Paper Gold vs Physical Gold


Investors looking to minimize their exposure to risk rely on diversifying their portfolio and with the optimistic outlook for the gold market in 2019, more investors are realizing the potential of pouring a portion of their capital on gold.

There’s no denying the fact that now is the best time to invest in gold. But how do you decide which type of gold is right for you? Today, we will be talking about paper gold vs. physical gold which will help in making a sound investment decision.

Understanding Paper Gold and Physical Gold

Physical gold refers to actual gold that you have in your possession or stored for you. It is a commodity that may come in the form of bullion, coins, bars, jewellery, and the like. The owner holds a tangible object that stores value.

Paper gold, on the other hand, is a piece of paper that is a derivative of physical gold. Some examples include gold certificates issued by banks and mints, unallocated or pooled accounts, gold mining shares, Exchange Traded Funds (ETFs), gold futures, gold options, and Contracts for Difference. Note that with this type of gold, you don’t actually own gold but rather a promise to receive physical gold.

Real-World Issues with Paper Gold

The underlying issue with investing in paper gold is that it is exposed to several risks. This includes:

  • ETFs are prone to counterparty risk. In this form, gold is held by a trustee and you must rely on them to make good on your investment. However, they are not liable for any loss, theft, damage, fraud;
  • There isn’t always enough gold supply to support the sale and trading of gold certificates; and
  • Mining stocks are often directly affected by movements in the stock market rather than in the precious metals market. This means your investment is more at risk in times of economic duress.
  • Some claim the ratio of Paper gold traded is somewhere between 200 to 250 to 1 of physical gold held.

Physical Gold is a Better Investment

Physical gold does not carry the same risks as paper gold. It is a physical holding that, once bought, is all yours. You can store it in your chosen location for as long as you like. It is also very liquid and can be converted to cash easily regardless of where you are in the world.

What’s more, physical gold is a store of value and is an excellent hedge for the financial or political crisis that may come your way.

When it comes to choosing the right kind of gold to invest in, unless you are involved in day trading, physical gold is still the way to go particularly if you want long—term financial security. While there are risks associated (cryptocurrency, competition from gold-like products, and the high cost of acquisition) with physical gold, the benefits it has for your portfolio still make it a viable diversifying option.

Getting Started with Your Gold Investment


If you’re new to gold investment and have just understood paper gold vs. physical gold, Private Vaults Australia is here for you. We not only offer gold storage services at our purpose-built and highly- secure facility in Redcliffe, but we also provide bullion sales services to help you get started.

You can buy and sell both gold and silver bullion from us along with all other precious metals (Platinum, palladium and rhodium).  We offer these at some of the most competitive prices on the market. Our instant purchase and collection service offers no minimum order requirements and free no-commitment quotes. What’s more, we offer immediate vault storage services, so you can rest assured that your investment is safely tucked away in a private safe deposit box.

Give us a call at 1300 888 782 and one of our team will be more than happy to guide you through your investment choices.

Invest in your future now!


Register now to receive our opening offer - 2 Months Free on your first year, limited spots are available

Share This