Gold has been used as a store of value for thousands of years. For Australian investors today, gold is most practically accessed via ASX-listed ETFs — providing the investment characteristics of gold without the logistical complexity of owning physical metal. This guide covers how gold works as an investment and how Australians can add gold exposure to a portfolio.
Why Investors Hold Gold
Gold serves specific portfolio roles:
Inflation hedge: Gold prices have historically risen during periods of high inflation, preserving purchasing power when paper money loses value. This relationship is imperfect and inconsistent over short periods, but meaningful over decades.
Safe haven: During financial crises, geopolitical uncertainty, and periods of extreme market stress, investors often buy gold — driving its price up when other assets fall. Gold has negative or low correlation with shares in crisis periods.
Currency diversification: Gold is priced in USD globally — Australian investors holding gold gain some exposure to USD and benefit if the AUD weakens.
Portfolio diversification: Gold’s low long-term correlation with Australian shares and bonds can reduce overall portfolio volatility when held in modest allocation.
Gold’s Limitations as an Investment
- No income: Gold pays no dividends, coupons, or rent — all return is capital gain (or loss)
- Storage costs: Physical gold incurs storage and insurance costs
- Volatility: Gold can be highly volatile in the short term — falling 30–40% from peak to trough at times
- No cash flow: Unlike shares (which represent businesses generating earnings) or bonds (which pay interest), gold generates nothing — its value depends entirely on what others will pay for it
Gold is generally considered a portfolio diversifier and crisis hedge rather than a primary wealth-building asset.
How to Invest in Gold in Australia
1. Gold ETFs on the ASX (most practical)
| ETF | Description | MER | ASX code |
|---|---|---|---|
| GOLD | Global X Physical Gold ETF — physically backed by gold stored in vaults | 0.40% | GOLD |
| PMGOLD | Perth Mint Gold — backed by gold held at the Perth Mint (Commonwealth Government guarantee) | 0.15% | PMGOLD |
| QAU | Betashares Gold Bullion ETF (AUD-hedged) | 0.59% | QAU |
PMGOLD is notable: it is backed by gold held at the Perth Mint, which carries a Commonwealth Government guarantee on the gold — an unusual level of security. Lower MER than GOLD.
QAU is currency-hedged — its return reflects AUD gold prices rather than USD. If the AUD strengthens, unhedged gold ETFs (GOLD, PMGOLD) may fall in AUD terms even if gold is unchanged in USD. QAU removes this currency effect.
2. Physical gold (coins and bars)
The Perth Mint sells physical gold coins (e.g., Australian Gold Kangaroo) and bars directly to the public. Gold can be stored at the Mint (certificate program) or taken delivery.
Practical considerations:
- Storage: Home safe, bank safe deposit box, or Perth Mint storage (fee applies)
- Insurance: Required for any significant holding
- Liquidity: Perth Mint will buy back — or sell via dealers. Less liquid than ETFs.
- GST: Investment-grade gold (99.5%+ purity) is GST-free under ATO rules
3. Gold mining shares
Owning shares in gold mining companies (Newmont, Evolution Mining, Northern Star, Gold Road Resources on the ASX) provides leveraged exposure to the gold price — gold miners’ earnings rise faster than gold when gold prices increase, and fall faster when gold falls.
Gold mining shares carry additional business risk (mine operations, cost overruns, management quality) beyond pure gold price exposure. They also pay dividends — unlike physical gold.
4. Gold mining ETFs
GDX (VanEck Gold Miners ETF): Exposure to a basket of global gold mining companies — listed on the ASX. MER: 0.53%.
How Much Gold to Hold?
Commonly suggested allocations for gold as a portfolio diversifier range from 5–10% of portfolio value. Research suggests allocations above 10–15% provide diminishing diversification benefit while introducing significant gold-specific volatility.
Gold is not suitable as a primary investment — its long-term real return is modest. It is best viewed as a portfolio stabiliser and crisis hedge in limited allocation.
Tax Treatment of Gold in Australia
- Gold ETFs: Capital gains tax applies on sale (50% CGT discount if held 12+ months). Distributions (if any) are ordinary income.
- Physical gold: CGT applies on sale. Investment-grade gold is GST-free.
- Gold mining shares: Standard share taxation — dividends as ordinary income; CGT on capital gains.
Related Articles
- Commodities Australia
- Inflation-Linked Bonds Australia
- How to Access Alternatives via ETFs Australia
- Alternative Investments hub
Frequently Asked Questions
Is gold a good investment in Australia? Gold serves a specific portfolio role — inflation hedge, crisis protection, and diversification — rather than a primary growth vehicle. It generates no income and its long-term real returns are modest. A small allocation (5–10%) can reduce overall portfolio volatility. It is not appropriate as a large portion of a long-term wealth-building portfolio. General information only.
What is the best way to invest in gold in Australia? For most retail investors, ASX-listed gold ETFs (PMGOLD, GOLD) offer the simplest access — no storage logistics, instantly liquid, and low cost. PMGOLD is popular for its Perth Mint backing and low MER (0.15%). Physical gold suits investors who specifically want tangible metal outside the financial system.
Is gold taxed in Australia? Yes — gold investments (ETFs, physical gold, mining shares) are subject to capital gains tax on disposal. The 50% CGT discount applies for assets held 12+ months. Investment-grade physical gold is exempt from GST. Gold held inside super is taxed at 15% (accumulation) or 0% (pension phase) on gains.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.