Investing in Gold: Guide to Physical Gold, Gold ETCs and Gold ETFs
This article was created with the help of artificial intelligence.
Key Takeaways
- Gold is not a return driver but a portfolio hedge with only around 0.8 percent real annual returns in the long term.
- A gold allocation of 5 to 10 percent reduces overall portfolio risk because the metal often moves opposite to stocks during crises.
- Gains from physical gold are tax-free after a one-year holding period, while gold ETCs as non-special assets carry counterparty risk.
- Gold is traded in US dollars and thus exposes eurozone investors to currency risks, while the metal pays no interest or dividends.
- The gold price has risen from around €250 thirty years ago to over €4,000, driven by central bank purchases, geopolitical tensions and falling interest rates.
- With physical gold, spreads between buy and sell prices range from 5 to 20 percent depending on quantity, plus storage and insurance costs.
Investing in Gold: Guide to Physical Gold, Gold ETCs and Gold ETFs
Anyone who wants to invest in gold buys either physical precious metals as bars and coins or exchange-traded securities like gold ETCs. The metal pays no interest and no dividends; gains arise solely from a rising gold price.
As an allocation of 5 to 10 percent, the precious metal reduces the overall risk of a portfolio because it often moves counter to stocks in crises. This is precisely why investing in gold is firmly established in many private investors' considerations for asset allocation.
Why investors are increasingly investing in gold right now
The gold price has moved significantly in recent years. In 2024, the average price was around 2,386 US dollars per fine ounce, with annual performance reaching 26.35 percent.
In early 2025, the 5,000 US dollar mark was exceeded; in April 2026, the metal traded at an average of around 4,720 US dollars. This means the value has nearly doubled within roughly two years.
Behind this increase are massive purchases by central banks, geopolitical tensions and falling interest rates. Anyone wanting to diversify their assets more broadly is examining the precious metal as a complement to stocks and bonds.
Gold price overview
- 2024 average: approx. 2,386 USD per fine ounce
- End of 2024: 2,606.40 USD per fine ounce
- Early 2025: over 5,000 USD per fine ounce
- April 2026: approx. 4,720 USD per fine ounce
- 30-year trend: from around 250 euros to over 4,000 euros
Gold as an investment: opportunities and limits
Gold is considered a crisis currency. It survived wars, depressions and currency reforms without becoming worthless. Unlike paper money, it cannot be arbitrarily increased in quantity, and this scarcity supports the gold price in the long term.
But the value development comes at a price. The real return on gold since 1900 has been only around 0.8 percent per year. Government bonds provided around 1.8 percent, stocks even 5.1 percent.
Anyone building wealth in the long term cannot avoid stock ETFs. The precious metal is more of a hedge than a return engine.
What gold delivers
- Protection against inflation and devaluation of paper money
- Stabilization during severe crises
- a scarce commodity with limited mining capacity
What gold does not deliver
The precious metal provides no regular income. It pays neither interest nor dividends. Profit only results if the selling price exceeds the purchase price. Significant price fluctuations are the rule, not an exception.
Gold for risk diversification: three crises as evidence
In several market phases, the precious metal acted as a counterweight to falling stock markets:
- 2007 financial crisis: Stocks plummeted, gold price rose.
- 2020 corona: Stocks collapsed, gold price reached records.
- 2022 interest rate hike: Bonds fell, the metal performed positively.
This diversification is the core argument for an allocation. When stock markets come under pressure, a portfolio with some gold can be stabilized. Gold reduces overall risk because it often moves differently than the other asset classes in your portfolio.
The right allocation in your portfolio
Consumer centers and financial websites recommend a maximum allocation of 5 to 10 percent of total assets. More is dangerous because high price fluctuations would otherwise dominate the entire investment.
The rule is: gold complements a broadly diversified portfolio of stock ETFs and fixed-income securities; it does not replace them. This maintains diversification and reduces overall risk without sacrificing return opportunities.
Investment horizon and patience
For asset building, an investment horizon of at least five years applies. Only over longer periods do short-term fluctuations even out. Anyone viewing the precious metal as short-term speculation bears a high risk of losses.
Buying physical gold: bars and coins
Those wishing to acquire physical gold turn to gold bars or coins made of 999 fine gold. Well-known coins are the Krugerrand and the Maple Leaf. Direct ownership is the strongest argument for this form of investment.
When purchasing, spreads arise between bid and ask prices. For one ounce, the spread is about 5 to 6 percent, for small quantities up to 20 percent. Larger units have lower premiums than small denominations.
Storage and security
Storing gold at home carries theft risk. A safe deposit box costs fees and often requires additional insurance. These costs belong in every calculation before bringing physical metal into your home.
Tax advantage with physical gold
Gains from selling physical gold are tax-free after a holding period of one year (§ 23 EStG). This also applies to certain gold ETCs with delivery rights. This tax advantage makes long-term investments in the precious metal more attractive.
Gold ETC and Gold ETF: gold on the stock exchange
A Gold ETC (Exchange Traded Commodities) is an exchange-traded, physically backed security. In the EU, a gold ETF may legally only be set up as an ETC structure because pure commodity index funds are not permitted as special assets.
When people speak of a gold ETF, they practically mean an exchange-traded commodity paper of this type. The legal hurdle is clear: a classic index fund on a single commodity fails to meet the requirements for special assets.
The advantage is obvious: no safe deposit box, low fees, quick sale via the stock exchange. Such papers track the gold price almost one-to-one. However, investors should pay attention to low management fees and tight spreads.
