Unlike physical gold, ETFs can be purchased like stocks on a stock exchange. ETFs allow investors to access gold and, at the same time, avoid the costs and inconveniences derived from margins, storage costs and security risks involved in holding physical gold. At first glance, buying an exchange-traded fund backed by bullion seems harmless. An ETF (or ETN, exchange-traded promissory note) is a security that tracks an index, a sector, a commodity or other asset, but that can be bought or sold just like a stock.
Here are some of the pros and cons associated with buying physical gold. The pros and cons of investing in ETFs can differ significantly from those of physical gold. Gold and silver ETFs allow investors to invest in gold without having to manage or store physical gold. Premium coins, such as the Saint-Gaudens double eagle, the barber's dime and the Liberty Head nickel coin, tend to have the highest market value due to their rarity value, which increases the gold content in the coins.
If you're interested in investing in gold, it's important to know all the differences between these two methods and how those differences may influence your buying decision. There are several ways to invest in gold, and two of the most popular options are physical gold and exchange-traded funds (ETFs). Physical gold has been in value for thousands of years, and many of those who invest in it find this continuity attractive. Understanding the difference between how the two metals are used, their economic sensitivities and their technical characteristics can help investors determine which metal may benefit their portfolio.
Locked in a safe and in its possession, gold is a tangible asset with which investors can do whatever they want.