Guide to gold

Safe investments guide: gold as an alternative to stocks and shares

Choosing where to invest your money can feel hard, especially with the ups and downs of the stock market. Instead of chasing high returns, it's smart to look for safe alternatives to spread your risk.

This guide reviews investment ideas beyond shares and bonds. You'll learn why gold can offer a safe alternative to add to your portfolio. We'll also see how platforms like BullionVault provide a simple and secure way for investing in gold at low cost.

Understanding alternative investment options

Investing doesn't end with stocks and bonds. Here are examples of the 7 main choices that an investor can use to diversify their portfolio:

  1. Commodities: Invest in precious metals like gold and silver, or in natural resources needed by industry, like copper or crude oil.
  2. Real estate: Buy housing directly and rent it out (buy to let). Alternatively, invest in real estate investment trusts (REITs) or join a crowdfunding platform to invest in construction projects or property development.
  3. Private equity (PE): This means investing in companies whose shares aren't publicly traded on the stock market. It can be risky, aiming for high returns. Managed funds in PE are usually restricted to professional or wealthy investors.
  4. Productive assets: Examples include infrastructure, farmland, forestry or solar-energy plants. Long favoured by wealthy families wanting to own 'real assets' that offer a high yield, this type of alternative investment has become popular with pension funds and other large investors.
  5. Digital assets led by 'cryptocurrency' Bitcoin: Highly volatile, no underlying value. Don't confuse them with asset-backed coins, where a digital token aims to track the price of a physical good.
  6. Hedge funds: These investment managers use short-term and often high-risk trading strategies to try making high returns. Fees, like investment size, are typically high.
  7. Collectibles: This includes things like art, antiques and rare coins. Collectable items can increase in value over time, but fashions come and go, and you need to know what you're doing.

Each type of alternative investment carries its own risks and opportunities. It's important to research and understand them before you invest.

Take note: Besides REITs, commodities such as gold, and some crypto, all the alternative investments above are illiquid. You cannot buy or sell them quickly using a trading exchange or without facing a wide gap between buy and sell prices. It can take several months to complete the sale of a property or farmland, or to get your money back from a private-equity investment.

Why gold makes a good alternative investment

Many people agree that gold makes a safe investment and so far this century gold has been one of the best performing assets with which to diversify any portfolio. Buy gold the right way, and you'll get protection from theft, avoid high costs and – unlike most other alternative investments such as real estate or collectibles – any delays when you want to buy or sell.

Here are the 5 reasons why gold helps to spread investment risk:

  1. Tangible asset: Unlike stocks and bonds, gold is a real, physical good that you can hold in your hand. As an alternative to shares, bonds or cash in the bank, gold's value doesn't rest on anyone else's promises or investing performance.
  2. Limited supply: All the gold ever mined weighs less than the world's steel factories produce every hour. Mining output adds less than 2% to that total each year.
  3. Deep demand, now led by the rising economic powers of China and India. Gold has been the ultimate prize in all cultures in all periods of history. Its value has never gone to zero.
  4. Independence from the stock market and economic growth. Known as a 'non-correlated' asset, gold tends to zig when the value of shares zags, rising most sharply during a financial crisis.
  5. High liquidity: Gold bullion trades in a global market from Tokyo to London and New York. Instantly priced, with a tight gap between buy and sell prices, it can be traded instantly at the click of a mouse.

There are 3 ways to invest in gold:

  • Buy gold bullion: You can buy gold bars or coins and keep them yourself. But you'll need to think about how to store them safely. BullionVault offer a safe solution to this problem, by holding your gold for you in our secure vaults.  
  • Gold ETFs: These are funds that invest in gold, and you can buy shares of them on the stock market.
  • Gold mining stocks: You can also invest in companies that mine gold. If the price of gold goes up, their stock prices might go up too.

Why you should consider alternative investments

Diversifying your investments can help protect your overall savings from big losses when the stock market falls. Here's why it's a good idea to invest in things besides shares and bonds:

  • Lower risk: When you spread your money out over diverse kinds of investments, you're less likely to lose a lot if one of them does badly.
  • Different goals: Some investments, like real estate, can give you rental income. Others, like commodities, might give you a chance to make quick profits.
  • Protection from inflation: Assets like gold can help you keep your money safe when the cost of living goes up.

But alternative investments also have their downsides. Gold prices can fall sharply when interest rates rise (it lost 25% in 2013) and most other alternatives are hard to sell, cost more to invest in, and can be complicated.

How BullionVault provides a safe route for precious metals investment

BullionVault is a company that helps people invest in gold. Here's what they offer:

  • Direct ownership: You can buy gold bullion already stored and insured in secure vaults around the world.
  • Best prices: BullionVault offers the most competitive prices you will find to buy or sell physical gold as a private investor.
  • Clear fees: You can see how much it costs to trade and store your gold on the BullionVault Tariff and using the Cost Calculator.
  • Low-entry investment: You can buy as little as 1 gram of gold at a time, so you don't need a lot of money to get started. Longer term, plan to build a holding of at least $2,000 or £1,600.
  • Independent audits: Every day, all of the precious metal owned by BullionVault users is reconciled on a public webpage against the Bar Lists issued by the industry-leading vaults caring for their property. They also have outside specialists inspect the vaults regularly to make sure everything is safe and secure.
  • Mobile Apps: Trade 24/7, track metal prices including setting price alerts and manage your account all from your mobile device.

Choosing to invest in gold through BullionVault can be a smart move. It's a safe and easy way to add gold, silver, platinum and palladium to your investment portfolio.

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

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London   W6 8DA
United Kingdom