Pros and Cons of Physical Gold vs. Gold ETFS


Gold is a very strong commodity and a great source of wealth for many people. Today, many people invest in gold for security and strength. Basically, gold investments are either physical or superficial. Physical investment includes investing in tangible gold items like gold coins, gold jewelry, gold rods, gold biscuits and gold bars. 

Another way of investing in gold is by investing in superficial gold investment. Well, one way of doing this is by buying through Exchange Traded Funds (EFTS). These are trusts sold on the stock exchange and considered as mutual funds, which hold the physical commodity and very different from the stocks of the companies that mine the gold.

Before you take the plunge to invest in either physical gold or gold ETFS, it is good to know the pros and cons of each one of them.


Physical Gold



  • You can physically view your investment and store your gold at home, in a vault or any other safe place. The fact is you can see what you invested in at any time you want
  • There are no intermediaries or institutions to deal with when you are investing in physical gold
  • It is a long-term investment as the prices of gold will most likely never fluctuate but will always rise steadily as gold will always retain its purchasing power.
  • No experience is needed to Invest in physical gold, as it is easy and very straightforward to purchase 
  • When you invest in physical gold, there will be no need to keep up with the goings on in the financial market 
  • It is very unlikely that a market crash will affect your investment 
  • The demand for physical gold in countries like India and China is high and you will always have a ready market


  • Not a good investment if you are looking for short-term returns. Buying physical gold means you will buy at slightly higher rates than the current market rates and disposing of the gold will also mean selling at lower prices because of paying commissions to the dealers
  • Storage issues may crop up for some investors
  • Because of its physical state, it is prone to theft
  • Since it is a physical wealth, you will have to pay taxes for it






  • The pricing of pure gold backs up every unit so there is no risk of purity.
  • You can buy at any rate without a markup making it very cost effective.
  • At the click of just a button, you can have your money on gold ETFS investments in your account because of its liquidity
  • It is tax efficient as it is not part of physical wealth 
  • Very easy to buy and sell


  • There is a likelihood of an EFTS sponsor defrauding you
  • Only one-share increments are allowed when buying and selling
  • Because of the numerous fund expenses, the actual ownership is not free.
  • It is easy to lose your ETFS especially when there is an economic crash, inflation or a political turmoil

There you have it!