We often receive questions from Clients about whether physical gold or gold ETFs are the better long-term investment option. While both physical gold and gold ETFs have their benefits, in this article, we will focus on the advantages of investing in physical gold over gold ETFs.
Firstly, physical gold is a tangible asset that provides investors with the ability to take physical possession of their investment. This means that investors can hold their investment directly, which provides a sense of security that is not possible with gold ETFs. Physical gold can be stored in a secure location such as a home safe or a bank safety deposit box, which means that investors have direct control over their investment.
Another benefit of investing in physical gold is that it is a store of value that has been recognized for thousands of years. Gold has been used as a form of currency for centuries and has maintained its value over time, even during periods of economic uncertainty. By investing in physical gold, investors can take advantage of this historical trend and benefit from its proven track record as a store of value.
Physical gold also offers investors the potential for long-term capital appreciation. While gold prices can be volatile in the short term, the long-term trend for gold prices has been positive. Over the past 20 years, the price of gold has increased from around $300 per ounce to over $2000 per ounce. This represents a significant increase in value for long-term investors in physical gold.
Finally, investing in physical gold offers investors the ability to diversify their portfolio. Physical gold has a low correlation with other asset classes, which means that it can help reduce the overall risk of a portfolio. By investing in physical gold, investors can protect their portfolio from market volatility and unexpected downturns.
While gold ETFs also have their benefits, they do not offer the same level of security and control that physical gold provides. Gold ETFs are essentially paper investments that track the price of gold and are subject to counterparty risk. This means that investors are relying on the solvency of the fund issuer to honor their investment.
Physical gold is a valuable long-term investment option that offers investors a range of benefits, including security, store of value, potential for long-term capital appreciation, and portfolio diversification. While gold ETFs may be more convenient, they do not offer the same level of control and security that physical gold provides. As a precious metals investment advisor, I recommend that investors consider adding physical gold to their portfolio as a long-term investment strategy.
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Disclaimer: Investing is a personal choice. You make your own decisions on when and how to invest. You can make money and you can lose money investing. The statements made on this website are opinions and past performance is no indication of future performance or returns. Precious metals, like all investments, carry risk. Gold, silver and platinum coins and bars may appreciate, depreciate or stay the same depending on a variety of factors. WJ Gold PMI cannot guarantee, and makes no representation that any metals purchased will appreciate at all or appreciate sufficiently to make customers a profit. The decision to purchase or sell precious metals, and which precious metals to purchase or sell are the customer's decision alone, and purchases and sales should be made subject to the customer's own research, prudence and judgement. WJ Gold PMI does not provide investment, legal, retirement planning, or tax advice. Individuals should consult with their investment, legal or tax professionals for such services.