Owning Gold ETFs Vs Owning Physical Gold - Which Choice Is Better for You?

It’s only a matter of time.

Maybe you saw it on a TV commercial or a banner ad on the internet but the message was clear: The time is nigh for a coming financial Apocalypse. If the marketers got their way this message would’ve stirred up a small tornado of panic in your gut. You remember the great recession of 2008. You can’t forget how it devastated your hard-earned savings.

All of the fever-pitched hyperbole aside, can we at least agree that predicting the future is a fallible at best? But one thing the investment gurus and the rest of us can agree on: The value of a diversified portfolio.

What does that mean?

Many experts will suggest holding a percentage of your assets in a hard, tangible asset.

While it is possible that financial Apocalypse may be in our future, making hair-trigger decisions based on irrational fear is never a good idea.

For you, we hope that you’re more of a considering type. You’re willing to take the time to do some research and have discovered many of the advantages of owning precious metals in your retirement portfolio. Maybe you’re come to the decision that gold

Hopefully, you’re more of a considering type. You’ve taken the time to do some research and have discovered many of the advantages of owning precious metals in your retirement portfolio. You’ve come to the conclusion that gold might be the ideal investment choice as you’re looking for something longer term – the kind of investment that will not only diversify your portfolio, but grow it over time.

Should You Invest in an ETF or Is Physical Gold the Way to Go?

First the question: What Is an ETF?

An ETF (Exchange-traded Fund) is basically similar to a mutual or index fund in that it performs based on gold market value and is traded like a stock on an exchange. A gold ETF may hold various gold assets including stocks in mining companies as well as gold reserves. Unlike precious metals, though, an ETF is not a tangible, hard asset. With an ETF, instead of holding possession of the actual metal, you hold only paper. As some experts will say, if you don’t hold it, you don’t own it. ETFs don’t provide investors with the most direct exposure to gold not in the way that owning physical metal.

As there are many ETFs from which to choose, deciding which is for you should be a decision based on performance, expense ratios, fees, etc. You can also purchase ETFs on margin. This means that investors only front a percentage of the investment’s value. Investors with experience in margin buys know that when prices go up, you can magnify your returns handsomely. But it’s also a double-edged sword: When you’re on the downside, you lose money twice as fast.

Are You the Right Kind of Investor for ETFs?

Are you risk averse? Do you have an iron gut? Can you cover your loses? Then, maybe margin buying is for you.

If you’re a steely-nerved high-frequency trader looking for something that’ll allow you to quickly move in and out of positions multiple times a day, then ETFs may be your game. ETFs are best suited for the short term. ETFs also give investors the opportunity to participate in gold and silver without having to take physical ownership of any asset. But if you want to own physical gold or silver you’ll need to be more patient. Precious metals are a longer term investment better suited to actual investors, not “traders.”

Currently, gold is experiencing a selloff that is making prices low. Prices this low provide investors an excellent opening for accumulating a long-term position in physical holdings of gold.

ETFs vs Physical Gold

While an ETF allows the investor to benefit from the price moves of gold or silver, there are also several risks and other detrimental qualities that you don’t encounter with owning physical metals.

The benefits of physical gold:

• It is a tangible asset with inherent value

• It’s a time honored hedge against paper stock volatility

• It’s balances the performance of your portfolio

• Protects against bank failures

• Great liquidity

What Don’t You Get with an ETF:

• As a paper stock it holds no inherent value

• It offers little protection against stock market volatility

• Little accountability – custodianship of gold holdings are not audited

• High reporting requirements

Where to Get More Information

With the stock market and the U.S. Dollar at a five year high, and the spot price of gold at a five year low, there may be no better time to invest in gold.

But don’t go into it blindly.

You can begin by downloading a FREE mini-course that can help answer many of your questions about gold and silver investing and Self-directed IRAs. (See link below.) This course is full of important money-saving investment tips and expert advice. This course was designed to help investors save precious time and possibly thousands of dollars.

Source by John Roz

Owning Gold ETFs Vs Owning Physical Gold - Which Choice Is Better for You?