How to invest in gold (without buying bars)

There are four common routes into gold, and they are not equally friendly to an ordinary investor. Each one trades off cost, convenience and how closely your return actually follows the gold price.

For most people, the physically-backed ETC is the sensible middle ground. You get near-exact exposure to the gold price, costs of around 0.12% a year instead of dealer spreads and vault bills, and the ability to sell your entire position in one click. That is why the rest of this guide focuses on the ETC route.

A gold ETC is technically a debt security, meaning a kind of tradeable IOU issued by a special-purpose company. Each note the company issues is backed by physical gold bars held in a professional vault by a custodian bank on investors' behalf.

The gold backing SGLN, for example, consists of allocated bars, which means specific numbered bars are set aside for the product rather than a vague claim on a pool of metal. You can check the holdings on the official iShares fund page, and the professional bullion market those bars belong to is overseen by the London Bullion Market Association.

You might wonder why it is called an ETC rather than an ETF, and the reason is a European rulebook called UCITS. UCITS is the regulatory standard that governs mainstream European funds, and one of its core rules is diversification: a UCITS fund is not allowed to put everything into a single asset.

A product that holds nothing but gold obviously breaks that rule, so it cannot legally be structured as a UCITS ETF. The industry's workaround is the ETC, a bullion-backed note that trades on the exchange exactly like an ETF does.

In day-to-day use the difference barely matters: you search the ticker, you see a live price, you buy and sell during market hours, and the price tracks the gold price minus a small annual fee. The distinction is worth knowing mainly so you are not confused when you search for the best gold ETF and every result in Europe turns out to be labelled an ETC.

First, you need a broker account that gives you access to the London Stock Exchange, where SGLN is listed. Interactive Brokers is a common choice for international investors because it covers European exchanges at low cost, but most brokers that offer UCITS ETFs will also carry the major gold ETCs.

There is nothing to store, insure or maintain. From here it behaves like any other position: you can add to it monthly, rebalance against it, or sell part of it whenever you want.

There is no universally correct number, but the framing you will hear most often is 5 to 10% of a portfolio. The logic is that gold tends to move differently from shares, so a modest slice can smooth the ride during stock market panics, while a large slice would drag on long-term returns because gold produces no earnings or income of its own.

In practice, many long-term investors build the core of their portfolio from broad equity funds such as VWCE or IWDA, which hold thousands of companies across the world, and treat gold as a small satellite holding beside it. Some skip gold entirely and accept the extra volatility, which is also a perfectly reasonable position.

Whatever allocation someone chooses, the useful discipline is rebalancing: once a year, selling a little of whatever has grown beyond its target weight and topping up whatever has shrunk. That turns gold's tendency to zig when markets zag into a systematic buy-low, sell-high routine. None of this is personal advice, and the right mix depends on your own goals and appetite for swings in value.

The headline cost is the annual fee, called the TER or total expense ratio. SGLN charges 0.12% a year, and that figure already includes the vaulting and insurance of the bullion, so there is no separate storage bill. The fee is skimmed gradually out of the product's value, which is why a gold ETC very slowly lags the gold price itself.

Finally, remember that an ETC is a note issued by a company rather than a fund holding shares. The protection comes from the allocated bullion securing the notes, which is strong, but it is a different legal wrapper from the UCITS ETFs elsewhere in your portfolio. The US regulator's investor education site keeps a plain-language explainer on commodity investing if you want an official second view of the risks.

If you want to see how the numbers stack up against alternatives, the compare tool puts fees and performance side by side, and the best gold ETFs ranking sorts the physically backed products by annual fee. Silver works in much the same way through its own ETCs, and the guide on how to invest in silver covers what changes.