Physical Gold vs. Gold ETF
With the current volatility of the market, prices for various things are going up and down every day. Investors are having a hard time deciding which way to go. In these times of uncertainty, gold is emerging as a savior. It is one asset everybody is confident about because gold never goes of style when it comes to making an investment.
However, investing in gold comes with its own set of challenges. There are many options available and it can be a very difficult choice when it comes to choosing the format. Gold can be either bought in a physical form – bars and coins or as ETF, which is a kind of stock.
Now, you might wonder if both are a form of gold why do you need to think so much about what to buy? The answer is quite simple, just like everything else in life your investments are personal and you should take the one which fits your needs the best. Following is a well-thought comparison of both Physical gold vs Gold ETF to help you decide, which one is best for you.
Purity
Physical gold is often sold as 99.5% pure but there is no way of measuring it or confirming it, even with certificates. ETFs on the other hand are not that strict with their trade, their values are decided by how the market is performing. ETFs deal with 99.5% pure gold too, only it is much more flexible.
Price
Physical gold does not have a fixed price throughout the world. It keeps on varying based on several factors. ETFs, on the other hand, have a fixed price as set by international standards and markets.
Cost
When you pay for physical gold, you do not only pay for gold, you pay for the labor involved in making that gold, additional taxes on purchases, etc. This can account for 20-30% of the price you are paying. Gold ETFs in comparison do not incur such additional costs, the most they go are 1% rest all you pay for manifests itself in gold stocks.
Power
This may seem like a weird point, considering all that we have discussed so far. Surely, buying gold in any form gives you a lot of power in terms of security and wealth. However, what form of gold you have can also determine that. Physical gold stays with you – the coins or bars – are always at your service. The moment market crashes you can liquidate them. ETFs do have the same options but at the same time, those are just stocks. There is nothing physical about them which means having to sell them on the market first which can take some time.
Gold coins or bars and Gold ETFs are both great investment options. Your decision needs to be based on how you want to use your gold for the best purposes of investment. While ETFs only require a Demit account and diversifies your portfolio, physical gold can help you greatly in times of inflation.
Choose the kind of investment based on what you want and need. Combining both is never a bad option too, all you need is to be wise about it.
