You don’t have to buy physical gold to invest in it and profit from a rise in its price. There are ways to benefit from the movement of the gold price through a range of financial products, that are less cumbersome and more investor-friendly than holding physical gold.
These are the ways in which you can get exposure to gold through financial markets:
Exchange traded products (ETPs) are pooled investment products that trade on a stock exchange like shares (See What is an exchange traded product (ETP)?). A small number of ETPs from South African providers invest in gold.
Exchange traded funds offer you access to a diversified range of shares in a fund that is also listed on a stock exchange. Read more: What is an exchange traded fund (ETF)?
While exchange traded funds (ETFs) typically track a market index and hold the assets of the index, gold ETFs track the daily gold price and hold assets in the form of physical gold bullion, stored in a secure vault. Each unit you buy is backed by its value in gold, but you don’t actually own the gold.
This is the easiest way to invest in gold through financial markets, because ETFs are easily accessible through the online share-trading platforms of reputable providers including the major banks. These platforms do not require high minimum amounts to invest, and buying and selling the ETFs can be done relatively easily online. Investment costs are low, in a similar range to those of index-tracking ETFs.
Unlike index-tracking ETFs, gold ETFs are not collective investment schemes as defined by the Collective Investment Schemes Control Act (CISCA). This is because they track a single commodity and, CISCA does not allow for investments in physical commodities. For this reason, a gold ETF also cannot be held in a tax-free savings account.
Note that gold ETFs do not attract dividends or interest. The value of your investment is determined solely by the gold price in rands.
Krugerrand custodial certificates are offered by one provider, this product is listed on 
the JSE like an ETF. Each certificate is backed by a one-ounce gold Krugerrand, roughly equivalent to the gold price, making the minimum investment amount relatively high (tens of thousands of rands at the time of writing).
The physical coin, which is held in safe custody, becomes available to the owner after 10 years, although the certificates are traded daily on the stock market like shares. Storage fees are deducted when a certificate is sold.
Unlike ETFs, which hold the underlying assets, an exchange traded note (ETN) is a debt instrument that simply guarantees a return linked to the price of the asset it tracks (See “What is an Exchange Traded Note?”). One South African bank offers several precious-metal ETNs, including a gold ETN.
“Stablecoins” are cryptocurrencies, the price of which is pegged to a currency such as 
the US dollar. A stablecoin that is pegged not to a currency but to the price of gold has also emerged. One popular South African share-trading platform offers a gold-backed coin. Although stablecoins are less volatile than regular cryptocurrencies such as Bitcoin, they are nonetheless risky, the main reason being that the global industry remains relatively under-regulated.
Futures and options are types of derivatives where the investor contracts to buy, or has the option to buy, an asset at a future date. Gold futures contracts are 
standardised and represent a fixed amount of gold. They are out of reach of most retail investors – for example, a contract may be for 100 ounces, worth about R4.5 million at today’s prices.
A contract for difference (CFD) is a type of derivative instrument common on trading platforms. Some sites offer CFDs that track the gold price or track the prices of gold mining shares. Before going this route, be aware of the risks of CFD trading. Read more: Trading platforms - where scamsters love to hide and other high risks
Another way to invest indirectly in gold is to invest in companies that dig it out of the ground. When the gold price rises, gold mining companies tend to benefit by a multiple of the price rise, because the cost of mining the gold doesn’t change as quickly. However, they have those same costs when the gold price drops. To protect themselves, they may hedge against a falling gold price by using derivatives.
Be aware that the share price is influenced by factors other than the price of gold, such as how well the company is run and the lifespan of the mine.
Also note that many of the big companies are diversified miners, meaning they mine a range of commodities. A few, such as Anglogold Ashanti, Harmony and Goldfields in South Africa, specialise in gold.
You can invest through a brokerage or online share-trading platform like those used to buy ETFs. Bear in mind that a single share of a large mining conglomerate may cost you a few thousand rands.
Unit trust funds offer you a way to get exposure to shares and other listed securities in 
a diversified fund managed by a professional fund manager. Read more: What is a unit trust fund?
Although there are a number of unit trust funds that invest in the mining sector, only one actively managed fund in South Africa focuses principally on gold miners: the Old Mutual Gold Fund, which invests about 70% locally and 30% offshore. It is suited to investors seeking long-term investment growth rather than looking for short-term gains.
