Gold is a highly sought-after investment. Because of its characteristics as a “store of wealth,” gold has frequently been used as a hedge against inflation in financial markets.
But when it comes to gold, investors have two broad options, physical gold and gold stocks. Which suits you the best, find out with Business Today.
Often, when people say they are investing in gold, it is usually physical gold in the form of jewellery, gold coins, bars, etc.
The biggest benefit of investing in physical gold is the fact that the owner gets to keep possession of the asset and there is no third-party risk involved. Moreover, the owner can sell the asset whenever and wherever he/she wants to.
This does not mean that it does not have any cons. Physical gold needs to be stored securely. Moreover, it is bought at a premium which is not the case of paper gold.
Gold stocks are securities correlated with the price of actual gold. They could be gold mining stocks, gold certificates as well as Gold ETFs.
Gold mining stock is a share in a firm that engages in gold mining. Whereas a gold exchange-traded fund (ETF) is a fund like any other ETF. It trades on a stock exchange. And finally, gold certificates are official document that implies you own gold that is not physically in your possession.
They can be bought without paying a premium, which is not the case with physical gold. Furthermore, there is no storage cost involved.
But the biggest con of paper gold is the third-party risk involved in investing.