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Gold Showdown: ETF vs. Physical Assets

The difference between physical precious metal assets and precious metal securities continues to be a question frequently asked by investors. To hash out both sides of this argument we sat down with New Direction IRA Co-Founder and CEO Bill Humphrey. Watch our short video to hear both sides of the story, or read below for our recap.

Who’s Benefitting?

The securities industry is focused on how it can make money, so when considering the purchase of a Gold ETF an investor must be confident in the person managing the fund. An investor should understand clearly who is making money off of a specific ETF and consider how trusting they are that the manager is overseeing the ETF the way they say they will. There have been past instances where assets stated to be part of a fund aren’t actually there and investors lost money, this is one reason investors turn to physical assets instead of securities. Once a physical asset is owned by an investor they are the “manager,” removing the possibility of poor oversight.  Physical assets also ensure an investor knows exactly what they are holding and they even receive proof of purchase and authentication.

Long vs. Short

The biggest difference between physical precious metals and those held via indexes is simply the presence or absence of the digital market. Physical gold is stored at home or in secure depository facilities, while ETF investments are purely executed via digital trading platforms and stored virtually. An important consideration when choosing between a precious metal ETF or physical assets is timeframe.

For investors seeking a quick turnaround, they’ll likely choose to purchase a gold security rather than physical metals. An ETF allows an investor to quickly buy and sell an asset. While the convenience of being able to trade almost instantaneously may be appealing, a precious metals index is still very susceptible to market volatility. Investors who are looking for long-term investments will likely purchase physical bars being that they don’t need to worry about quickly selling or trading the asset, and they can ensure their investment is there when they need it.

 Investment Purpose

The reason for purchasing precious metals is another consideration that needs to be thoroughly thought through. If an investor is interested in utilizing their assets in an IRA to save for retirement they will want to purchase physical assets that can be stored in an approved depository. Precious metal ETFs can be volatile and are less secure than owning physical assets, making them unideal for growing retirement portfolios.


Interested in learning more about precious metal investments? Download our FREE Gold and Silver Investment Guide to determine if precious metal investments are right for you.

Gold and SIiver Investment Guide