Payday Loans and Fast Cash Guide | Gold ETF Versus Physical Gold

Gold ETF Versus Physical Gold

Owning gold is owning gold right?  Not exactly.  There are cost differences with a physical gold ETF versus actual physical gold, and psychological differences too.

Pros to a Gold ETF:
·    A gold ETF is readily available on a major exchange to be bought or sold in seconds.  This really makes it another cash form for you.
·    A gold ETF is managed a by a professional company that will get the best rates on storage, security, buying and selling gold at the moment, and other business expenses.
·    A gold ETF is more flexible than gold, it can be a bet on the direction of gold, contracts relating to gold, or bets on companies working with gold.

Cons to Gold Funds
·    Gold funds are managed by people and are subject to people issues like corruption and incompetence.
·    Gold funds are traded on major markets and are subject to being impacted by major market moves not nearly as correlated to gold prices.  When the market tanks all stocks can fall, no investors no price.
·    When the world ends gold funds are electronic promises that mean nothing anymore.

Pros to Physical Gold
·    It is a real tangible asset that means something in an economic collapse.
·    Collectibles can grow in value greater than the worth of the gold.
·    Jewelry looks better on the wife than shares of a fund.

Cons to Physical Gold
·    Easier to lose with zero value without the asset.
·    Easier to steal, with zero value without the asset unless you pay insurance.
·    High cost to buy and sell including your personal time.  A lot has to happen when you sell gold to someone, including transportation costs and security, and proof of purity which doesn’t happen when you’re only trading papers.

In summary, for a general investment I would personally buy a gold ETF vs. physical gold, but it really doesn’t hurt to own a small amount of physical gold for the really rainy day.

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