Gold ETF vs. Physical Gold

Due to its convenience, gold ETF investment is at its pinnacle. Though it might be an unexplored term for new investors in the market, gold ETFs have been around for a while now. The most vital advantage of gold ETF investments is that they mandate a small amount of investment, and then you can diversify your portfolio with this investment.

The amount you will be funding in physical gold will be approximately two thousand dollars, relying on the size, face value, and mintage date of a gold coin, for instance. But with gold ETFs, you can begin with a mere fifty dollars, and you can run up to a million dollars.

This is why, for a long time, actual gold and gold ETFs have been contrasted based on their gold price. Many investors seem to be divided on which possibility is more probable. In each situation, there are several positives and negatives.

However, what will work best for you as a gold investor will depend on the gains you want and the liabilities you wish to avoid. There is no other way to choose the finest option but to rely on your personal preferences. But, to make things easier, we’ve included both topics so you may choose among them.

Physical Gold

physical gold

When we think of actual gold, the very first thing that springs to mind is gold jewelry as a precious metal. Gold jewelry has sentimental as well as monetary worth. You may buy gold from a physical or online store.

If you go to an online store, you have to determine the suitable item and pay with cash on delivery or a credit card. Physical gold is a widely recognized asset that may be liquidated for cash at any moment. Though real gold is still taxed, it is one of the key facts that hedge against inflation.

Gold Coins, Bars, and Jewelry

Gold jewelry is the earliest physical form of gold. You may not acquire 99.9 percent pure gold here, but you will receive 75 to 91 percent pure gold. The presence of gold in a piece defines the karat number of gold jewelry. Gold jewelry has a melt value, without a doubt, but it also has a manufacturing cost of precious metals. As a result, when you sell the jewelry, you may not get the entire melt value of gold.

Gold coins and bars are first produced to invest in gold bullion. Numerous mints make 99.5 percent to 99.99 percent pure coins and bars. In the United States of America, gold coins exchanged as bullion are typically IRS-approved and have a face value and a melt value.

Numerous collectible coins are considered to have a high value. Coins struck before 1933 are considered collectible since there was a ban on gold hoarding in the United States from 1933 to 1977 in order to sustain the economy. However, these coins are uncommon, and they may be rather expensive depending on the mintage.

Gold bars are an advancement above gold coins. Unlike coins, the majority of gold bars contain 99.9 percent pure gold and are available in a variety of weights. Gold bars are available in an assortment of weights from 1 gram to 250 kg. As a result, it’s simple for you to choose among them.

Different Aspects of Physical Gold

Here we include the advantages and disadvantages of physical gold.

Control and Possession

With actual gold, you get far more control over the yellow metal, and it becomes an asset that may be handed down through generations. You determine when and where to market your stuff. The majority of companies that sell actual gold have buyback schemes. Ultimately, the responsibilities and results of gold are determined by the investors.

Financial Insurance

Buying physical gold may be used as a first-aid. Gold will always have your back in times of social, personal, or financial catastrophe. If there is a rapid shift, you may trade or invest in gold to effect the change immediately. This is why owing to gold’s melt value; it is a good method to earn fast money. In times of inflation and currency depreciation, gold remains the preferred asset class for the majority of folks.

Storage and Maintenance

The first aspect of owning gold is that it must be stored somewhere, whether in your home or a bank deposit account. Annual bank deposit fees might exceed one hundred dollars. Additionally, if the goods are stored in your home, you must invest in insurance that includes a monthly interest payment.

Gold Exchange Traded Fund (Gold ETFs)

Gold ETFs

The gold exchange-traded fund (ETF) is fairly similar to conventional stock investments, particularly gold mutual funds. This kind of investment is a form of digital investing. While you will not possess the gold, you will get an annual dividend, and you can trade and purchase gold ETFs from a stock exchange.

Gold exchange-traded funds (ETFs) are a liquid alternative to physical gold and are backed by 99.9% pure gold. ETFs may be traded on a stock market instead of gold, which must be traded in cash. One ETF unit is equivalent to one gram of gold. Thus, while investing, you will begin with a gram.

Different Aspects of Gold ETFs

Here we include the advantages and disadvantages of gold ETFs.

Simple Trading and Transactions

This kind of investing or buying gold is easier and more appropriate for beginning investors. When it comes to digital gold vs. real gold, Gold Efts is a digital method with an uncomplicated manner. One gold unit of ETF investment might serve as a minimum investment, and you can work your way up from there. The cash transaction is easier, and the price of gold is established with international standards by the World Gold Council. Local gold prices, taxes, and GTS do not affect the ETF rate.

Diversification of the portfolio

If there is a possibility of inflation in the near future, gold ETFs are the easiest strategy to protect yourself from a risky investment. This kind of digital investing safeguards you against unforeseeable risks while diversifying your gold investment portfolio. Loan collateral may be utilized as an ETF as well. Brokerage and management fees are the sole costs connected with them.

Ownership of gold

There is no personal statement on that gold, and the stock market will choose what is best for you. You have less authority over the outcome than you have over physical gold. The management firm will be in charge of your goods, and most of the time, they are inappropriate.

You possess just a tiny fraction of that gold without any wealth tax as a shareholder. You may obtain a price that is one-tenth or one-hundredth of the price of physical gold bullion. Furthermore, if advanced commodities are included, the cost of ETFs will be greater than the cost of real gold.

Should I Buy: Gold ETF vs. Physical Gold?

“Should I buy physical gold or ETF?”– as we previously noted, there is no definitive explanation for this query. However, we will break down some investment advice that will serve as a good starting place for you to pick from.

Physical gold prices differ across countries and may not be consistent. The actual weight of an IRS-approved gold coin may vary in price depending on the manufacturing firm and mint. With an ETF, you have a constant rate that is the same around the world.

Gold jewelry and coins need a substantial outlay like insurance costs and storage costs for holding gold. The majority of typical gold pieces weigh 31 grams and may cost up to $1800 or more. With jewelry, you must pay an additional 20% as a processing fee. The expense ratio will be 1%, and the brokerage rate will be around 5% for gold ETFs, much less than a mutual fund.

Even if it’s a popular Gold ETF, they have counterparty risk due to the fund’s entire structure, management, chain of custody, delivery processes, operational integrity, stock exchanges, among other factors. The funds are not sufficiently safe, and if we are to fight inflation, ETFs are a kind of banking. There is no rational response to such inquiries. You must pay insurance and depository costs, but the yearly yield on gold bullion will be zero percent.


If you’re seeking a simple investment and financing vehicle, look no further than gold ETFs. And if you’re searching for a long-term state of huge investment in gold, owning physical gold might be a reasonable option. While ETFs are cost-effective, they do not give a secure hold on your money. Read the related documents carefully and choose a reputable retailer and the fund’s custodian while purchasing physical gold or gold ETFs.

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.