The Pros and Cons of Holding Physical Precious Metals
Precious metals have been a store of value for centuries. From ancient civilizations to modern-day investors, gold has always been considered valuable in terms of its ability to retain wealth over time. For example, if an investor were to put $1000 worth of gold under their bed today, it would have the same purchasing power as it did 100 years ago! However, this is not true with all assets. Let us learn more about this concept.
Today, investors are faced with many choices when it comes to holding precious physical metals. These methods vary by the amount of security they offer, liquidity (ability to sell), ease of transport, and storage costs, amongst other factors. Some examples include:
Gold ETFs allow easy access into the gold market without having to store or transport any metal. However, there is a risk that you do not actually own the underlying asset because your shares in an ETF may be backed by futures contracts instead of physical bullion in vaults which could cause delays if you need immediate access to your holdings. Furthermore, some experts believe that this will make paying for large transactions like buying a house difficult and selling at low prices since people will not be able to quickly get in and out of the market.
– Gold bars or coins – if you choose this, it can be reassuring to know that your gold is stored securely in a reliable vault (at least for large purchases), but there are extra fees such as transportation costs plus insurance which may add up over time.
Furthermore, some people like having physical possession since they find comfort knowing their investment is tangible. However, transporting costly items such as jewelry or watches back and forth from home/work could become tedious after a while, especially when it might need special care and attention.
Bullion Bars come with an advantage because most makers will store them in a warehouse and can be kept at home. However, they do not come with the same protections as owning physical bullion in an insured vault, meaning that if your house burned down, you would lose this investment.
Coins are cheaper than bars but much more expensive than gold ETFs or paper certificates, which allow one to trade their way into the market without any underlying metal backing up those claims.
There are also no storage fees involved, so it makes sense for people who just want exposure to precious metals at lower prices, especially when there may be volatility in gold right now.