

One argument follows that in the long-term, gold's high volatility when compared to stocks and bonds, means that gold does not hold its value compared to stocks and bonds:<ref name="Sowell, Thomas 2004">Sowell, Thomas (2004). ''Basic Economics: A Citizen's Guide to the Economy''. Basic Books, {{ISBN|978-0-465-08145-5}}.</ref>
{{blockquote|1=To take an extreme example [of price volatility], while a dollar invested in bonds in 1801 would be worth nearly a thousand dollars by 1998, a dollar invested in stocks that same year would be worth more than half a million dollars in real terms. Meanwhile, a dollar invested in gold in 1801 would by 1998 be worth just 78 cents.<ref name="Sowell, Thomas 2004"/>}}

==Taxation==
{{Main|Taxation of precious metals}}
Gold maintains a special position in the market with many [[tax]] regimes. The taxation of gold is regulated very differently around the world and depends on the respective national laws. As a rule, a distinction is made between investment gold, gold jewelry and financial products such as ETFs or futures.

* '''Sales tax''' '''(VAT):''' Investment gold such as bars and coins with a high degree of purity is exempt from VAT in many countries. Investment gold enjoys preferential tax treatment in the European Union<ref>{{Citation |title=Council Directive 98/80/EC of 12 October 1998 supplementing the common system of value added tax and amending Directive 77/388/EEC - Special scheme for investment gold |date=1998-10-12 |volume=281 |url=https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31998L0080 |access-date=2025-01-28 |language=en}}</ref> and Switzerland.<ref>{{Cite book |title=Mehrwertsteuergesetz & Mehrwertsteuerverordnung |publisher=SwissVAT AG |year=2023 |location=Zurich |pages=17/66 |language=de |trans-title=VAT Act & VAT Ordinance}}</ref> By contrast, gold jewelry is subject to sales tax in most countries because it is considered a consumer good.
* '''Capital gains tax:''' Profits from the sale of investment gold are treated as capital gains in many countries and taxed accordingly. In the US, special tax rates apply to physical gold, which is also handled differently in the various states. By contrast, Switzerland, for example, does not levy any capital gains tax on private gold sales. In other countries, such as Australia, however, reduced tax rates may apply if the gold is held for more than a year.<ref>{{Cite book |last=Kunze |first=Mathias |url=https://gold.biz/en/gold-tax |title=From Germany to India: The Tax Landscape in the Global Gold Market |date=2025-01-03 |publisher=ONSITES Graduate School |isbn=978-619-7646-44-3 |edition=1st |location=Varna |publication-date=2025-01-03 |pages=7–28 |language=en}}</ref>
* '''Import duties:''' Some countries, such as India, impose high import duties on gold to protect their domestic economies and balance of trade.<ref>{{Cite web |title=Indian gold import duties reduced to the lowest level in over a decade |url=https://www.gold.org/goldhub/gold-focus/2024/07/indian-gold-import-duties-reduced-lowest-level-over-decade |access-date=2025-01-28 |website=World Gold Council |language=en}}</ref>
* '''Virtual gold:''' Trading in gold in the form of financial products such as ETFs or futures is subject to specific tax regulations in most countries. Profits from these investments are often categorized as capital gains and taxed at the corresponding tax rates.<ref>{{Cite web |date=2024-08-08 |title=Western activity picked up in July |url=https://www.gold.org/goldhub/research/gold-etfs-holdings-and-flows/2024/08 |access-date=2025-01-28 |website=World Gold Council |language=en}}</ref>

The tax treatment of gold often reflects economic policy priorities, such as protecting domestic industry or promoting investment. Given the complex and country-specific regulations, a thorough knowledge of the applicable tax rules is crucial for investors and traders.

