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Paper Gold Vs Physical Gold: What Is The Better Investment?

Paper gold and physical gold are two different ways to invest in precious metals. Both options have their own set of benefits and disadvantages, and it’s important to understand the differences between the two in order to make an informed investment decision.

In this article, we’ll share the benefits and disadvantages of investing in paper gold vs physical gold to guide you to the best investment option for your individual needs. We’ll also discuss rolling over your existing 401(k) or similar retirement account into a gold IRA and how this process works.

Feel free to use the quick links in the TOC list to jump straight to any section:

Important Notice!
Before we go more in-depth on the topic of paper gold vs physical gold, we know that choosing a precious metals company is an important financial decision that can impact your financial future for years to come.

Our goal is to provide you with the most accurate and reliable information to help you identify the best option to grow and protect your wealth today.

With careful and extensive research, we have reviewed and rated the 6 best precious metals companies of 2023 to help make your decision easier!

>>See our list of the 6 top precious metals companies for IRA and non-IRA purchases.

Difference Between Paper Gold And Physical Gold

Paper Gold Vs Physical Gold: What Is The Better Investment?Paper gold refers to investments in gold that are not tangible, such as gold exchange-traded funds (ETFs) or futures contracts.

Gold exchange-traded funds (ETFs) are investment vehicles that track the price of gold and are traded on a stock exchange. They offer investors a convenient and cost-effective way to invest in gold, as they can be bought and sold just like stocks.

These investments allow investors to gain exposure to the gold market without actually owning any physical gold.

Physical gold, on the other hand, refers to actual gold coins, gold bars, or jewelry that can be held and touched. In other words, it’s a tangible asset that you can hold in your hand and a real store of value.

Benefits Of Investing In Paper Gold

Paper Gold Vs Physical Gold: What Is The Better Investment?One of the main benefits of paper gold or ETFs is that it is convenient and easy to trade. Investors can buy and sell their holdings quickly and easily, and they don’t have to worry about storing or transporting physical gold.

Additionally, paper gold is generally less expensive than physical gold, since it doesn’t require the cost of manufacturing, minting, and shipping physical coins or bars.

Some other benefits of investing in paper gold include:

  • Liquidity: Gold ETFs are highly liquid, which means you can buy and sell them easily
  • Convenience: These ETFs can be bought and sold through a brokerage account, which makes it easy for investors to access the gold market
  • Low cost: Gold ETFs have low management fees compared to other types of gold investments, such as physical gold or gold mutual funds
  • Ease of ownership: They don’t require the storage and insurance that physical gold does, making them an easy and cost-effective way to invest in gold

Overall, gold ETFs offer investors an affordable and convenient way to gain exposure to the gold market and diversify their investment portfolio.

Disadvantages Of Investing In Paper Gold

There are also disadvantages to investing in paper gold. One of the main risks is that it is not backed by physical gold, but rather by a promise to deliver gold at some point in the future.

This means that investors are relying on the issuer of the paper gold to hold enough physical gold to meet their obligations. If the issuer does not have enough gold or goes bankrupt, investors could lose their entire investment.

Here are more potential drawbacks to investing in paper gold:

  • Lack of physical ownership: Gold ETFs do not give you physical ownership of gold, which means you cannot hold the gold in your hand or store it in a safe
  • Market risk: The price of gold ETFs can be affected by market factors such as supply and demand, political events, and economic conditions. This means that the value of your investment may fluctuate
  • Potential for fraud: Like any investment, there is a risk of fraud with gold ETFs. It is important to do your due diligence and invest with reputable firms to minimize this risk.
  • Depends on the value of the dollar: Similar to stocks and bonds, gold ETFs rely on the dollar, meaning that if the dollar loses its value, the gold ETFs will lose their value as well
  • Management fees: Although gold ETFs have low management fees compared to other types of gold investments, they are still not free. The fees can eat into your investment returns over time.



Benefits Of Investing In Physical Gold

Benefits Of Investing In Physical GoldOne of the main benefits of physical gold is that it is a tangible asset that cannot be easily devalued or manipulated. It is also portable and can be easily stored or transported, making it a potentially useful asset in times of crisis or instability.

