Most people have heard that gold is a good investment. In this post we will look at gold ETF vs physical gold, in order for you to get a better picture. The value of gold is rising and it is not going to go down anytime soon. Throughout history, gold has increased in value. Looking at gold many are wondering what the best investment will be. investors are wondering if gold ETF or physical gold will make them more money and which one is the best investment. Gold is not getting worldwide attention. The average person is looking into investing in the different types of gold and looking to find out more information about the gold investments.
Gold and Investements
For most of the time, gold was considered to be a metal that has great value. Back in the time of the ancient people gold was highly desired and something that people wanted. Gold has not lost its desire and value through history. There is still a high demand for gold. Most currencies around the world are backed by gold. Gold is also making its way to the field of investments. People are turning to gold to invest in for retirement and other savings. Gold has a high value and is still something that is desired. There is something else that sets gold apart from other currencies and investments. Gold is one of the few currencies that is accepted around the world. Just about every country desires gold and a person will be able to use this as an exchange rate.
Investing with Gold
Gold has been able to stand up to inflammation. The value of gold has always gone up and it has never gone down. Even during the latest financial crisis of 2008, the price of gold continued to increase as the stocks in the United States decreased in value. There have been famous investors that have put their savings into gold. Financial experts recommend that every one that is looking to invest should have some gold included in their portfolio. This can include gold ETF or physical gold. When looking at these two investments people often wonder which one is better.
Additional Information about Gold
While gold is a smart investment it will not have much room to grow. A gram of gold will always be a gram of gold. It will not grow in size over the next decade. Experts have stated that people should invest no more than 10-20 percent of their portfolio in physical gold.
When the economy is uncertain people invest in gold because it is said to be safe.
Gold has not been known to decrease in value so for many, it is a safe investment. When the economy becomes uncertain the price of gold often increases in value. If the value of paper money would drastically decrease gold would be able to be used as a form of currency and it would be able to be traded for value.
This is one of the easiest things to invest in. physical gold comes in many forms. A person can purchase gold jewelry or gold bars. There is also bullion, coins, and medals that make good investments. Physical gold can be stored in a home or it can be stored in a safe deposit box to make sure that nothing happens to it. Gold is tangible and can be bought and sold at any time. The price paid for gold may change over time. If a person has a piece of jewelry they may be offered less than the retail value for it. Coins, bullion, and bars often have an increase in the price that was paid for them. When a person decides to sell they need to get several quotes to make sure they are getting the best price for their value. It is not advised to keep gold in the home as there is an increased risk for theft.
The most common way that people invest in gold is in gold coins. The coins weigh around two ounces but a person can get gold coins as well as half an ounce. There are different types of coins. Some coin dealers will even accept tarnished or damaged coins. If a person has a premium coin and has something that is in demand with collectors they can see a return on investment. The gold coins are going around 5 percent more than gold bullion. When looking to invest in gold coins the best option is to work with a reputable dealer that is licensed to buy and sell these coins.
Also read: What is Numismatic Gold Coins
This is gold or the ETF stands for exchange traded funds. This gold is the same way that stocks are traded on the stock markets. This stock is backed by gold and this will help protect the investors. The price does go up and down based on the flexibility in the market for gold. There are some popular ETF stocks when it comes to gold. SPDR Gold Shares is one of the most popular gold ETFs that is traded on the market.
When a person invests in gold ETF they will not get a physical piece of gold that they will be able to hold or take home. They will be given a share of gold like they will be given a share of other stocks. The price that a person will get for the gold will be the same as the current market value for a physical piece of gold.
Gold ETF has been increasing in popularity. There are some benefits to this investment. Since a person will not hold physical gold there is no risk of the gold being stolen or any risk for the theft of gold. When a person invests in gold ETFs they will pay a lower brokerage fee. This fee is much lower than if they were working with a broker to sell physical pieces of hold. It is easy to buy and sell the ETFs. They can be purchased and sold like any other stock. There are some fees that are associated with gold ETF. While the brokerage fee is small there is an annual account management fee that will need to be paid.
