Physical Gold vs Paper Gold Investing

Gold Investing Bullion Bars Over Black

All the shares of firms that mine, produce, and explore for gold ore are known as paper gold investing. All the important companies are present on the big gold indices such as Gold Miners Index (GDX) or the BUGS Index (HUI), and you can check out this list select your gold stocks.

You will take more risks if you decide to buy physical gold in comparison to gold stocks due to the fact that gold stocks will appreciate faster when gold spot prices increase but drop much more dramatically when the price of gold drops.

There are even more risks associated with gold stocks. Here are some of them:

  • Regulatory Risk – bigger taxes and regulation may be imposed on mining and exploration firms.
  • Cost of Production Risk – the valuation of a mining firm may be negatively influenced by mining equipment depreciation, rising and values, labor cost increases and so on.
  • Management Risk – bankruptcy can and will be declared by all the firms which mismanage or overly leverage
  • Fiat Currency Risk – you will receive fiat paper currency whenever you sell securities such as gold stock or shares of gold mutual funds. You may end up having an asset with no value in case of currency collapse.
It is practically impossible for the value of physical gold to hit zero and physical gold investing will always beat paper gold investing.

5-20% of Your Retirement Portfolio Should be in Gold Investing

You can easily and safely enlarge your retirement portfolio with the help of gold investing.

You will be able to guard your assets against stock market volatility and inflation with gold.

There is also an important growth potential associated with gold investing. Moreover, there are lots of investors who buy gold in order to grow their assets, and numerous analysts predict gold to keep on gathering gains in the future.

Your own risk tolerance and retirement horizon will influence the entire amount of precious metals in your retirement portfolio. By opening a self directed IRA, you will be able to establish a diversified retirement portfolio the right way.