People have invested in gold for thousands of years and it is the world’s primary currency. Nowadays investors invest in gold to hedge against inflation and geopolitical unrest. Most financial advisors recommend including gold in your investment portfolio to lower overall risk.
You can invest in gold by buying gold bullion, gold coins, investing in gold ETFs, mutual funds, futures and options, gold mining companies, gold jewellery or trading gold saving certificates from UAE banks. This guide will explain how to invest in gold using each of these methods.
Why Gold Is Called a “Safe Haven” Investment?
Investing in gold is a way to diversify your investment portfolio, it protects your money from inflation, and it appreciates in value.
There are four common ways to buy gold in UAE: buying gold bullions, gold coins, gold jewellery, investing in gold ETFs, mutual funds, futures and options, gold mining companies or trading gold saving certificates from UAE banks.
1. Buying Physical Gold in UAE (Gold Bullion)
You can buy physical gold in UAE from certified retailers in the Gold Souk in Deira, Agatha in the Mall of the Emirates, or online from Malabar Gold and Diamonds and National Bullion House. The advantages of buying physical gold are that there are no maintenance and carrying costs involved and that it cannot be hacked. Examples of disadvantages are that it is difficult to transport in big quantity and that it can be stolen by thieves.
2. Gold Coins
Many governments issue gold coins for investors to invest in. It is easier to invest in gold coins compared to gold bullion because they are smaller and easier to transport. The disadvantage of investing in gold coins is that you often pay a premium on top of the original gold price, especially when buying older, more rare coins which have ‘’collector’s value’’ like South African Krugerrands, Canadian Maple Leafs, and U.S. Eagles.
3. Online Gold Trading
You can trade gold online with trading platforms like eToro, AvaTrade, and Capital.com. With a trading account at these brokers, you can buy and sell gold at the current international market price. You can check our our guide on how to select the best trading platform based on your needs.
The most popular ways to trade gold online are: Gold ETFs, Gold Futures and Options and Gold Mining Companies.
- Investing in Gold ETFs
Investing in gold ETFs involves opening a brokerage account and trading exchange-traded funds that hold gold and gold-related stocks like those of gold mining companies. Investing in gold ETFs gives you exposure to gold’s price without owning it. SPDR Gold Trust and iShares Gold Trust are popular gold ETFs among UAE-based traders and investors.
The advantages of gold-only mutual funds are that they are low-cost and require low minimum investment, that you can easily own them via your brokerage account, and that you don’t need to research individual companies. Read our guide to learn why its a good idea to invest in ETFs.
We recommend trading gold ETFs at eToro, our top-rated broker and trading platform for UAE traders and investors. Read our entire eToro review or open an account.
- Gold Futures and Options
Gold futures are gold or dollar-denominated contracts to buy or sell gold on a specific date in the future at a certain price. Futures are low-cost, but more suitable for experienced investors as the contracts are large. Options on gold futures give the owner the option to buy the gold future at a certain price within a certain time frame. The advantage of gold options is that it leverages your investment and limits potential losses. The disadvantage of investing in gold options is that you need to pay a premium for the right to own the option.
- Gold Mining Companies
You can invest in shares of gold mining companies to profit from increasing gold prices without investing in gold directly. These companies can make a profit even when the gold price is stagnating or declining because of their business operations. Although you will need to research individual companies, investing in gold mining companies can be a safer way of investing in gold than buying bullion.
4. Investing in Gold with UAE Banks
Investing in gold with UAE banks can be done by opening a gold account with a bank that offers this. You fund the gold account with money from your regular bank account and then buy gold at the current market price minus the bank’s fees. Some banks offer investing in physical gold bars and coins this way whilst others only offer gold paper trading. This is an easy way to invest in gold and you can cash out whenever you want. The disadvantage of investing in gold like this is that bank fees are often high.
Check our list of the best UAE banks here.
UAE Investors with a lot of capital can invest in gold bullion to have direct exposure to the gold price and own physical gold rather than ‘paper gold’ whilst more aggressive investors can invest in gold options and futures to profit from a rising or falling gold price. We don’t recommend investing in gold jewelry because the markup is too big. Investing in gold-related mutual funds and ETFs is a smarter and cheaper way of investing in gold. We suggest investing in gold ETFs, stocks of gold mining companies, and gold itself via eToro, our top-rated gold broker.