Buying Paper Gold: Is GLD Backed by Physical Gold?

Posted by reallynicearticle on February 11th, 2021

When it comes to investing in precious metals it is important that you understand the differences between buying a piece of paper which represents the precious metal and physically owning the precious metal.

It is important that you choose the option that is the most convenient and safe for your investment ventures. sqaured paper

However, each option has its own set of advantages and disadvantages. Still, if you are planning on investing in precious metal it is imperative that you understand the options that are available.

Buying Gold: Weighing the GLD ETF Against Physical Gold

Let's assume that you are planning on investing your extra money in gold. There are two options that are available to you: either buy GLD shares or buy physical gold.

GLD is the ticker name for SPDR Gold Trust fund. It is an ETF (exchange trade fund) that allows people to buy certificates which are backed by gold. In other words, when you buy a GLD, you buy a piece of paper which states that you own a certain amount of gold.

It is a convenient method to purchase gold when you do not want to head to a local bank to buy physical gold.

You can purchase "paper gold" from GLD from almost anywhere through the internet. Buying gold from GLD eliminates the need to store gold and transport it.

The company takes care of all of the details regarding the location of your gold and safety of your gold - you just own a certificate which states that you own the gold.

But there are a couple of disadvantages to buying gold through ETFs like GLD.

For one, it will take a considerable amount of time to cash in your certificate for the real gold. The process can be quite complicated and time consuming.
Additionally, a lot of investors are skeptical about purchasing gold from exchange trade funds such as GLD. Because they are not entirely confident if the certificates will be valuable if the GLD company or banks crash.
Most people prefer to physically own their gold in case of emergencies, and also to protect against hyperinflation.
Of course, it can be quite inconvenient to buy physical gold from your bank. First, it is much more expensive to buy physical gold than it is to buy gold through GLD.

Secondly, it can be risky to transport and store the gold. Which is why GLD was established in the first place - it created a convenient trading platform for gold.

Holding Physical Gold in a Self-Directed IRA Plan

Perhaps there is another option that you can look into when it comes to investing in precious metals. It is called a Self-Directed Retirement Fund. This fund allows you to invest in various ventures without worrying about tax deductions until you are retired.

It creates cost an effective way to invest in your future. Most IRAs are not self directed, in other words, they are controlled by a particular firm or broker.

Most people prefer to have their retirement funds controlled by brokers because it relieves them of the responsibility of investing in ventures without proper counseling. In fact, The Securities and Exchange Commission last year estimated that only around 2% of all IRAs are self-controlled.

However, if you would like to be in control of your IRA funds (as most savvy investors do) and invest in anything that catches your interest, a self-directed IRA may be a good option for you.

In fact, investing in precious metals with a self-directed IRA is another good option. With a self-

directed IRA, it will be much easier for you to invest in precious metals without dealing with any third parties.

On top of that, you can decide if you want to buy the physical gold or buy a certificate, but it is recommended to buy physical gold. It is always better to be able to get your hands on your precious metals at will.

So when it comes to investing in gold there are several options that are available to you. Purchasing gold through a GLD is cheaper and convenient but it can be a little tricky and many people are skeptical about it.