When the word Gold is mentioned, we automatically think of it as a valuable form of currency, commodity even investment option.
Today and more than ever investors, Governments even Banks use it as a form of a hedge in counter to any currency devaluation, or as a virtue to balance the financial market against any inflation or deflation. It is considered for many to be a Safe Haven especially during times similar to the big market crash where the economy recovery was ambiguous.
Gold ownership can be in the form of Physical or Exchange Traded Fund (ETF), however, the physical path gives you the most direct exposure.

Physical Gold

Bullion is reference to the Physical Gold in Bulk, and Physical Gold can be casted into bar or minted into coin. We value Physical Gold by the purity and the mass of the bullion. However, in certain circumstances, Physical Gold can be issued with monetary face value, yet it is the Physical Gold’s fine content that determine its market value and not the monetary value.

Physical gold can be purchased from governmental and/or private mints, Broker and Dealers of precious metals and jewelers. Due to the basic law of demand and supply, a premium price is expected when purchasing physical gold. In addition to the premium, other costs such storage, insurance, and transactional fees are still associated with owning, purchasing and/or selling Physical Gold.

Exchange Traded Fund (ETF)

Unlike physical gold, Exchange Traded Fund or ETF is considered a financial product with the purpose of tracking the performance of an underlying asset. Purchasing ETF comes with a price of pre-funding a percentage of the ETF investment’s value. ETFs are similar to stock and have a per-share price that will be traded throughout the day without giving you physical ownership of the gold itself. In other words, you will hold the title of a Physical Gold Stock Value but never the Physical Gold.  Investing in ETFs does not require storage costs; However, a percentage of the investment’s value is lost each year due to a recurring annual fee required for management and administrative expenses. SPDR Gold Shares ETF (GLD) annual fee is 0.40%.

In addition, trading an ETF lead to paying a commission for every time an investor transact the ETF whether for sell or buy purposes.

What are the key differences between physical gold and silver and ETFs?

Category Exchange Trade Fund (ETF) Physical Gold
Asset Type ETF or Stock Claim (Paper) Actual Gold (oz.)
Cost associated with acquiring asset Commission at every trade.
Annual Fee .40% for Management & Administrative.
Premium at purchase due to demand and supply law.
No Annual Fee. $0.00
Privacy & Reporting Requirements Must report.
Regulated by the SEC and FINRA.
Personal information such Social Security Number, Name and Address are required at account opening.
Potentially no reporting requirements when purchased.
Limited or no reporting requirements when sold. Very Private and unobtrusive.
Risk associated with market crash Considered Risky due to uncertainty of the market place. Considered a Safe Heaven at all time.
Liquidity Reasonable Only if market is at a normal condition.
Very Questionable when Government, Financial Institutions and Banks are at risk, or market is abnormal.
Very Easy to liquidate whether the market is under a normal or abnormal conditions.
Ownership of the gold 0% . You only own the Paper Claim of the Stock. 100% owner of the Actual Physical Gold.
IRA Eligibility YES, IRA Eligible. YES, IRA Eligible.