Miners can be a great way to invest in gold if they can manage costs and invest in efficient mines. As mentioned, Newmont was a better investment over the last year than gold or the S&P 500 until the recent sell-off. And since Newmont pays dividends, it offers a way to earn passive income from gold, whereas buying gold bullion doesn’t pay dividends.

However, a simpler way of investing in gold than mining stocks is to buy an exchange-traded fund (ETF) such as SPDR Gold Shares (NYSEMKT: GLD) or the iShares Gold Trust (NYSEMKT: IAU). As you can see in the following chart, both ETFs have closely followed the price of gold.

Both financial products use a custodian to hold their physical gold, so their value is backed by tangible assets. The iShares Gold Trust has an expense ratio of 0.25%, or $2.50 per $1,000 invested compared to a 0.4% expense ratio for SPDR Gold Shares. Both expense ratios are reasonable considering buying gold usually involves paying a fee above the spot price, not to mention there are storage and security costs involved if you want to hold gold safely rather than under your mattress.

Investors may want to invest in gold for a variety of reasons. But the simplest is that it is an alternative asset to stocks and bonds that can do well amid times of uncertainty. It is also a store of value that doesn’t depend on the U.S. dollar or the U.S. economy.

If the main reason you’re thinking about gold is its proven value, even during economic turbulence, then it makes more sense just to buy shares in a gold ETF than go with a gold mining stock with way more variables. However, if you already own gold bullion or a gold ETF and are looking for an additional way to invest in the yellow stuff, then researching gold miners could make sense. There are also gold miners’ ETFs, such as the VanEck Gold Miners ETF, in which Newmont is, unsurprisingly, the top holding.

In sum, it’s best to approach investing in gold in a way that suits your objectives and your liquidity needs. And for most folks, a gold mining ETF is probably a better buy than Newmont.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,154!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,777!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $406,992!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Is Gold Mining Dividend Stock Newmont Selling Off With Gold Prices at All-Time Highs? was originally published by The Motley Fool