If you want to get some gold exposure, most people instantly think of buying gold coins or gold miners like Barrick Gold and Newmont Mining. Those are great options, but they aren't the only ways to play the precious metal. Let's take a look at some of the ways, mundane and science fiction-like, that gold is used and see how you can take a different approach to investing in gold.
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1. The biggest use of gold is...
Roughly half of all gold is turned into jewelry. Sure, you knew gold was used to make fancy baubles, but it's kind of shocking that such a large percentage of gold gets used in this manner. This means one of the best ways to play gold may not be miners at all; it might be companies that work with jewelry.
That list is extensive, including giants like Tiffany & Co, best known for its silver and diamonds, all the way down to tiny gold specialist Kingold Jewelry Inc. Be careful here, though, because some jewelry names are hard to get a handle on. For example, Signet Jewelers (NYSE: SIG), owner of the Kay, Jared, and Zales brands, finances a huge amount of its own sales. That means it borders on specialty finance and could see bad loans spike in an economic downturn -- a period in which its sales are already likely to be under pressure.
2. The tech factor
Roughly 6% of gold demand came from the technology sector in 2016. It may seem odd that something so precious gets used in the cell phones and other devices we carry around with us every day, but gold's physical properties, including malleability and conductivity, make it a perfect fit for the task.
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So, if you want to invest in gold as it gets used in technology, you might as well go for the technology giants that build the best gear. That includes names like Apple and Samsung, the two most dominant forces in high-end cellular phones. Of course, this pair also has deep inroads into other emerging products, too, and a history of shifting along with changing consumer tastes. Regardless of what gadget they sell, it's highly likely they've engineered some gold into the product.
Even when the technology doesn't come from Apple or Samsung, gold is increasingly likely to be involved. For example, La Roche Posay's My UV Patch product uses wearable sensors from private mc10 that make extensive use of gold. The sensors link up to an app on your smartphone.
3. Taking a bite
Did you know you might have gold in your mouth? It's not a huge use of the metal, but roughly 18 tonnes of gold (less than half a percent of demand) were used by the dental profession last year. One of the best ways to invest in that industry is via "picks and shovels" providers like DENTSPLY SIRONA. This is one of the largest dental product supply companies, selling everything from tools to consumables -- like the stuff in your fillings (if you're unlucky enough to have some).
4. The final frontier
Gold is also a key ingredient when it comes to blasting into space. For example, NASA is scheduled to launch the James Webb Space Telescope next year, which will use gold's physical properties to act as a reflector of infrared light. Since NASA farms out a lot of the heavy lifting, you can get exposure to this use of gold by investing in government contractors like Northrop Grumman (NYSE: NOC), which helped to build the James Webb.
But you don't have to stop there. Aerospace companies with experience in outer space include well-known names like Boeing and lesser-known, but still material, companies like Orbital ATK.
5. A store of wealth
Central banks and gold bugs accounted for around 45% of gold demand last year. That gold is a store of wealth shouldn't be a surprise at all, but step back from the big boys that make up this stat (like central banks) and think about how an everyday person might make use of gold as a store of wealth. I'm not talking about socking some bullion away in a safe; I'm talking about using gold jewelry to raise some quick cash.
Those types of asset-backed loans are the specialty of pawn shops like EZCORP (NASDAQ: EZPW) and Cash America International Inc (NYSE: CSH). The interesting thing here is that demand for such loans is likely to spike during economic downturns. That's also the time when the value of gold is likely to be picking up. So, adding names like these could be a countercyclical play, so long as you can get past the negative image that often surrounds the pawnbroker industry.
A different look
There you have it: five uses of gold (or ways to invest in a well-known use) that may surprise you. It's a diverse collection because gold is a really useful material when you take its non-financial attributes into consideration. However, as the pawn shops show, you shouldn't ignore gold's use as a store of wealth, either. If you are looking for a unique way to invest in gold, I'm pretty certain there's at least one company on this list that has piqued your interest.
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