What’s the best way to capitalise on surging gold prices?
Gold prices have soared an incredible 46% in the year to date. And if broker forecasts are right, investors can expect further healthy gains as macroeconomic and geopolitical risks grow.
But what is the best way to get exposure to the safe haven commodity? Here are three popular options to consider:
1. Buy physical metal
The first and most traditional way is to buy and hold bars, coins, or any other physical form gold may take.
In extreme situations, owning physical metal may be more reliable that financial instruments related to gold. And investors have the choice to access this at any time.
But there are drawbacks, including the potential for higher buying prices, longer selling times, and theft. This is why modern investors increasingly tend to favour other options.
2. Invest in gold ETFs
The introduction of gold exchange-traded funds (ETFs) in 2003 has made capitalising on price rises much simpler than owning physical gold. For a low ongoing charge, investors can trade gold quickly and without having to worry about things like physical delivery and storage.
Demand for these products is booming — latest World Gold Council data shows total assets in these instruments hit $386bn in July, another all-time high as inflows continued and bullion prices rose.
Investors need to remember that they don’t directly own gold with one of these products. Instead the metal is owned by the fund itself, which creates counterparty risk. But their reliability and simplicity still makes them worth consideration.
3. Buy gold stocks
ETFs that hold gold stocks can also be used to capitalise on rising metal prices. This is a route I took by purchasing the L&G Gold Mining fund, which holds shares in 37 different precious metals miners.
As another option, investors can also directly purchase individual mining stocks for their portfolios. This carries greater risk, as the process of metals production is fraught with dangers that can impact earnings. Putting all of one’s eggs in one basket also carries greater concentration risk than a diversified ETF.
But the potential rewards can also be significant. Take Serabi Gold (LSE:SRB), which has risen 126% in value so far in 2025.
That beats that hefty rise in the gold price, along with the 107% increase in the value of my L&G gold ETF.
Miners that display operational robustness can often see their returns rise further than broader rises in the metal price. The leverage effect means their profits earnings can rise more robustly during bull markets.
This is the case with Serabi, which is why its profits rose 90% in the first half of the year, better than the 26% gold price rise in the period. Production also rose to 10,532 ounces in April-June, the highest quarterly total for 12 years.
Total output is rising above budget, too, and in line with the company’s ambitious growth forecasts. It eventually hopes to produce 100,000 ounces of gold by 2028, more than double what it’s expecting this year.
What’s the best choice?
There is no wholesale correct option to this question.
The best option to choose out of physical gold, tracker funds, and mining stocks will depend on individual personal circumstances, investing goals, and tolerance of risk. But I think all three are worth serious consideration as gold’s long-running price surge continues.
The post What’s the best way to capitalise on surging gold prices? appeared first on The Motley Fool UK.
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Royston Wild has positions in Legal & General Ucits ETF Plc – L&g Gold Mining Ucits ETF. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
