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Pros and Cons of Physical Gold Investments

What is the difference between ‘paper gold’ and ‘physical gold’? What are the pros and cons of investing in gold, in either of these forms? These questions, and similar questions, are in the minds of people all around the world today. Here I want to give some insight into the prospect of investing in gold, and hopefully give you some answers to these questions.

First of all, I’ll tell you what ‘paper gold’ is, as compared to ‘physical gold’. Paper gold is a gold asset only on paper that is supposed to represent owning a set amount of physical gold in some form, such as coins, bullion or jewellery. Examples of paper gold are futures contracts and exchange-traded fund. This paper gold investment is often cheaper than physical gold investment, and it allows investors to buy and sell quickly to take advantage of shifts in the gold prices today. Investors don’t have to be worried about storing, shifting and transporting physical gold, so it’s more hassle-free. But there are some drawbacks to this form of investing in gold.

On the other hand owning ‘physical gold’ is an investment you can really get your hands on, investing in gold coins or bullion, and storing them at a bank vault or a secure location in your home. Having part of your savings portfolio in gold can work as protection against currency devaluations or inflation, and in the case of a banking crisis, you would have immediate access to income that can easily be turned into cash. Any physical gold you possess remains outside of government or the banks control, giving you the freedom to support your family in times of unrest or economical difficulties.

Looking more at some advantages of paper gold vs physical gold, we’ll see why many people are attracted to both forms of investment..When buying gold through paper gold documents, one doesn’t have to pay any extra fees above the spot price, only a small commission to their broker. Gold ETFs, such as GLD, will also require a small management fee. So generally it costs less than buying physical gold. But the main advantage to physical gold is its liquidity. Through retailers in precious metals anyone can buy or sell gold very quickly allowing you to make huge profits if you sell during peak market rates. Before investing in gold from a retailer check the shifts in the gold price today to make sure the rates are lower.

So to sum it up, investing in GLD is good if you looking for short-term profits by playing the shifts in the price of gold. For using gold as a financial safety net during financial troubles, buying gold and owning it in its physical form is the best option.