There are several benefits to investing in physical gold:

  • Diversification: Gold is not correlated with other asset classes, such as stocks and bonds, so adding it to your investment portfolio can help diversify your risk
  • Safe haven asset: Gold is often considered a “safe haven” asset in times of high inflation and market volatility and can offer wealth protection.
  • Gold price typically increases when stock markets are crashing: Its price tends to increase during times of economic uncertainty and when stock markets are crashing. Gold will also never be worth $0 as is the risk when investing in other paper assets
  • Liquidity: Gold is a highly liquid asset, which means it can be easily bought and sold
  • Ease of storage: Physical gold can be stored in a safe or a safe deposit box, which can give investors peace of mind. If you’re investing in a gold IRA or also called precious metals IRA, your gold is stored with a depository like the Delaware Depository or Brinks that carries insurance
  • Tangible value: Some investors prefer the tangible nature of physical gold, as it has value beyond just its price
  • Private ownership: Physical gold and other precious metals allow you to take private ownership of your financial future
  • Long-term appreciation: Gold has a long history of appreciation, with its price increasing over time in many cases. This makes it an attractive investment for people who are looking to grow their wealth over the long term

Overall, physical gold can be a good investment for those who want to diversify their portfolio and who value the security and tangible nature of owning physical gold.

Disadvantages Of Investing In Physical Gold

There are also some disadvantages to physical gold. For starters, it can be more expensive to buy and sell, especially if it requires shipping and handling. However, all precious metals companies on our list below offer free shipping of non-IRA metals.

  • Limited returns: The price of gold can also be volatile and its returns may not always match those of other asset classes, such as stocks or bonds
  • Storage costs: It also requires storage and security, which can be an added expense
  • The gold price can fluctuate based on demand: Additionally, physical gold is subject to wear and tear, and its value can be affected by factors such as rarity, condition, and demand

In conclusion, both paper gold and physical gold have their own set of benefits and disadvantages. Investors should carefully consider their goals and risk tolerance before deciding which option is best for them.

Roll Over An Existing Retirement Account Into A Gold IRA

Gold IRA Guide - What is a gold IRA? Why invest in a precious metals IRA? Best gold IRA companiesDid you know that you can roll over or transfer parts of your 401(k) or similar retirement account into a gold IRA?

A gold IRA rollover is a term for an Individual Retirement Account (IRA) that is funded by moving funds from a 401(k), 403(b), TSP, or similar retirement account into an IRA.

This process allows an individual to invest a portion of their retirement savings into physical gold or other precious metals, as well as other investment vehicles such as real estate, stocks, bonds, or mutual funds. When performing an IRA rollover, funds from existing tax-advantaged accounts can be rolled over into a new IRA tax-free.

Investors can even roll over funds from multiple retirement accounts into a single self-directed IRA, making it easier to consolidate and manage their retirement savings. For more information, you can visit our >>> Gold IRA Guide.

Or, >>> request a FREE Gold IRA Guide to learn more about gold IRAs.

Goldco Free 2023 Gold IRA Guide
Goldco Free 2023 Gold IRA Guide

Gold IRA Rollover Or Transfer Process

To rollover or transfer your retirement account into a gold IRA, you will need to:

  • Choose a gold IRA custodian or trustee. This is a financial institution or company that specializes in administering self-directed IRAs and holds the physical gold or other precious metals on your behalf.
  • Open a gold IRA account. Once you have selected a custodian, you will need to open a gold IRA account and complete any necessary paperwork.
  • Transfer or roll over your funds. You can transfer your retirement funds to your new gold IRA account either through a direct transfer or by rolling over your funds from the old account.

It’s an easy and quick process that usually takes around 10 days to complete.

In summary, a gold IRA can be a good investment option for those looking to add diversification to their portfolio, protect against inflation and ride out a recession.

But as with any investment, it’s important to do your due diligence and carefully consider your financial goals and risk tolerance before making a decision to invest in gold.

>>> Request a FREE Gold IRA Guide to learn more about gold IRAs.

Best Precious Metals Companies

For over a decade, our mission has been to provide investors and retirees with all the information they need when it comes to precious metals investing.

In doing so, we have carefully vetted the best precious metals companies in the industry to help you choose the best provider for your investment needs.

We believe that investing in precious metals and/or cryptocurrencies through your 401(k)/IRA is one of the best ways to invest in this asset class, due to the tax-saving component.

With that said, we have rated each precious metals company on a variety of factors including BBB/BCA ratings and complaints, customer reviews, annual fees, precious metals selection, storage options, promotions, and buy-back programs.

Here’s our list of the top 5 precious metals companies in the US:


Company Reviews Annual Fees Investment Minimums (IRA) Preferred Custodian Free Gold Kit
Goldco: Best Overall Gold IRA Company Reviews $180 $25,000 Equity Trust
Reviews $0 $50,000 Equity Trust
Reviews $100 $10,000 Equity Trust
Reviews $180 $10,000 Equity Trust
Reviews $80 $2,000 Equity Trust

Additionally, for investors in the United States and worldwide that want to trade gold and silver, we recommend BullionVault. You can read our in-depth review of this worldwide online trader here.

