{"id":27462,"date":"2024-02-28T08:00:17","date_gmt":"2024-02-28T16:00:17","guid":{"rendered":"https:\/\/www.advantagegold.com\/?p=27462"},"modified":"2024-02-28T08:00:17","modified_gmt":"2024-02-28T16:00:17","slug":"shares-of-gld-is-not-the-same-as-owning-physical-gold","status":"publish","type":"post","link":"https:\/\/www.advantagegold.com\/blog\/shares-of-gld-is-not-the-same-as-owning-physical-gold\/","title":{"rendered":"GLD and Gold ETFs vs. Owning Physical Gold"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">There are <\/span><span style=\"font-weight: 400;\">many<\/span><span style=\"font-weight: 400;\"> ways for <\/span><span style=\"font-weight: 400;\">investors<\/span><span style=\"font-weight: 400;\"> to get exposure to the precious metals markets. <\/span><span style=\"font-weight: 400;\">You<\/span><span style=\"font-weight: 400;\"> can buy shares of mining companies, buy shares of <\/span><span style=\"font-weight: 400;\">e<\/span><span style=\"font-weight: 400;\">xchange<\/span><span style=\"font-weight: 400;\">-t<\/span><span style=\"font-weight: 400;\">raded <\/span><span style=\"font-weight: 400;\">f<\/span><span style=\"font-weight: 400;\">unds (ETFs) backed by gold or silver, buy or sell gold or silver futures contracts, and even purchase gold or silver certificates.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">While investments like certificates and ETFs provide exposure to precious metals markets, they\u2019re not a substitute for purchasing real,<\/span><a href=\"https:\/\/www.advantagegold.com\/approved-precious-metals\/\"> <span style=\"font-weight: 400;\">physical gold or silver<\/span><\/a><span style=\"font-weight: 400;\">. Let\u2019s walk through how GLD and other ETFs compare to physical gold ownership and when they might make sense for your investment priorities\u2014and when they don\u2019t.\u00a0<\/span><\/p>\n<h2><b>What Are Gold ETFs?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Gold ETFs give investors a vehicle for participating in the gold market without having to take physical delivery of the gold. ETFs are typically traded on a regulated exchange where investors purchase shares in the fund. Each share represents fractional, undivided ownership interest in the trust\u2019s assets. These assets take the form of gold bullion and sometimes cash.\u00a0<\/span><\/p>\n<h3><b>What Is GLD?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">GLD\u2014or the<\/span><a href=\"https:\/\/www.spdrgoldshares.com\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">SPDR Gold Shares ETF<\/span><\/a><span style=\"font-weight: 400;\">\u2014is one of the largest gold ETFs. As of August 2023, the fund\u2019s roughly 29 million ounces held a net asset value (NAV) of over $56 million. Each of the ETF\u2019s shares is worth 0.06052 ounces.\u00a0<\/span><\/p>\n<h3><b>Other Gold ETFs<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">While GLD is one of the most popular ETFs, it\u2019s not the only one. Other common choices for precious metals investors include the following funds:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>iShares Gold Trust (IAU):<\/b><span style=\"font-weight: 400;\"> IAU holds over 14.152 million ounces and a NAV of $27.3 billion. The iShares Gold Trust is organized as a trust that includes physical gold bars at vaults in London and New York.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>VelocityShares 3x Long Gold ETN (UGLD):<\/b><span style=\"font-weight: 400;\"> UGLD is a leveraged exchange-traded note (ETN) that is more complex than traditional gold ETFs. It\u2019s meant for short-term holding.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>DB Gold Double Short ETN (DZZ):<\/b><span style=\"font-weight: 400;\"> DZZ is an ETN that moves inversely to gold prices.\u00a0<\/span><\/li>\n<\/ul>\n<h2><b>Are Gold ETFs the Same as Physical Gold?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Buying gold ETFs isn\u2019t the same thing as purchasing physical gold, and it\u2019s incredibly important that you understand this before you make either investment.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you buy a gold ETF, you\u2019re buying shares of a trust that holds<\/span><a href=\"https:\/\/www.advantagegold.com\/blog\/what-is-bullion\/\"> <span style=\"font-weight: 400;\">gold bullion<\/span><\/a><span style=\"font-weight: 400;\">. When you buy physical gold, you\u2019re taking direct ownership of actual gold coins or bars you can hold in your hand. You\u2019re also not purchasing fractional shares. You\u2019ll own each ounce of gold outright and can sell it for<\/span><a href=\"https:\/\/www.advantagegold.com\/blog\/how-much-is-a-pound-of-gold-worth\/\"> <span style=\"font-weight: 400;\">its current value<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, buying physical gold comes with its own quirks. You\u2019ll have to figure out a storage solution, either in your own home, in a safe deposit box, or in the custody of a depository. And while this does add to the cost of gold ownership, it gives you direct ownership and control over your gold.\u00a0\u00a0<\/span><\/p>\n<h2><b>Are GLD and Other Gold ETFs Good Investments?\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">GLD and other gold ETFs might be considered a good investment for specific types of investors. They\u2019re an easy way to gain exposure to gold markets without the need to physically purchase, store, or insure gold.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before you invest, do your research and consider your financial goals. Weigh them against your risk tolerance and investment timeline. That said, always consult with your financial advisor before you make an investment.\u00a0<\/span><\/p>\n<h3><b>Risks of Investing in GLD<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Investing in GLD (and other ETFs) does carry a few significant risks:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Owning shares of an ETF such as GLD <\/span><b>does<\/b><span style=\"font-weight: 400;\"> carry counterparty risk. There could be accounting or custody errors, theft, or other issues that affect your investment.