Physical gold is one of the best forms of long-term wealth protection. It's ideal for your heirs, as it will last longer than any currency they may use in the future. Physical gold is not subject to the risks associated with paper assets. It cannot be hacked or erased.
Neither that nor the fact that an ETF is physically backed bring a person closer to owning gold. Gold values represent physical gold, but you don't have the right to exchange them for real metal. Owning stocks in a gold mining company or a gold ETF exposes you to the gold industry and, since gold doesn't necessarily move in conjunction with the stock market, it can help to further diversify your shares. I like to think of physical gold and silver as financial insurance against inflation, which provides the ability to “set a specific rate”.
Gold futures are more liquid than physical gold and have no management fees, although brokerage firms may charge a trading fee (also called a commission) per contract. If you decide that investing in physical gold is right for you, here are some things to keep in mind. The popularity of exchange-traded funds (ETFs) underscores the ease with which people can enter the gold market without actually owning physical gold. However, physical investors in gold must also predict when they will want to sell their gold.
Compared to paper stocks, physical gold gives investors the ability to physically hold the investment over which they have full control at all times. Gold-traded funds or mutual funds have more liquidity than those that hold physical gold and offer a level of diversification that is not offered by a single stock. Unfortunately, some investors don't realize until they make their first purchase that the spot price isn't what you actually pay for physical gold. Investors are encouraged to consider creating physical gold positions as a long-term investment, possibly even to save for retirement.
Investors must clearly understand that buying physical metals is not the only way to expose themselves to the gold market. While owning gold sounds great and can even be considered responsible during a stock market crash, investing in gold comes with some unique challenges and doesn't always turn out the way you might expect.