Best Gold and Silver Trading Company: BullionVaultFree Gold Ira Lies Guide: Augusta Precious Metals


About the Author

Stina is an entrepreneur who's passionate about personal finance, investing, and digital marketing. She's been a writer in this space for over a decade.

Frequently Asked Questions & Answers

Is investing in precious metals a good idea?

We believe it is. Throughout history, gold and silver prices have moved in the opposite direction of paper assets and can, therefore, provide a good hedge against inflation. Past performance doesn’t guarantee future gains, but the numbers show that the weaker the dollar has become in the past, the better gold generally has performed. In fact, the relationship between gold and the dollar is often seen as an inverse one.

Why starting a gold IRA?

Traditional IRA accounts may not be enough to provide for you and your loved ones, post-retirement. Not if the economy remains as uncertain as it has looked recently.
For eons, investors have looked to gold to help them potentially offset losses due to economic turmoil. A gold IRA or precious metals IRA permits you to diversify a portion of your retirement portfolio — including pre-existing IRAs and former 401k(s) with previous employers — by actually owning physical gold (and silver) within a retirement plan. As a result, you can securely possess physical precious metals in a tax-deferred account.

Should I invest in physical gold, futures options (EFTs), gold mining stocks, or gold funds?

Indirect forms of investing in gold are much riskier than physical metal. You are relying on any third party individual or company to look after your wealth for you, and depending on the company’s success or failure, you risk losing your investment. With physical gold, you are in control of your wealth. Physical gold offers you that layer of protection and security which Gold Exchange Traded Funds (ETFs), gold mining stocks and funds do not.

When investing in a gold IRA, you will get the same tax benefits as a traditional IRA, while actually owning physical gold coins or gold bars.

Do my precious metals have to be bars or can they be coins?

While some coins can be included in precious metals IRAs, only certain coins are IRS approved for inclusion in IRAs. In fact, not all bars or bullion are IRS approved. The IRS maintains a list of acceptable forms of precious metals for IRAs. You can be certain that a reputable gold IRA company offers a variety of metals for IRAs within IRS guidelines.

Can I choose any custodian and storage company to store my metals?

Yes. While established gold IRA companies often recommend Equity Trust as their preferred custodian and Delaware Depository for storage, you can choose your own custodian and storage companies.

Can I store my precious metals at home?

Non-IRA precious metals, yes. Not metals for an actual IRA. IRS rules forbid keeping your IRA precious metals at home or in a standard safety security box. They must be held by an approved non-bank trustee or a bank within IRS guidelines that restricts access. In other words, just like a traditional IRA, the access to the precious metals in your precious metals IRA must be restricted in specific ways to ensure deposit and disbursement laws are followed.

Are the values of the precious metals I buy for my IRA guaranteed?

No. Like all investments, the future value of precious metals is not guaranteed and can rise or fall based on a variety of market influences. But we believe physical precious metals are your safest bet to hedge against a stock market crash, inflation, and the debasing of the dollar.

When will I be eligible for distributions from my gold IRA?

At age 59½, you or the beneficiary of your precious metals IRA can start taking penalty-free distributions from the account, according to the IRS.

How long does it take to rollover a traditional IRA into a gold or silver IRA?

Usually around two-three weeks, although each application is different and the amount of time varies on a case-by-case basis.

What is the advantage for customers to set up an IRA with a gold IRA company as opposed to going to the custodian and setting it up with them?

The customers will receive top-notch service and specialized account setup knowledge provided by the gold IRA company’s IRA Processing Department throughout the process from start to finish. They do 95% of the paperwork with them. Customers can feel safe knowing they will be kept up to date every step of the transfer process by daily calls or e-mails from the IRA Processing team with any gold IRA company listed on How To Invest Gold. These companies also often provide lifetime account support.

About How To Invest Gold

Our Mission

For over a decade, our mission has been to provide investors and retirees with all the information they need when it comes to precious metals and cryptocurrency investing.

Gold backed IRA - Goldco, Regal AssetsNot only do we provide a complete guide on the best ways to invest in precious metals, but we have also carefully vetted the best precious metals companies in the US to help you choose the best provider for your investment needs.

We believe that investing in precious metals and cryptocurrencies through your 401(k)/IRA is one of the best ways to invest in this asset class, due to the tax-saving component. A gold IRA or crypto IRA is the best way to protect your retirement account against an unstable market.

Disclaimer: The owner of this website is not licensed as an investment advisor and, accordingly, does not make any recommendations regarding clients’ personal investment portfolios. It is recommended that you carefully evaluate and research the risks and rewards associated with investing in alternative assets such as physical precious metals and cryptocurrencies before you make a purchase. Learn more in our Terms of Service.

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