Gold guide

Author: Moustafa HijaziReviewed: 2026-10-30

Gold has been used as money, jewellery and a store of wealth for thousands of years. Today it is also a financial asset that you can buy in many forms, from a small coin to a share in an exchange-traded product. This guide explains the basics in plain language: why people hold gold, what tends to move its price, the different ways to get exposure, what you really pay, and the risks you should understand first.

What gold is and why people hold it

Gold is a dense, rare metal that does not rust or decay. Almost all the gold ever mined still exists in some form, which is one reason it has kept its role as a long-term store of value.

People and institutions hold gold for several different reasons:

• Store of value. Gold cannot be printed like paper money. Many people see it as a way to preserve purchasing power over very long periods.
• Diversification. Gold often behaves differently from shares and bonds. Some investors hold a small share of gold so their whole portfolio does not depend on one type of asset.
• Crisis demand. In times of financial stress, war or political uncertainty, demand for gold has often increased. It is sometimes called a "safe haven", although it does not always rise in a crisis.
• Jewellery. Jewellery is traditionally one of the largest sources of demand, especially in India and China. High prices tend to reduce jewellery volumes.
• Central banks. Many central banks hold gold as part of their reserves. The Deutsche Bundesbank, for example, holds one of the largest official gold reserves in the world. Central-bank buying has been strong in recent years, according to the World Gold Council (Gold Demand Trends, 2026).
• Industry and technology. A smaller share of gold is used in electronics, dentistry and other technical applications.

The case against gold

A balanced view also needs the downsides:

• No yield. Gold pays no interest, dividends or rent. Your only return is a change in price, and you may pay storage or product fees while you wait.
• Long flat or falling periods. Gold has gone through many years in which it lost value or went nowhere. Someone who bought at a peak may have waited a very long time just to get back to their purchase price.
• No "intrinsic" cash flow to value. A company produces profits; gold does not. Its price depends entirely on what other people are willing to pay.
• Costs. Buying, storing, insuring and selling physical gold all cost money.

Go deeper: Why gold matters

What influences the gold price

There is no single formula for the gold price. Many forces act at the same time, and sometimes they pull in opposite directions. The factors below are tendencies, not rules — each of them has been "wrong" for long stretches.

• Real interest rates. The real interest rate is the interest rate minus inflation. When real rates are low or negative, holding gold (which pays nothing) costs you less in missed interest, and gold has often done well. When real rates rise, the opposite has often happened.
• The US dollar. Gold is mainly priced in US dollars. A weaker dollar makes gold cheaper for buyers using other currencies, which can support demand. A stronger dollar can have the opposite effect.
• Inflation expectations. If people expect money to lose value, some turn to gold. But the link between gold and inflation is loose and can be weak over short and medium periods.
• Central-bank buying and selling. Large, steady purchases by central banks add demand. In past decades, central-bank selling weighed on the price.
• ETF flows. Gold exchange-traded products buy or sell physical metal when investors move money in or out. Big inflows or outflows can move the market.
• Geopolitics and uncertainty. Wars, sanctions, financial crises and elections can increase demand for gold as a perceived safe haven. These effects are often short-lived.
• Mine supply and recycling. New mine production changes slowly. Recycled gold (for example old jewellery) tends to increase when prices are high.
• Seasonal jewellery demand. Festivals and wedding seasons, particularly in India and China, traditionally lift jewellery buying at certain times of year.

Go deeper: What moves the gold price and Gold and inflation

Ways to get exposure

There are many ways to "own" gold. They differ a lot in what you actually hold, what it costs and what can go wrong.

Physical bars and coins

You buy real metal from a dealer or bank and either keep it yourself or pay for storage (for example a bank safe deposit box or a vault service). Well-known bullion coins include the South African Krugerrand and the American Gold Eagle (both 22 karat) and the Canadian Maple Leaf and the Vienna Philharmonic (both 999.9 fine). You own the metal directly, with no issuer in between — but you take care of security, insurance and resale yourself.

Gold ETFs and ETCs

These are exchange-traded products you buy through a broker, just like a share. In Germany and the EU, most gold products are ETCs (exchange-traded commodities) rather than funds. Legally, an ETC is usually a debt security (a type of bond) issued by a company. Many gold ETCs are physically backed: the issuer holds gold in a vault to cover the securities, and some products even give you a claim to delivery of physical gold.

The structure matters. Because an ETC is a debt security, you depend on the issuer, the custodian holding the gold and the legal set-up protecting investors. Read the product documents (prospectus and key information document) to see how the gold is held, whether it is allocated, and who the custodian is.

Gold mining stocks

Shares in companies that mine gold. Their profits often rise faster than the gold price when gold goes up, because their costs are partly fixed — this is called operating leverage. But it works both ways, and you also take on company risk: management decisions, debt, mine accidents, political risk in mining countries and rising costs. A mining stock can fall even when gold rises.

Futures, CFDs and tokenized gold

• Futures are exchange-traded contracts to buy or sell gold at a future date. They use leverage and are mainly used by professionals.
• CFDs (contracts for difference) let you bet on price changes without owning gold, usually with leverage. In the EU, ESMA limits leverage on gold CFDs for retail clients (20:1 under its 2018 measures) and has reported that most retail CFD accounts lose money.
• Tokenized gold such as PAX Gold (PAXG) is a crypto token that represents a claim on physical gold held by the issuer. It trades on crypto exchanges around the clock. You depend on the issuer, the custody arrangements, the exchange and the blockchain technology.

