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I want to invest in gold. I have two options: On an exchange like etoro, I can buy shares of a stock that tracks the price of gold. Or I can literally buy a gold bar.

What's the better option? The only difference I can tell is that with the former, I don't actually own any gold, so I can't sell it on a different exchange or at a gold marketplace. And if the servers are hacked, so is my virtual gold.

Aside from these differences, are there any other reasons why I might be better off buying real gold bars?

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  • There are three options, not two.
    – Fattie
    Feb 14, 2021 at 23:47

3 Answers 3

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I can think of a couple of other reasons.

  • No ongoing fees. A gold dealer will add a margin when they sell you the gold. But after that you can stash it in a safe place for as long as you like, and it costs you nothing.
  • If everything goes wrong in your country, you can shove the gold in your pockets and flee across the border. I will leave it up to you to decide whether this is a significant risk.
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    OTOH, if you have physical gold, you have to worry about burglars &c.
    – jamesqf
    Feb 14, 2021 at 23:48
  • (I swear I put a comment in here already @jamesqf !) True enough, but, after all your car, oil paintings, etc can be stolen. Same thing. For a few kilobars, many dealers will just let you sit it in their safe with no real charge.
    – Fattie
    Feb 15, 2021 at 0:08
  • @Fattie: Sure, your car can be stolen, but unlike gold, you have to have your car handy to make use of it. (Certain collector cars excepted, of course.) Likewise, you have to have your Rembrandt, Picasso, or whatever hanging on your wall so you can brag about it to your associates. If you just want to take pleasure in looking at it, you can get very nice prints of pretty much anything for under $100 or so.
    – jamesqf
    Feb 15, 2021 at 17:47
  • @jamesqf TBF, most burglars look for the easy-to-find stuff and want to get out quickly. If the gold is stored unobtrusively (like in a plain cardboard box under some clothes), few will think to look there.
    – RonJohn
    Feb 15, 2021 at 20:12
  • Acts of God are another worry. Will insurance cover the fire/flood/tornado, and how will you prove that you had the gold?
    – RonJohn
    Feb 15, 2021 at 20:13
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This question can only be answered when you decide why you are buying gold.

  • If it is to speculate on the price of gold, then buy "paper".
  • If it is to hedge against inflation, then buy "paper".
  • If it is to protect against the coming apocalypse, then buy "physical", and get it delivered to you.
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  • Hmm, this seems a bit abstract / general. If you want to "speculate" on the price, ie trade it, best is just to trade futures (as I explain in the answer). Regarding hedging against inflation, simply glancing at some charts of the two things I see no evidence that gold is a hedge against inflation, nor is there any general opinion that it is? (regarding a hyperinflation, that's your point 3).
    – Fattie
    Feb 15, 2021 at 15:56
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    @Fattie gold is a poor hedge against inflation, but many people think it is.
    – RonJohn
    Feb 15, 2021 at 16:00
  • that's weird. But, ok.
    – Fattie
    Feb 15, 2021 at 16:09
  • @Fattie a lot of seeming normal people think a lot weird things, and there's nothing we can do to make them think right.
    – RonJohn
    Feb 15, 2021 at 16:12
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I want to invest in gold.

I certainly traded a lot of gold, but I would call it trading, not investing.

What's the better option?

I would truly encourage you to do this:

  1. Go buy a kilobar (do not pay more than a tiny amount over spot; if someone wants more than a tiny amount over spot laugh and go elsewhere).

I would encourage you to have nothing at all to do with gold until you actually have a bar in hand. Call me a mystic, but that's my opinion.

  1. Next go to one of the two gold-storers (goldmoney or bullionvault) and buy, let's say, $1000 worth of "digi-gold"

I would encourage you to have nothing at all to do with ETFs until you experiment with digi-gold. Call me practical, but that's my opinion.

  1. Open a brokerage account (but NOT f@&(#$ r@#$@#hood)* and buy say $1000 of an ETF.

I urge you to do nothing serious until you have the experience of all three.

The very simple answer to your question ...

(A) If you are gonna hold some gold long-term (more than a year) just buy kilobars and don't even consider any other option.† End of story.

(B) As outlined above. There is absolutely on cost or downside to trying all three (a couple dollars commissions here and there). Go try all three. It would be madness to take one route or the other before trying all three.

Furthermore ...

Don't forget, with commodities you can simply trade the futures.

(You know, like when you hear in a movie about someone trading FCOJ or Oil or whatever.)

Gold trades on comex, so GC. (You'd be trading GCK or whatever at the moment.)

It's extremely easy to do, but is very wired, so as with say heroin, take care.

Again that's for trading.

As I say above, If you are gonna hold some gold long-term (more than a year) just buy kilobars and don't even consider any other option.† End of story.

† ok, if you're incredibly rich, buy lbma bars, not kilobars!

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    One third the way down, I knew this was a "Fattie" answer.
    – RonJohn
    Feb 15, 2021 at 1:26
  • You're saying that if a person wants to invest, then they should go spend about $60,000 on a 1-kilogram gold bar before they invest anything in stock index ETFs (among other kinds of ETFs)? I must say that I find that advice bizarre.
    – Tanner Swett
    Feb 15, 2021 at 14:08
  • hi @TannerSwett - not really sure what to say, a bar of gold is (as you say) roughly $60,000 dollars. if you want to "buy physical gold" .. you need $60,000. the question asks about buying physical gold. what am I missing? if the question is about buying a house, houses cost (say) 200,000 and up, would you be shocked if an answer then referred to spending 200,000 on a house??
    – Fattie
    Feb 15, 2021 at 15:53
  • @TannerSwett also note that if you buy a bar of gold .... you can sell it. You haven't lost any money. It's like buying shares. (obviously the price can and will fluctuate.)
    – Fattie
    Feb 15, 2021 at 15:54
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    @Fattie: No, you don't have to by a $60K bar of gold to invest in physical gold. You can simply buy bullion coins, which come in sizes as small as 1/20 ounce. (Per Wikipedia: en.wikipedia.org/wiki/Gold_coin#Bullion_coins )
    – jamesqf
    Feb 15, 2021 at 17:40

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