==Scams and frauds==
Gold attracts various forms of fraudulent activity. Some of the most common are:
* [[High-yield investment program]]s&nbsp;– HYIPs are usually just dressed up [[pyramid scheme]]s, with no real value underneath.  Using gold in their prospectus makes them seem more solid and trustworthy.<ref>{{cite web |title=Look Out for High-Yield Investment Program Scams -- Investor Alert |url=https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/look-out-high-yield-investment-program-scams-investor-alert |website=Investor.gov |publisher=Securities and Exchange Commission - US Govt |access-date=15 March 2023}}</ref>
* [[Advance fee fraud]]&nbsp;– Various emails circulate on the Internet for buyers or sellers of up to 10,000 metric tonnes of gold (an amount greater than US Federal Reserve holdings).  Through the use of fake legalistic phrases, such as "Swiss Procedure" or "FCO" (Full Corporate Offer), naive middlemen are drafted as hopeful brokers. The endgame of these scams varies, with some attempting to extract a small "validation" amount from the innocent buyer/seller (in hopes of hitting the big deal),<ref>{{cite news |url=http://news.bbc.co.uk/1/hi/world/africa/3887493.stm |archive-url=https://web.archive.org/web/20090228132855/http://news.bbc.co.uk/1/hi/world/africa/3887493.stm |archive-date=February 28, 2009 |title=Turning the tables on Nigeria's e-mail conmen |first=Dan |last=Damon |date=July 11, 2004 |work=BBC News}}</ref> and others focused on draining the bank accounts of their targeted dupes.<ref>{{cite web|author=Joe Wein |url=http://www.419scam.org/ |title=Advance Fee Fraud and Fake Lotteries |publisher=419 Scam |date=June 21, 2011 |access-date=February 12, 2014}}</ref>
* Counterfeit [[gold coin]]s.<ref name=":0" />
* Shares in fraudulent mining companies with no gold reserves, or potential of finding gold. For example, the [[Bre-X]] scandal in 1997.<ref>{{cite web |last1=Partridge |first1=Matthew |title=Great frauds in history: the Bre-X gold-mining scandal |url=https://moneyweek.com/502188/great-frauds-in-history-the-bre-x-gold-mining-scandal |website=Moneyweek |date=20 February 2019 |publisher=Future plc |access-date=20 February 2019}}</ref>
* There have been instances of fraud when the seller keeps possession of the gold.<ref>{{Cite web|url=http://about.ag/GoldSilverFraud.htm|title=Gold and Silver Bullion Bankruptcies, Fraud, Government Actions, etc.|website=about.ag|access-date=Sep 26, 2020}}</ref>  In the early 1980s, when gold prices were high, two major frauds were [[International Gold Bullion Exchange]] and Bullion Reserve of North America.<ref>Audit After Gold Dealer's Suicide Suggests Customers Lost Millions ''New York Times'' October 5, 1983 [https://www.nytimes.com/1983/10/05/business/audit-after-gold-dealer-s-suicide-suggests-customers-lost-millions.html]</ref>  More recently the 2008 fraud at [[e-Bullion]] resulted in a loss for investors, that was only reimbursed to them in April 2019.<ref>{{cite web |title=United States Returns $9.8 Million Recovered from e-Bullion Illegal Money-Transmitting Business to Victims |url=https://www.justice.gov/usao-cdca/pr/united-states-returns-98-million-recovered-e-bullion-illegal-money-transmitting |website=U.S. Attorney's Office, Central District of California |date=19 April 2019 |publisher=U.S. Department of Justice |access-date=19 April 2019}}</ref>

==See also==
{{div col}}
* [[Gold fixing]]
* [[Gold repatriation]]
* [[Full-reserve banking]]
* [[Gold exchange-traded product]]
* [[Inflation hedge]]
* [[Vaulted gold]]
* [[Peak gold]]
* [[Gold reserve]]
* [[Traditional investments]]
* [[Alternative investments]]
* [[List of bullion dealers]]
{{div col end}}

===Other precious metals and diamonds as investments===
* [[Diamonds as an investment]]
* [[Palladium as an investment]]
* [[Platinum as an investment]]
* [[Silver as an investment]]

==References==
{{Reflist}}

==External links==
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