Investing In Gold Can Take Various Formats As Safe Haven Appeal Continues

In case you missed it, the price of gold hit an all-time high a few months ago when it reached $3,500 an ounce. Prices have climbed almost 30 per cent within the last 12 months amid a backdrop of geopolitical tensions and economic uncertainty. Gold is traditionally seen as a 'safe haven' so in times of uncertainty, people invest in it. While it may have since dropped from its all-time high, it is trading within a range of around $3,300 to $3,400 as investors remain cautious.

Physical gold

There are multiple ways of investing in the precious metal. Some people like to hold physical gold but of course this comes with security risks, or costs involved in paying a company to store it securely for you. Mirza Zuhaib Baig is the founder of Just Gold, a Shariah-compliant digital gold platform. He said that last year, everyday investors purchased about 1,186 tonnes of gold bars and coins, worth roughly $91 billion.“That is more metal than China, the world's top producer, mines in a whole year. So plenty of households still keep physical gold, whether at home or in a safe-deposit box.”

And what about gold jewellery? Some see that as a good proxy for investing in gold. Jewellery is the largest segment of demand (1,877 tonnes in 2024, 44 per cent of total demand).“Yes and no,” says Toby Young, a digital assets strategist.“Yes, because it has more than one use - a store of value and also something you can wear or use, and no because why would you have a piece of jewellery made which would incur extra costs and charges, and may not be to everyone's taste?”

Funds

For those looking to invest in gold without buying it physically, there are funds that buy gold but let you invest in them via shares. One popular type are exchange traded funds (ETFs) which have lower costs than traditional mutual funds. The biggest gold ETF is called SPDR Gold Shares (GLD) which owns real gold bars that sit in HSBC's high-security vault in London. The fund posts a daily list of every bar's serial number, weight, and refiner so anyone can see the metal backing their shares. There are also Shariah-approved physical-gold ETFs such as Albilad Gold ETF or TradePlus Shariah Gold Tracker.

Gold miners

Another way to gain exposure is by investing in companies that mine gold, which include Newmont Corporation and Barrick Gold. Rather than invest directly in a mining company, there are funds and ETFs available that invest in a basket of mining stocks. For example, VanEck Gold Miners ETF is a fund that invests in major gold miners. It also has a fund of smaller gold miners but this comes with added risk. Be aware that it's expensive and complex to mine gold and companies face huge energy and labour costs.

Digital gold

One exciting development is digital gold, which refers to buying small fractions of physical gold online, usually via apps or online exchanges. Legitimate digital gold platforms will back every unit you buy with physical gold held in a vault. Always check if the platform is regulated and audited, and where the gold is stored. Just Gold's app lets anyone start with Dh10 and own fractional gold stored in a local vault.“Lower entry tickets and no storage worries make fractional digital gold attractive, especially to younger, mobile-first investors,” says Mirza Zuhaib Baig. Other platforms include SafeGold and BullionVault.

Tokenised

While digital gold exists online, tokenised gold goes one step further and puts your units on the blockchain in the form of tokens. Many 'real world assets' are being tokenized like property, jets and even racehorses. Gold is now part of this growing list.“It enables fractional ownership, which can come at a lower price than an ounce, or kg of gold. Some platforms offer fractions of a gram. It is definitely a world that is expanding at the moment, and allows for wider ownership too,” adds Young.

The value of gold-backed tokens such as Tether Gold is growing rapidly. Each token can be split into milligrams, so investors can start with the cost of a coffee instead of buying a 1-ounce coin.“Younger savers who are comfortable with crypto wallets prefer tapping 'Buy 0.05 g' on a phone to visiting a bullion dealer,” adds Baig.

Future moves

With global trade uncertainty, a weakening dollar, and sticky inflation, gold continues to attract investors seeking stability. Many central banks are also hoarding gold to diversify their reserves. Gold remains a protection against inflation and serves as a portfolio diversifier. But what about price predictions?

JP Morgan predicts $3,675 by the end of the year, but crossing $4,000 next year. While Goldman Sachs has a $3,700 price target by the end of 2025. Scott E. Campbell, director at Global Investment Opportunities, says:“There is a strong case that gold will rise to $3,700 a troy ounce by the end of 2025 as central banks buy many tonnes of the precious metal every month. My opinion is that still more growth to be had over the next 12-24 months.”

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