A new trend in the investment world of gold is the purchase of gold bullion. While ETFs are helpful there is no physical gold that is backing up their value. Gold coins and bullion is an idea for people that do not want to look at the market and is something that they can easily purchase and sell. Physical gold can be purchased online, from coin specialists, bullion banks, and even some retailers. When a person is going to purchase physical gold they will need to pay for it in full at the time of purchase. Banks and other finance companies often do not offer loans or programs that will help a person purchase gold. If a person does have the money to purchase gold they are the owners of it. A person will be given a receipt or their purchase. There will be no disputes or confusion about who owns the gold and what can be done with it. The gold will be on hand. Since a person has the gold in their possession they do not have to worry about system failures. If the market crashes this does not affect them. If they cannot get on a computer they will know that their investment is still safe. The downside of physical gold is that it needs to be moved and secured. The gold may need to be kept in a special facility. This means there are storage fees associated with it.
If a person wants to invest in gold a gold IRA is another option. A person will not have to worry about the physical management of the gold. There are some tax advantages for this investment. The gold will be protected and a firm will take care of the handling of the gold. If a person is going to use gold for an important purchase such as a retirement account it may be wise to have a professional handle the investment. A traditional IRA is not used for the purchase of gold.
If a person has a self directed IRA account they will be able to invest in different things including gold. If a person is unsure of this option that is where the ETF can come in. That way there are no storage fees and the risk of handling physical gold. When a person invests with an EFT they need to keep in mind that they are not the owners of physical gold. A person will get to invest in gold but there is a high risk involved with this. As many investors know the bigger the risk the bigger the potential reward. Gold is relatively stable so investors state that when it comes to the market this is one of the better options.
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Benefits of Investing with Gold
There are many benefits to investing in gold. Gold has been shown to stand up to inflation which is appealing to investors. If they want to hold on to the gold for a long time they do not want to worry about the decreasing value. Gold held its value over the years and it has shown to stand up to the test of time. Gold is also good for shorter investments. If a person needs money for a certain purpose they can buy, sell, and walk away. The type of gold that a person should invest in will depend on their tolerance for risk. Physical gold and ETFs have bright futures. While gold can be a good investment it is recommended by financial experts that a person put no more than 10 percent of their portfolio into gold alone.
While gold is a good investment it is still not free from risks. Experts say that the ETFs and the mutual funds are good options and one of the safest options. Gold is stable and it can be added to any portfolio so that a person can have a solid backing.
Gold ETF Vs. Physical Gold (Which Option is better?)
The price of gold will change as the economy changes. Gold jewelry and coins will allow a person to have a tangible item. They can see it as they please or they can hold on to these items to sell at a later time. Physical gold often costs more money than gold ETFs. A person will need to keep the gold in a safe and secure place. They should not tell anyone that they have the gold for the risk of theft. Investors that are looking to invest in small quantities like ETFs. They do not have to put out as much money up front and they can still have the gold investment.
The ETFs are backed by gold and the gold that they are backed by is pure. When it comes to physical gold a person will need to do some research to find out the purity.
While a person can purchase 10 karat gold at a reasonable price it will not be as valuable as something that is 24 karat gold. A person also needs to make sure they are not getting jewelry that is gold plated as this will decrease the value.
There is some difference between the two options when a person goes to sell the gold. The price of physical gold is going to vary based on the jewelry or other professional that a person is going to. Some will offer higher prices than others. The price that ETFs are valued at is going to be more transparent and will not vary.
Both physical gold and ETFs are good investments. The price of gold is at an all time high and does not show signs of decreasing in value, and many indications that it will explode in value moving forward. Gold is able to be used to back most currencies. A person should look at the pros and cons of each type of gold investment and find the one that works best for their needs and situation.
See: Top-5 List of Gold & Silver IRA Companies!
I hope you found this post on gold ETF vs physical gold to be helpful and that you now have a better understanding on the two different ways to invest in gold. Please share your own experience or thoughts in the comments section below! Also, if you got any questions about this I will be more than happy to answer them below!
I wish you success!
Michael, founder of Gold Retired
Wow! I didn’t know gold ETFs were a thing. I remember hearing investing in gold and/or silver was a good idea, and I’ve thought of doing it myself. However, as you pointed out, there are several disadvantages regarding physical gold. I’d hate it if someone stole it from me, so in order to keep it safe, I’d have to pay someone to keep it in a safe place.
I’m thinking of investing. I’m new to this, and it all sounds too complicated. I guess it’s just a matter of doing more research.
Thanks for sharing.
First of all, thank you for your comment!
Yes it is a thing for sure, but personally I prefer physical between the two.
Don´t worry, we all start out as beginners at some point, it is not as hard as it seems, most important is to get started!
Thank you again!