Valued as a currency and a commodity, gold represents one of the best ways to defend yourself against monetary devaluation, inflation and the prospect of economic instability. Because it is accepted all across the globe and cannot be printed by governments, gold is even perceived as the ultimate or purest form of money. Moreover, gold is universal and does not constitute the monopoly of a particular country; that and its scarcity are two of the main reasons why gold tends to increase in value over time against all types of paper money.

If you’re thinking of investing in gold, then you’ll be looking at a liquid market with a high potential of revenue. As an investor, there are two key ways you can gain exposure to the precious metal, namely purchasing physical gold or acquiring gold exchange traded funds (ETF).

The advantages of gold ETFs

The ETFs are a type of investment fund typically traded on the stock exchange market. The ETF acts like an open-ended mutual fund where all the money gathered from the entrepreneurs is invested in gold. Take note that these funds are usually managed passively and yes, they do ensure an above medium ROI sometimes similar to the return you gain from physical gold. The other advantages of holding gold ETFs include:

• Investing in ETFs means you don’t need to pay charges
• It is easier to sell off gold ETFs via a broker at any point of time and especially when banks/jewelers don’t accept buying back physical gold
• Purchasing ETFs when the currency is weak provides a good support for your portfolio
• Re-selling ETFs doesn’t come with the typical amount deducted by the bank/jeweler
• Because they provide a lot of liquidity, the ETF constitutes a good short and medium term investment
• Buying ETFs involves paying a fixed amount and you don’t have to deal with price variations
• ETFs are more tax efficient overall, especially since you don’t have to pay a wealth tax

The pros of owning physical gold

Irrespective of how the world’s leading currency performs, owning physical gold in the form of bullion, coins or ingots means you can be certain your assets will hold their value. Investing in physical gold is wise if you’re looking to create a safe haven or want to have a hedge against market volatility. In short, if you’re a long-term investor, then you’ll be better off with physical gold. The benefits of owning gold bullion or coins in the long run include:

• Inherited value that will increase over time
• Physical gold balances your portfolios’ performance
• It provides peace of mind against paper stock volatility and bank failures
• It’s a private asset that comes with minimal reporting requirements
• Physical gold benefits from nominal spreads

Which one works best for you?

As previously mentioned, if you’re looking to make a short or medium term investment or simply want to diversify your portfolio, then ETFs are the ideal solution for you. On the other hand, if you’re looking to make a long-term investment, then owning physical gold is the way to go.