If you are an investor looking for a hedge against inflation and are looking towards Gold to do that, you are at the right place. For decades now we have seen investors put their cash to good use by purchasing assets that will appreciate in value over time. One of the predominant assets that these investors always purchase is Gold. There are a couple of different ways now of purchasing Gold. Back in the day it was mainly buying physical Gold, but now with the stock markets you can purchase Gold Stocks and Gold ETFs as well. This begs the question, which one are you better off purchasing?

Let’s break it down and see which is better suited for your next investment. 

Beginning with Gold Stocks; these can be purchased directly on the stock market the same way you would buy any stock. Instead of investing in Gold, you are investing in a company that mines gold or holds a significant amount of gold on your behalf. You are not investing directly into gold itself, however if gold succeeds and goes up in value, then theoretically, so will the company that you bought into. Whenever you see a crash in the stock market, these stocks will not crash but rather retain or increase in value.

Benefits of owning Gold Stocks is that there is no need for storage compared to physical gold. You are essentially just holding your investment through the brokerage in your stock portfolio. Another great benefit is that gold stocks can be liquidated a lot quicker and easily compared to physical gold. Simply just contact your broker and sell your shares; same way you would with your other stocks. Finally, you do not need to pay for insurance. With physical gold, it can be stolen depending on where you store it, hence why if you own a large sum it is important to insure your investment 

The drawbacks of owning gold stocks is that you do not actually own any gold. Your shares are an investment in the company rather than an investment in gold itself. Gold stocks are also a riskier investment than physical gold as they are dependent on many other factors besides gold. Sometimes they do poorly if the company has poor management. Finally, since gold stocks are directly related with the stock market, they are less stable than physical gold. 

Moving onto physical Gold, or ‘gold bullion’ you are purchasing an asset that you directly own. These can be in the form of bars, coins, ingot, etc. You must make sure that when you are buying gold bullion that it is authentic by doing various tests.

Benefits of physical gold is that you actually own it. Compared to gold stocks where you only own a share in the company that has ties to gold. There is no broker here, just you and the asset itself. Another benefit is that overtime with inflation and economic crisis’ like recessions, your investment will go up in value. Finally, if there ever comes a time where the stock market crashes and there is a post apocalyptic world, you can use your gold as currency. Physical gold can be easily traded for other goods that you may need.

Drawbacks of buying physical gold can be faced when it comes to the safe and secure storage of the precious metal. Some things to take into consideration include; the physical space that will be taken up by your Gold Bullion, an environment that is not damp or corrosive, and most importantly the security of the area in which you will be storing your investments. Another drawback when buying physical gold is to ensure that you are not buying something that is counterfeit. In Canada, the majority of the bullion that you buy must be produced by a metal refinery that is accredited by the London Bullion Market Association (LBMA). Now of course you can purchase Non-LBMA gold, but you must ensure that you are purchasing it from a reputable dealer. 

This leads us back to the original question, are you better off purchasing physical gold or gold stocks?

At the end of the day, it all comes down to what your end goal is for the investment you are making. Do you want something short term? Or do you want something to store your wealth and hedge against inflation?

We here at Au Bullion offer some of the lowest premiums in the industry for precious metals. Check out our selection of Gold bullion for your next investment in physical Gold. Whether you are an investor or a collector, we have got what you are looking for at the best gold price today!