Thinking of buying gold for the first time? Here’s what you need to do

Gold is exploding again. New buyers are piling in, old names are breaking records, and global fear is doing what it always does, pushing people to chase this metal like it’s the last life raft in a sinking market.

And if you’re thinking about grabbing a piece of the action for the first time ever, then you’re late, but luckily, not too late. You just need to know what the heck is going on, and for that, we got you.

You see, investors are worried about war, inflation, central bank politics, and rate decisions that never seem clear. The result has been a stampede into gold, with the NYSE Arca Gold Miners Index smashing through its all-time high for the first time since the 2011 euro debt crisis and the U.S. credit downgrade.

This time, it’s the wars in the Middle East, Russia-Ukraine, and yes, Donald Trump trying to kick Lisa Cook out of the Fed, that’s stirred the pot. Nobody knows what interest rates are doing anymore.

Gold mining stocks break records

Miners are on fire. Big names like Newmont Corp., Agnico Eagle Mines Ltd., Wheaton Precious Metals Corp., and Barrick Mining Corp. have all jumped more than 80% this year.

Newmont’s earnings more than doubled in 2024. Analysts say it’ll go up another 50% this year. That’s after two full years of weak numbers. It’s now trading at the highest price in over three years.

“Newmont is my top pick,” said Martin Pradier of Veritas Investment Research. “Return on equity is almost twice as high as last year.” He’s not the only one paying attention. Agnico Eagle also made his list, mostly because of their assets in Canada and “strong execution.”

Agnico’s U.S.-listed stock soared over 90% this year, hitting record highs. Its earnings are also expected to grow, despite a drop in gold output. Barrick had some trouble in Mali and took a $1 billion net charge in Q2, but the stock still climbed 80% year-to-date.

Behind all that? Simple. Spot gold is near $3,600 per ounce. That’s a 35% gain just this year. And when gold gets hot, miners follow.

Some, like Blair duQuesnay, a financial planner and advisor at Ritholtz Wealth Management, are pointing to investor sentiment: “Gold has been trending higher and getting a lot of attention.” She says it’s the go-to when things fall apart. And it is. Always has been.

Sameer Samana at Wells Fargo Investment Institute agrees. He calls gold a classic safety play in “bad economic times.” According to research from the Federal Reserve Bank of Chicago, gold does well in low-rate environments and periods of chaos. That box is checked. Multiple times.

Wells Fargo’s latest strategy report says global central banks are buying more gold too. Add geopolitical stress to that, and the demand picture just keeps getting stronger. This isn’t just retail investors chasing headlines. The big boys are loading up too.

Investors choose ETFs over physical gold

Now, if you’re serious about buying gold, there are two main ways to do it. You either buy the real thing, bars or coins, or you buy financial products that track the price. Most experts say skip the coins.

Why? Because physical gold is expensive to store, and even more expensive to sell. You lose money on transaction fees, and keeping it safe is a problem. “It’s much more inefficient to own physical gold,” said duQuesnay. She’s not wrong. Once you’ve dealt with the logistics, you’ll wish you’d bought an ETF.

That’s why most investors stick with ETFs. The biggest ones are SPDR Gold Shares (GLD) and iShares Gold Trust (IAU). They move with the price of gold, they’re cheap, and they’re easy to trade. “Gold ETFs are going to be the most liquid, tax efficient and low-cost way to invest,” duQuesnay added.

But not everyone agrees on how much to hold. Most financial advisors don’t go above 3% of the full portfolio. Some, like duQuesnay herself, don’t use gold at all. “It’s a trendy asset. Are we in the third inning or the ninth inning of this rally?” she said. It’s a fair question.

Meanwhile, Andrew Musgraves from VanEck warned about past cycles. “In past gold rallies of 2010, 2011, for example, they kind of blew out their budgets and were penalized by the market for that,” he said.

This time, miners have kept their spending in check. They’re protecting margins and turning those high prices into real profit.

So far, it’s working. Whether that continues depends on what happens next.

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