Comparison table

Go deeper: Ways to own or trade gold

Units and purity

Weight units

Gold is usually priced per troy ounce, which is not the same as the ordinary (avoirdupois) ounce used for food.

• 1 troy ounce = 31.1034768 grams
• 1 kilogram ≈ 32.15 troy ounces
• Small bars are often sold in grams (1 g, 5 g, 10 g, 50 g, 100 g), larger ones in ounces or kilograms

Fineness and karats

Fineness shows how many parts of pure gold there are per 1,000 parts of metal. "999.9" means 99.99% gold. Jewellery often uses karats, where 24 karat is pure gold.

To convert karats into gold content, divide by 24:

gold content = karats ÷ 24

For example, 18 karat is 18 ÷ 24 = 0.75, so 75% gold, or fineness 750.

Go deeper: Quoting and units

Spot price vs what you actually pay

The spot price

The spot price is the current wholesale price for gold for immediate delivery, usually quoted in US dollars per troy ounce. It reflects trading between large banks and dealers, not what an individual pays in a shop. Important benchmark: the LBMA Gold Price, set twice each London business day in an electronic auction administered by ICE Benchmark Administration. Prices in euros are usually converted from the dollar price.

The costs on top

• Bid/ask spread. Dealers quote a buying price (what they pay you) and a selling price (what you pay them). The difference is their margin.
• Dealer premium. Physical gold is sold above spot. Premiums are usually much higher, in percentage terms, for small bars and coins than for large bars, because production and handling costs are spread over less metal.
• Storage and insurance. A safe at home, a bank safe deposit box or a vault service all cost money. Home contents insurance may cover precious metals only up to a limit.
• ETF/ETC fees. Exchange-traded products charge an annual fee (TER), plus broker fees and a trading spread.
• VAT. In the EU, investment gold is generally exempt from VAT under a special scheme. Broadly, this covers bars of at least 995 fineness and certain gold coins (at least 900 fineness, minted after 1800, legal tender, and sold close to their gold value). Jewellery and collector items generally do not qualify, and silver is generally subject to VAT. Check the current rules in your country.

Go deeper: Costs that eat returns and Silver and other precious metals

Risks

Price volatility

Gold can fall sharply and stay down for years. Two well-known examples in US-dollar terms:

• After peaking in early 1980, the gold price fell by more than half and stayed far below that level for around two decades, until the early 2000s.
• After a peak in 2011, gold fell by roughly 40% into late 2015 before recovering.

Recent record highs do not change this: past patterns show that big rallies can be followed by long declines.

Currency risk for euro investors

Because gold is priced in US dollars, a euro-based investor is also exposed to the EUR/USD exchange rate. If the dollar weakens against the euro, the euro value of your gold can fall even if the dollar gold price stays the same — and the other way round.

Liquidity and spread costs

Selling physical gold usually means accepting the dealer's buying price, which is below the selling price. Unusual bars, damaged coins or items without certificates may be harder to sell or fetch lower prices.

Counterparty risk

With ETCs, tokenized gold, storage services or "gold savings plans" with custody, you depend on other companies being honest and solvent. Check who holds the gold, whether it is held separately from the provider's own assets, and which regulator supervises the provider.

Scams

Gold is a popular theme for fraud. BaFin lists warning signs for fraudulent investment offers, including:

• unsolicited calls, emails or social media messages, often with fake celebrity endorsements
• promises of high returns with little or no risk, or "guaranteed" gold returns
• pressure to decide quickly
• requests to transfer money to accounts outside Europe or to give remote access to your computer
• platforms or providers you cannot clearly identify

You can check in BaFin's company database whether a firm is authorised in Germany.

Tax

Tax rules depend on your country and personal situation, and they can change. As general information for Germany: currently, gains from selling physical gold held by a private person for more than one year are generally tax-free under the rules for private sales (§ 23 EStG). If you sell within one year, gains are generally taxed at your personal income tax rate, subject to an annual exemption limit for private sales. Gold ETCs may be taxed like physical gold or like securities, depending on how the product is structured (for example, whether it carries a delivery claim). Mining shares and most other securities fall under the flat-rate capital gains tax.

Go deeper: Gold in a long-term plan, and tax

Key takeaways

• Gold is a store of value and diversifier for some investors, but it pays no yield and can go through long flat or falling periods.
• Real interest rates, the US dollar, central-bank buying, ETF flows and geopolitics tend to influence the price — none of them works like a rule.
• Physical gold, ETCs, mining stocks and leveraged products are very different things with different costs and risks.
• 1 troy ounce = 31.1034768 g; karat content = karats ÷ 24.
• The spot price is a wholesale benchmark; your real cost includes spreads, premiums, storage and fees.
• Euro investors carry currency risk because gold is priced in US dollars.
• Be very wary of unsolicited offers and "guaranteed" gold returns, and check tax rules with a professional.

Sources

• World Gold Council – Gold Demand Trends
• World Gold Council – Gold Demand Trends Q2 2026
• LBMA – LBMA Gold Price
• Deutsche Bundesbank – The development of the Bundesbank's gold reserves
• Council Directive 2006/112/EC, Article 344 – definition of investment gold
• EUR-Lex – VAT: special scheme for gold (summary)
• ESMA – Restrictions on CFDs and binary options for retail investors
• BaFin – Investments: how to recognise fraudulent offers
• BaFin – Consumers
• Scalable Capital Help – How are gold ETCs considered for tax purposes?