Physical Gold Vs Gold Stocks

Investing in gold has certainly gained a lot of interest in the past couple of years, and with gold prices still going up, more people are enticed into placing their money on this precious metal than ever before. Among the different forms of gold that people can buy, there is a huge debate on which of them is the better investment. Is it better to buy gold stocks, or should you invest in physical gold, like bullion coins? If you are puzzled as to which of these two options you should pick, then you should continue reading this article.

What Are Gold Stocks?

When you mention gold stocks, this actually means that you purchase a part of a gold mining company, pretty much like the ones traded in the stock market. The value of gold stocks will largely depend on how the company performs, and they are also affected by market volatility; in short, you are taking the same kinds of risks that you would by investing in other kinds of stocks.

The plus-side of investing in gold stocks is that they offer a high margin for profit. There is a chance that the value of your stocks will rise by as much as 10% or even more in just weeks; but then again, there is also a risk that they would drop at the same rate. Gold stocks, even though they stand to give a large profit, is not really the right choice for people who just want to preserve the value of their current assets, if you want that, then you should invest in physical gold.

The Benefits of Physical Gold

When you own gold in its physical form, like gold bullion, you will have a currency that is tangible and holds its value much better than any paper currency in the world. If you want a hedge that will protect your money from the effects of inflation, then physical gold is the right choice for you. Here are some more benefits that you can get by owning gold:

There are less risks in physical gold – Gold mining stocks carry with them huge risks, like the company going bankrupt, or the limited amount of gold in their claim suddenly runs out, they can also depreciate due to political turmoil (consider the South African miners shooting incident in August 16 2012, source: But when you own physical gold you can be sure that it will hold its value regardless of what is happening in the other parts of the world.

Physical gold can resist inflation – Since the value of paper currency of most countries are dependent on how their economies are performing, they have a higher risk of succumbing to the effects of inflation. There are some war-torn countries in the world right now where their money is not even worth the paper they are printed on; this will not be a problem when you own physical gold. Gold is an internationally-accepted form of currency, so its value will not go down.

This is not to say that you should ignore gold stocks completely as they are still very good ways to make a profit, so you should still consider investing some of your money on them. It is said that owning physical gold is better because it can serve as a hedge to protect your money’s purchasing power from the effects of inflation. The best thing that you can do is to convert some of your assets into gold first so that you can have some form of security, and then invest some of your extra money into gold stocks so that you can make it earn more.

And, when it comes to purchasing physical gold, you should always remember to deal with reputable companies who have a A+ rating from the BBB; this way you can be sure that you will not get cheated from your money.


Donna Morgan

Donna Morgan

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