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You do not have access to the gold held by the trust. In the unlikely\u2014yet possible\u2014case of an<\/span><a href=\"https:\/\/www.advantagegold.com\/blog\/category\/economic-and-geopolitical-news\/\"> <span style=\"font-weight: 400;\">economic, currency, or geopolitical crisis<\/span><\/a><span style=\"font-weight: 400;\">, you have no actual gold to purchase goods or services or transact with.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You have no way to audit the holdings of a gold-backed ETF or trust. You must rely on the trust and its auditors to tell you how much actual gold the trust <\/span><span style=\"font-weight: 400;\">holds<\/span><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You must pay a management fee to participate in such an investment. Management fees can have an impact on your investment and eat away at any proceeds or profits.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You cannot use your shares to buy basic necessities or barter. In a real crisis, shares of GLD may simply be viewed as a piece of paper.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If gold prices decline, your investment can lose value without the benefit of owning and maintaining the gold in your possession.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You essentially have zero control. You are told how much gold the fund owns and where it is held. You have no control over the management of the gold.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Benefits of Investing in Physical Gold<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Buying physical gold offers plenty of perks compared with purchasing shares in mining companies or ETFs. When you purchase physical gold bullion, you enjoy the following benefits:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You decide how much gold to buy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You decide where to store your gold bullion. You can store your gold at home, in a safe deposit box, in a depository, or use a combination of all three.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You can buy and sell your gold anytime you choose.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You can use your gold to purchase basic goods and services. In the unlikely yet possible event of an economic, geopolitical, or currency crisis, you could potentially use your gold to barter and purchase basic necessities such as food, water, and fuel.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You do not pay any management fees when you own your own gold bullion.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Physical gold bullion carries no counterparty risk. It cannot default, declare bankruptcy, or otherwise fail to deliver on obligations.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You can store your gold so it remains accessible.\u00a0<\/span><\/li>\n<\/ul>\n<h2><b>The Bottom Line<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As you can see, owning shares of GLD or any other \u201cpaper\u201d gold product is not the same as owning a physical gold bullion that you can touch and feel. While it can be excellent exposure to the market, it does not provide the same benefits of buying liquid, tangible gold that you can sell or trade.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you do not own physical gold or precious metals, now may be the time to consider adding an allocation to your portfolio. If you own shares of paper gold products, now may be the time to consider additional options.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You either own gold, or you own paper\u2026<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are interested in learning more about the potential benefits of owning physical gold bullion, we encourage you to speak with one of our account executives today. Our precious metals professionals can show you the most convenient way to begin building a precious metals portfolio or add to existing holdings.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Talk to an IRA advisor about how to roll over your 401(k) into a Gold IRA by<\/span><b>\u202f<\/b><a href=\"https:\/\/www.advantagegold.com\/open-ira-account-today\/\"><b>opening a self-directed IRA account<\/b><\/a><span style=\"font-weight: 400;\">,\u202f<\/span><a href=\"https:\/\/www.advantagegold.com\/contact\/\"><b>contact us<\/b><\/a><span style=\"font-weight: 400;\">\u202for call us at\u202f<\/span><b>800-341-8584<\/b><span style=\"font-weight: 400;\">\u202ftoday.\u00a0\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are many ways for investors to get exposure to the precious metals markets. You can buy shares of mining companies, buy shares of exchange-traded funds (ETFs) backed by gold or silver, buy or sell gold or silver futures contracts, and even purchase gold or silver certificates.\u00a0 \u00a0While investments like certificates and ETFs provide exposure [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":30311,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[47],"tags":[1332],"class_list":["post-27462","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gold-archive","tag-is-gld-backed-by-physical-gold"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts\/27462"}],"collection":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/comments?post=27462"}],"version-history":[{"count":0,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts\/27462\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/media\/30311"}],"wp:attachment":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/media?parent=27462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/categories?post=27462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/tags?post=27462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}