Well-known products in comparison
- EUWAX Gold: physically backed, with delivery rights
- Royal Mint Physical Gold: state-guaranteed precious metals
- Amundi Physical Gold ETC: high fund volume, tight spreads
These products are mentioned here only for classification purposes, not as a recommendation. Comparing fees and fund volume is worthwhile before any investment of this type, since ongoing costs range from 0.12 to 0.40 percent per year depending on the provider.
Consider counterparty risk
Exchange-traded gold papers and gold certificates are not special assets. They are subject to issuer risk. If the institution behind the product goes bankrupt, there is a risk of loss in extreme cases. Physical backing with delivery rights reduces this danger.
Other options: gold stocks and savings plans
Besides physical metal and ETCs, there are gold stocks and gold stock funds. They invest in mining companies and often respond more strongly to the gold price than the metal itself. Dividends come into play here, but the risk increases due to business factors.
Gold savings plans allow regular contributions starting at around 25 euros per month. However, the consumer center warns against non-transparent providers with high fees. Anyone choosing a savings plan should carefully examine the terms and compare options from different platforms.
Gold vs silver: the difference for investors
The question of gold vs silver arises for many beginners. Both precious metals are considered crisis protection, but they behave differently. Silver fluctuates more and is more closely tied to industry because it is needed in production.
Gold is the quieter investment and the recognized reserve metal of central banks. In a direct gold vs silver comparison, the value storage function dominates for the yellow metal, while the opportunity for higher gains through greater fluctuations dominates for silver.
Don't forget currency risk
Gold is traded in US dollars. For investors in the eurozone, this creates currency risk. A rising dollar can amplify gains, a falling dollar can erase them, even if the gold price in dollars rises.
Global gold demand: the numbers for 2024 and 2025
Demand recently reached record levels. According to aktie.com, these quantities fit into a long-term trend:
- Global gold demand 2024: just under 4,975 tonnes
- Private demand (bars and coins): approx. 1,186 tonnes
- Central bank net purchases 2024: approx. 1,092 tonnes
- Central bank net purchases 2025: approx. 863 tonnes
- Global gold reserves of central banks: over 36,000 tonnes
In particular, China, India, Turkey and Russia are stockpiling to become more independent from the US dollar. These four countries alone account for a large part of state investments in the precious metal.
Germany as a gold nation
Private gold holdings in Germany total over 9,000 tonnes, a world-leading figure. The Bundesbank's gold reserves amount to around 3,360 tonnes. This makes the Federal Republic the second-largest state gold holder after the USA.
Gold ETF holdings and market sentiment
Global holdings in gold ETFs and ETCs were around 3,190 tonnes at the end of 2024, equivalent to about 220 billion US dollars. Over the full year 2024, there were net outflows of around 244 tonnes.
In the fourth quarter, sentiment reversed with inflows of approximately 19 tonnes, the strongest quarterly increase since Q3 2020. The influence of again rising prices was clearly felt here.
Risks when investing in gold at a glance
Before you invest, you should know the downsides:
- Price fluctuations: hefty price movements are the rule
- no income: neither interest nor dividends
- high spreads: especially for small quantities
- currency risk: trading in US dollars
- storage costs: safe deposit box and insurance
- liquidity risk: uncertain during severe crises
Gold price forecasts
Several investment banks expect further price increases in the medium term. Goldman Sachs, Bank of America and HSBC cite ranges of 6,000 to 7,000 US dollars per fine ounce.
Such forecasts are no guarantee because value development depends on interest rates, crises and wars. Even a change in interest rate policy can reverse the influence on the gold price within weeks.
How to proceed when investing in gold
A clear process helps avoid mistakes:
- Set your allocation: maximum 5 to 10 percent of your assets as an allocation
- Choose the form: physical metal for direct ownership, exchange-traded papers for quick trading
- Check costs: compare fees, spreads and storage
- Consider taxes: one year holding period for tax-free gains
- Maintain diversification: keep stock ETFs and bonds as the foundation
Which form suits whom?
Those who value physical ownership and think long-term buy gold bars or coins. Those who want flexibility and low fees turn to exchange-traded gold ETCs. Both approaches can also be combined.
Frequently asked questions about investing in gold
Is gold a safe investment?
No. Gold is risky and speculative because the price fluctuates significantly. It is suitable as an allocation for risk diversification, not as a sole investment. Safety lies in diversification, not in the metal itself.
How much gold should you hold in your portfolio?
5 to 10 percent of total assets are recommended. This allocation reduces overall risk without significantly slowing the long-term returns of a stock portfolio.
Is physical gold or a gold ETF worth it?
Physical gold offers direct ownership and a tax advantage after one year. A gold ETF, structured in the EU as Exchange Traded Commodities, scores points with low fees and quick sale via the stock exchange. The choice depends on your goals.
What distinguishes gold vs silver in investing?
Gold is the quieter value store of central banks. Silver fluctuates more and is tied to industry. When deciding between gold vs silver, consider whether you seek stability or greater fluctuations.
Does gold pay interest or dividends?
No. Gold provides no regular income. Gains arise exclusively from a rising gold price, that is, from the difference between purchase and selling price.
Informed decisions with aktie.com
Before you invest money in the precious metal, a sober look at the gold price, fees and your overall risk is worthwhile. A well-considered hedge begins with clear figures.
The free market reports and newsletter from aktie.com provide current analyses of gold, stocks, ETFs and other asset classes. This way you make your decision with clear figures instead of gut feeling.