Is real gold or paper gold a better investment?

Real tangible gold is somewhat more secure and paper gold may be a quicker means of making a short term profit in the gold market. Holding real gold or paper gold depends upon investment strategy.

Real gold is gold bullion. Gold bullion coins such as the American eagle and gold bars from well-known sources such as Johnson Matthey are trusted means of holding gold bullion. Taking delivery of these gold bullion products is the ultimate in security. They also have a worldwide market when the investor wishes to sell.

Real gold also includes certified rare gold coins. These often outperform gold bullion over the years and can be used as long term investments. However, the value of these items is much more closely tied to their rarity than to their gold content.

Gold mining stocks are a useful way to profit from the price of gold. When the price of gold is going up mining stocks will often outperform gold bullion. The risk of owning gold mining stock is the risk of owning stock in any business. Thus a mining company’s stock may go up when it finds a new vein of easy to mine gold or down if it is forced to close down a mining operation because of environmental concerns.

The ultimate in paper gold are the gold funds that try to track the price of gold. The investor buys shares in the company whose assets are gold bullion and cash. The value of the shares goes up when gold goes up and down when it goes down, minus the profit to the company. Holding shares in a gold fund can be a quick and efficient way to profit from the rising price of gold. As with other stocks the investor can buy or sell quickly, paying a commission but not paying for or taking the time for delivery. There are, however, costs to running any business, and in buying and selling stock, that come off the bottom line and can make paper investments much more complicated than their physical metal equivalent.

So is real gold or paper gold a better investment? Gold funds are for short term speculation in the gold bullion market and bear the risk of someone else deciding when to buy and when to sell gold. Physical gold is the tradition investment for long term security. The answer depends on why the investor wants to buy gold, so call our hard asset specialist today at 1-800-300-0715 and after a few questions we can offer an honest opinion on what type of gold serves your unique situation best.