Lately we have received many questions from subscribers regarding the difference between “paper gold” and physical gold, and the pros and cons of investing in either. The following aims to shed light on this important question, and explain some lesser known intricacies of investing in gold.
So, what is “paper gold?” Paper gold refers to an asset that acts as a substitute for owning physical gold. It is a claim on physical gold. When you own paper gold, you own a promise to receive a certain amount of physical gold, if so desired, at some time in the future, and if certain conditions are met. Futures contracts and exchange-traded funds are examples of “paper gold.”
Paper gold provides investors with a simple, liquid, and sometimes cheaper method of investing in gold. It allows investors to capitalize on price movements in the yellow metal without the hassle of owning, storing and transporting physical gold. ... Log in or subscribe to continue reading.
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