Gold investments have become increasingly popular due to current times. Gold is seen as a good method to combat the unstable stock market. While it is true that gold is a good method of investment, especially during these times, physical gold may not be the best route. Buying gold Exchange-Traded Funds, (ETFs), may be more reliable option.
ETFs hold a similar investment as physical gold, however they are purchased online in the same way shares are purchased. The ETFs are kept in a brokerage account. When purchasing gold ETFs online, the process is made simple, easy and convenient. When investing in ETFs, you are not purchasing gold bullion, rather you are buying shares of companies that have invested in gold. This is a more indirect method of investing in gold. This enables you the luxury of purchasing gold shares, without the hassle or downsides of owning physical gold.
Which are the risks of owning gold?
Owning physical gold can be a hassle for a number of reasons. First and foremost, physical gold puts you at risk for theft. Whoever is aware of your investment in gold can use it against you as a form of theft. Your safe could be compromised as a result of physical gold investments. Without strategic security measures in place, your physical gold could be compromised and cause you to loose the invest you worked hard for. Physical gold’s value is dependent on it staying safe and in your possession only. It is important to keep physical gold secure for preserving and protecting your funds. Protecting your investment enables you to sell it later on.
Another downside of owning gold is the selling process. Owning gold is beneficial, assuming it holds its value and increases over time. However, if you have difficulty selling it, your investment is lost. Many buyers will want to inspect the gold quality when purchasing it from you when it comes time to sell. If they are not pleased with the physical gold quality, your investment will not be as significant as you thought it would.
Are ETFs safer than gold?
Using ETFs can avoid this issue altogether. ETFs are not as fragile as physical gold. ETFs are seen as convenient and quick option for investing in gold. They have been used for many different reasons. However, ETFs do have have their downsides as well. For example, ETFs are best suited for short term investments. The goal is to buy ETFs for a low price and sell them for a higher price. Using ETFs should only be used for short term investments for the best result possible. As stated previously, ETFs are essentially the same as shares in any other type of company. The same caution you would use for company shares is the same caution you should use for ETFs.
However, if you already have a functioning brokerage account, buying ETFs is fairly simple. Purchasing ETFs is the same as trading any other company’s stock. There is a risk for losing money when trading ETFs. ETFs are shares of a company that invest in gold. Therefore, if the company suffers, so does your stock share. You do not have physical possession of the gold, therefore your risk of loss is higher as you are betting on the company’s success. If the company does well, so do your stocks. If the company does poorly, so do your stocks.
Different types of investment
Using ETFs as a short term investment is the best way to minimize loss. Gold coins or gold bullion are excellent for recession proof investments. ETFs are short term investments that do not give you control over the decisions a company may make. When purchasing ETFs, you are depending upon the board of directors at the company to make sound decisions. This is not always a reliable method of financial security for your investment. Companies are often at the mercy of the economy. If the economy suffers a massive, unpredicted loss, so do your ETFs.
However, if you are interested in trading and focusing on short term investments, ETFs may be a good option for you. Gold ETFs can be beneficial for your investment portfolio. If you prefer long term stability, physical gold is the way to go. Physical gold is not subject to the fluctuations of the economy or market.