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Gold is a commodity that you can easily buy. All you need to do is visit a coin shop and acquire a few gold coins. That's actually an expensive and inefficient option, but buying a gold-linked exchange-traded fund (ETF) such as SPDR Gold Trust (NYSEMKT: GLD) isn't much better. Why? Because an ounce of gold can only ever be an ounce of gold. Here's the best way to invest in gold in 2026.

There's nothing wrong with buying gold bullion or a gold-linked ETF, per se. They provide direct exposure to the precious metal and, in the case of an ETF like SPDR Gold Trust, they are fairly easy to buy and sell. The problem is that you are entirely reliant on gold's price to determine your return. If you are speculating on the price of gold over the short term, that shouldn't be an issue. However, if you are a long-term investor looking to use gold as a diversification tool, you should probably go with another approach.

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One commonly chosen option is a gold miner like Newmont Mining (NYSE: NEM). A miner provides exposure to gold, and the business can grow over time by increasing production. Right now, Newmont is benefiting mightily from high gold prices, producing a record $3.1 billion in free cash flow in the first quarter of 2026. Buying a company like Newmont is not a bad choice, either, but operating a mining business is very difficult, capital-intensive, and generally leads to a fairly concentrated bet on a small number of mines.

A better choice could be streaming and royalty companies like Franco-Nevada (NYSE: FNV), Royal Gold (NASDAQ: RGLD), and Wheaton Precious Metals (NYSE: WPM). From a top-level view, these companies provide cash up front to miners like Newmont in exchange for the right to buy gold at advantaged prices in the future. Essentially, streaming and royalty companies finance miners and are paid in gold and other precious metals.

This arrangement means that Franco-Nevada, Royal Gold, and Wheaton all provide exposure to gold, the price of which will dictate their sales and earnings, just as it does for a miner. However, Franco-Nevada, Royal Gold, and Wheaton don't take on the risk of operating a mining business. Moreover, they tend to have very diversified streaming and royalty portfolios. Meanwhile, the ability to secure new streaming and royalty deals enables long-term growth. And their streaming and royalty deals normally lock in wide profit margins. This last one helps protect the business when gold prices fall, something that can lead to losses for a mining business if its cost structure is too high.

If you haven't heard about streaming and royalty companies, you aren't alone. They are niche businesses that aren't exactly mainstream. However, long-term investors looking to add gold to the mix in 2026 likely won't regret taking the time to get to know Franco-Nevada, Royal Gold, and Wheaton. They have a differentiated business model that has served shareholders very well over time. That said, if you just want to speculate on the price of gold over the short-term, buy a gold-linked ETF.

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Reuben Gregg Brewer has positions in Franco-Nevada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

What Is the Best Way to Own Gold in 2026? was originally published by The Motley Fool