How Can You Invest in Gold?

Editorial Note: Gold evokes a lot of emotions, including amongst investors. It is also impacted by the mood of the markets amongst other things. It is an interesting asset for those building a diversified portfolio. A low correlation to equities is a good thing for diversification. On the other hand, it is also hard to know what golds value will be long-term since it is not an income-producing asset. If you do decide that exposure to gold should be a deliberate part of your portfolio (not a reaction to recent prices), then the question is how to do it. Hopefully, this post will help.

This is a paid sponsor post. You will see relatively few of these on The Loonie Doctor because my mission is this site’s priority. Sponsored posts must align with that, and the sponsor provides a service or product that I would use myself or recommend to a family member. One that I like. I retain editorial control, and the articles are written with education as the primary objective. It is a win-win because you get deep, industry-expert content, vetted by me. You can read more about why I decided to collaborate with BMO ETFs as a sponsor, but I think you’ll get it after reading this post.

Understanding Gold

By Danielle Neziol, VP Online Distribution, BMO ETFs

Gold has reasserted itself as a relevant asset class in recent years, delivering returns that have captured investor attention and challenged long‑held assumptions about portfolio construction. After posting gains of roughly 60% in 2025, gold outperformed most major asset classes, including global equities and digital assets, and continued to advance into early 2026.¹ While headline performance often drives interest, a more important question for long‑term investors is whether gold’s recent strength reflects temporary momentum or more durable structural forces.

For investors evaluating gold today, understanding why it has performed well, and how different forms of exposure behave, is essential before determining whether it belongs in a diversified portfolio.

Macroeconomic Forces Supporting Gold

Gold’s performance has historically been influenced by a distinct set of macroeconomic conditions, many of which are currently in play. One of the most enduring drivers is geopolitical uncertainty. Periods marked by military conflict, political instability, or shifting trade relationships often coincide with increased demand for assets perceived as stores of value. Gold has traditionally filled that role, particularly when confidence in governments, currencies, or financial systems is strained.

Currency dynamics have also played a meaningful role. The U.S. dollar, which serves as the global pricing mechanism for gold, has shown signs of weakening amid evolving interest‑rate expectations, tariff policy changes, and broader trade uncertainty. As the dollar loses purchasing power relative to other major currencies, gold becomes more attractive to global investors seeking an alternative store of value, reinforcing demand.

Another important consideration is diversification. Gold is a class of commodity and has a historically demonstrated low correlation to equity markets, meaning its price movements often diverge from stocks, particularly during periods of market stress. With equity valuations elevated and market leadership increasingly concentrated, many investors are revisiting diversification strategies, and gold frequently emerges as a candidate due to its differentiated risk profile.

While no asset performs well in all environments, these underlying drivers—geopolitical risk, currency pressure, and diversification demand—tend to evolve over multi‑year cycles rather than dissipate quickly. This helps explain why investor interest in gold remains elevated even after strong recent returns.

From Spot Price to Real-World Exposure

When investors refer to “the price of gold,” they are typically referencing the spot price per ounce, quoted in U.S. dollars. As of the middle of March 2026, that price stood just above US$5,000 per ounce.² However, translating the spot price into a practical investment involves a number of structural and logistical considerations.

One traditional approach is direct ownership of physical gold in the form of bars or coins. In Canada, this often takes the form of one‑ounce Gold Maple Leaf coins purchased through precious metals dealers. While this method offers tangible ownership, it comes with meaningful frictions. Dealer spreads, currency conversion, and transaction costs can significantly raise the effective purchase price, often adding hundreds of dollars per ounce.

Beyond cost, physical gold presents operational challenges. Storage and insurance must be arranged, liquidity can be limited, and gold is inherently indivisible: selling a portion of a coin or bar is not possible. For investors accustomed to managing portfolios digitally with precise position sizing, these constraints can make physical gold an inefficient, less liquid investment vehicle.

Structural Advantages of Gold ETFs

Gold exchange‑traded funds (ETFs) have fundamentally changed how investors access gold exposure. Physical gold ETFs, like ZGLD, are designed to track the price of gold while offering the liquidity, transparency, and operational simplicity of a publicly traded security. Investors can buy or sell exposure through standard brokerage accounts, eliminating many of the logistical barriers associated with physical ownership.

Because ETF units represent fractional ownership of underlying gold holdings, investors can tailor exposure with far greater precision. Rather than committing thousands of dollars to a single coin, an investor can scale positions incrementally, rebalance as needed, and access intraday liquidity.

It is important, however, to recognize that gold ETFs are not structurally identical. Some funds rely on derivative instruments such as futures or swaps to replicate gold’s price movements. While these structures can provide exposure, they introduce counterparty risk and additional complexity. For investors seeking direct exposure to bullion, understanding whether an ETF holds fully allocated physical gold is a critical due‑diligence step.

ETFs that hold allocated physical gold in secure vaults offer a closer approximation to direct ownership, while maintaining the efficiency of a financial security. This structural distinction becomes particularly relevant during periods of market stress, when transparency and asset backing matter most.

Gold Mining Equities: Different Risk Profile

Another common avenue for gold exposure is investment in gold mining companies. While often grouped with bullion, gold equities behave very differently from physical gold. Mining companies typically have relatively fixed operating costs. When gold prices rise, revenue increases while costs remain comparatively stable, which can lead to significant margin expansion. As a result, mining stocks often exhibit leveraged exposure to the gold price.

This leverage can enhance returns in strong gold markets, but it also amplifies risk. Gold mining equities are subject to equity‑specific factors such as operational execution, geopolitical jurisdiction risk, regulatory changes, environmental considerations, and balance‑sheet leverage. Share prices can decline even when gold prices rise, particularly if company‑specific challenges emerge.

That said, the upside potential can be substantial. During 2025, many gold mining stocks generated returns well in excess of broader equity markets, reflecting the operational leverage embedded in the sector. For investors with higher risk profile, gold equities may serve as a tactical complement to bullion exposure rather than a substitute.

To mitigate single‑company risk, many investors access gold equities through diversified ETFs. By holding a basket of mining companies across regions and producers, ETFs can reduce idiosyncratic risk while preserving exposure to the sector’s growth potential.

Positioning Gold Within a Portfolio

A broad equity ETF, like ZEQT, would have some exposure to gold miners. A Canadian all-cap ETF, like ZCN typically has 1-2% exposure depending on market conditions. However, a targeted allocation to gold could serve multiple roles depending on an investor’s objectives. For some, it functions as a long‑term store of value and inflation hedge. For others, it plays a diversification role, helping reduce portfolio volatility during periods of equity market stress. In certain environments, gold and gold equities may also serve as tactical growth allocations.

As with any investment decision, the appropriate form of exposure—physical gold, gold ETFs, or mining equities—depends on risk tolerance, liquidity needs, and investment horizon. What has changed over time is accessibility. Gold is no longer an operationally complex or impractical asset for most investors. Through modern investment vehicles such as ETFs, exposure can be gained efficiently, transparently, and at a scale aligned with broader portfolio objectives—without the need to store bullion outside the financial system.

ETF Market Insights Video on Gold

Footnotes & Disclaimers

One’s risk profile is comprised of risk tolerance (i.e., willingness to accept risk) and risk capacity (i.e., ability to endure potential financial loss).

Sources: ¹BMO ETFs, MSCI, March 2026. Proxies for asset class returns: The MSCI ACWI returned 22.8% in 2025 (global equities), the Purpose Bitcoin ETF BTCC.J returned -11.8% in 2025, and ZGLD returned 59.5% in 2025. ² www.kitco.com, March 17, 2026.

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