Gold has outperformed a wide range of investments over the years, but surprisingly enough there are still millions of Americans who do not own any gold. What’s more, many of these individuals have stayed on the sidelines only because they are confused by the vast array of gold investment options. This confusion is the topic that I would like to discuss today.
It has been scientifically proven that it is easier for humans to make decisions when there are only two or three possible choices. Otherwise, the task of evaluating each possible choice becomes so daunting that it frightens us into inaction. The gold market has recently seen the innovation of a slew of new products, but at the end of the day there are really only two options: paper gold or physical gold.
Paper gold investments, also known as gold derivatives investments, are investment vehicles that have something to do with gold but do not involve the physical delivery of product to the investor. Examples include gold mining stocks, gold ETF investments and gold pool accounts. The calling card of such investments is that they are often supposed to closely track the gold spot price but rarely do, and at the end of the day you still need a piece of paper to prove ownership.
Physical gold investments are exactly what they sound like: investments which involve physical gold. One can buy gold bullion bars, gold bullion coins or certified coin investments and immediately become a part of the physical gold investment market. Bullion has always tracked the spot price, while certified coins often track the spot price and sometimes outperforms gold bullion over the long-term.
Investors who want to turn a quick profit may do better with paper gold investments, but safety-minded investors will get what they are looking for by buying into the physical gold market. It’s that simple, so if you are one of the millions of Americans who as of yet does not own gold, you have two options. It’s a simple question of what is more important to you, profit or safety.