Why You Should Consider Investing In Physical Gold Over Gold Shares

With inflation on the rise, countries at risk of default which would then lead to economic breakdown — investing in gold stocks has become a popular choice with investors. But, which is better: investing in gold shares or physical gold?

Gold Shares vs. Physical Gold

If you want to carefully protect yourself against inflation, or even diversify your portfolio, one of the best options is to devote a portion of your total portfolio to gold.

When it comes to physical gold and gold shares, there are a few similarities, and some very broad differences. For instance, physical gold is a clever way to hedge against impending inflation. So, whatever amount of your investment portfolio loses due to inflation, you can still recover thanks to appreciation of your physical gold.

On the other hand, gold shares have the potential for greater growth. Often, in instances of a stock market bull run, it is better to focus your attention on shares instead of physical gold. But, you need to know what your overall investment objectives are. Do you want to substantially grow your investment portfolio over a short time span, or are you after a hedge?

The Pros and Cons

As for determining the value of investing on physical gold vs. gold shares, there is one thing that is clear: gold has some traditional strengths that both investment types offer. That’s because gold’s traditional strengths aren’t going to change. These include:

  • Liquidity
  • Traditional store of value
  • Refuge in times of economic instability

Now, what about the pros and cons?

Physical Gold

  • A stable investment
  • Can be used for retirement funds
  • Can be affected when shares strengthen


Gold shares

  • Appreciate the same way stocks do
  • Possibility of quicker returns or losses
  • A risky investment
  • Potential for loss of capital


The Key to Investing is Diversification

Whether you decide to invest in shares or go to Gold Buyers Melbourne for physical gold, if you want to lock in on the value of gold for the sake of your investment portfolio, diversification is the key. You can diversify by adding precious metal to your overall portfolio, and you can diversify you positions of gold.

But, here’s a secret: you can add yet another layer of diversification by investing in a variety of stocks and turn investment differences of shares vs. physical gold to your benefit as each has their own set of advantages. Then, you can use your diversification as a hedge and make money through the differences each investment offers.

It All Comes Down to Timing

If you want to leverage the benefits of physical gold vs. shares, timing is everything. You need to be aware of the best time to hold on to gold, when to buy physical gold and sell it, and when to invest in shares or when to liquidate.

If you want to use a buy-hold strategy for your physical gold, you will likely want to hold on for a longer period of time. Whichever you choose, you must keep in mind that you have to look at all your investments and diversification is the key. Make sure you are ready and willing to change the forms of your investments so you can preserved overall value and position yourself to make money when the market is strong.

FG Editorial Team
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