Over the last fifteen years, gold and silver ETFs have become quite popular, largely because of convenience. Electronic traded funds are handled digitally, which means investors don’t have to worry about the weight, storage, or security concerns which are associated with holding physical metals. However, ETFs aren’t all as they’re cracked up to be, and below are some reasons why holding physical gold and silver can be a better choice.

How Gold And Silver ETFs Work

ETFs are investment funds which use physical gold and silver to back up their shares. The price of the shares will track that of gold and silver, and will trade similar to stock. However, the majority of investors won’t have any claim on the gold which backs it.

The reason for this is because most ETFs have rules stating that you cannot take physical ownership of any of their metals unless you own a minimum number of shares, sometimes 100,000 or more. To put this in perspective, if gold is traded for $1,000 an ounce, 100,000 shares would mean you’d need to have $1 million in order to take physical ownership. Furthermore, even those who do have enough shares may be subject to ETF rules which allow them to settle the delivery in cash.

Those who own ETFs are also putting their faith in a separate entity that may not have their best interests in mind, and if for any reason the structure, management, or operations dissolve, your entire investment will be at risk. While ETFs do allow you to invest in gold cost effectively, this is a potential downside that must be considered, but it isn’t the only thing those holding ETFs have to worry about.

ETFs Will Not Be Available During Emergencies

Recent hurricanes throughout the Caribbean and southern United States highlight the dangers of relying too much on ETFs and digital money in general. Hurricane Irma and Maria devastated Puerto Rico, knocking out power for weeks and forcing citizens to stand in long lines waiting to get money out of the few available ATMs that ran off backup generators. Once the ATMs ran out of cash or the generator ran out of the fuel, no one could get their money, and the few stores and merchants who were still open begin requesting cash or coins for goods and services.

The purpose of owning physical gold and silver is to protect against emergencies – both manmade and natural. Those with silver quarters or dimes can use them along with cash to trade for basic necessities in power down scenarios where the electrical grid is unavailable. At the end of the day, physical gold and silver is insurance you can hold onto, while ETFs, by comparison, are speculative. They won’t be available if the power goes out, and there is always the question of whether a fund has adequate holdings and insurance. While ETFs have their place in the investment market, physical gold and silver have been traded and stored for thousands of years and can be carried across borders.