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Rhodium:
5125.00 USD

The Benefits of Owning Physical Gold

13 Dec 2019 - Investing Information

Reportedly the most prevalent metal in which people invest, the history of gold’s benefits can be traced back several centuries. From time immemorial, in addition to being used for its medicinal properties including but not limited to alleviating symptoms of arthritis, regulating body temperature, and functioning as mood enhancers and for skin treatments, gold has always been portrayed as an indicator of wealth, only owned by the elite of society. Although primarily associated with its rarity, the value of gold goes beyond its availability and has been said to be explained by several of its physical properties, the most prominent of which include its beauty, density, durability, and malleability.

Today, however, investing in gold is not only limited to the elite. There are sveral ways to invest in precious metals like gold, among which are purchasing and owning gold bullions, and coins (physical gold), buying shares of a company in possession of either gold exchange-traded funds (ETFs) or stocks, futures contracts, options and/or contract for differences (CFDs), or mining shares. Today, gold investing is accessible to anyone. Whatever the option, only one of them involves owning physical gold and so the choice will likely depend on factors including the investor’s investment goals and the available means or funds.

There are two forms of investment grade physical gold bullion: gold bullions and gold coins.

  • Gold bars/bullions: May exist as either cast or minted gold bars. Whatever the type, gold bars are typically issued with certificates confirming their purity, weight, refiners’ hallmark, and serial numbers. Often designed in 24 carats, they are easier to store in bulk and have a lower premium than coins since the production costs are relatively lower. However, investing in gold bars exposes the investor to more significant market risks for several reasons, including the fact that gold bars are more difficult to sell spontaneously or in case of an emergency since few people can afford to buy an entire bar and the bars are challenging to split into smaller pieces.
  • Gold coins: Typically designed at a standard purity and weight, gold coins are easy to collect thanks to the fact that they exist in multiple currency denominations and small sizes. Also, their dimensions confer on them ease to store as well as the flexibility to liquidate whenever. However, because their authenticity is not always verified during purchases, not all gold coins present the same mass, there is no assurance of their purity levels (such as a certificate), and the premium per coin is generally high owing to the cost of production or designing coins. As a result, for a given amount of money, a buyer will typically acquire fewer gold coins.

So, why choose investing in physical gold over the gold ETFs and mining shares? Research has demonstrated that even though there are risks associated with investing in gold, the benefits, most of which are only exploited fully with purchasing physical gold bullions, outweigh the risks. Some of these reasons to resort to physical gold include:

Medicinal properties

Unlike possessing ETFs or mining shares, when you own physical gold, you have unlimited access to its medicinal properties and can thus benefit from its advantages for as long as you wish, primarily because no side-effects have been associated with long-term exposure to it. This can be achieved through frequent donning of gold (encrusted) jewelry.

Ubiquitous acceptance

Likely owing to its history and simplicity, gold is today, one of the few precious metals that can act as a global currency, able to be traded any and everywhere worldwide. As a universally accepted form of money, gold makes for a good source of emergency funds wherever you find yourself. It is probably for these reasons that militants are usually provided with gold coins to carry on their persons when in conflicts zones.

Safe from the risk of devaluation and eventual economic crisis

Unlike all other currencies, owning physical gold presents its owner with a near-guaranteed assurance of financial stability, especially in periods of economic instability. Several studies have reported an inverse relationship between the value of precious physical metals like gold and currencies like the dollar. Thus, although the value of your physical gold is maintained irrespective of the dollar's importance in the world market, in periods of economic uncertainty, your gold’s value tends to rise.

Tangible haven with inherent value and no counterparty risk

Unlike when you possess intangible gold rights, owning physical gold comes with no counterparty risk. Furthermore, owing to the cost of mining and the fact that despite the increasing demand for gold, it is naturally-occurring and impossible to create otherwise, gold has an inherent value and worth, making it the ideal safe-haven asset and financial insurance especially during amidst socio-economic turmoil.

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