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Virtual gold vs Physical Gold

Published by Karl Martin Karus in category Precious metals on 28.10.2021
Gold price (XAU-SEK)
18 123,18 SEK/oz
  
- 174,22 SEK
Silver price (XAG-SEK)
216,29 SEK/oz
  
- 3,14 SEK

Have you heard people talk about physical, paper, and virtual gold and wondered what they are or which one is better suited for you? While the meaning of physical gold seems straightforward, it can often be confusing how gold can be virtual.

Let’s understand the terms

  • Physical gold – Coins, bullion bars, jewelry. You can buy gold online or in a physical shop and receive a physical investment or jewelry product.
  • Paper gold and virtual gold – Virtual gold is defined as so-called paper gold, or exchange-traded gold fund units (ETFs), gold mine shares, or other instruments that are not physically tangible. That means that gold can be traded on the Internet like any other asset class without leaving home.
    That term is often used in the trading community, where buying and selling happen frequently. Traders buy or sell gold financial instruments such as ETFs and CFDs. Trades only happen virtually, and gold ownership is not physically exchanged, and you do not necessarily own gold in any way.
  • Bonds and Stocks – Aside from trading and physically owning gold, there are also options to invest in Sovereign gold bonds, mutual funds, gold exchange-traded funds, gold mining stocks, etc.
  • Digital Gold – Digital gold can also be physical, where bullion dealing companies sell the physical gold to a customer, but they store it themselves. Customer pays monthly or a yearly fee to the bullion dealer for safekeeping and storing customers’ physical gold products.

What is digital gold, and how it works?

In light of the pandemic, another means of investing in gold has been getting a lot of traction: Digital Gold.

When buying physical gold, there are a number of aspects to consider. There might be concerns with determining gold legality, purity, and maybe even safekeeping.

When buying precious metals from Tavex, you can be sure that you receive ethically sourced, legitimate, and high-quality products – our partners are amongst the biggest gold manufacturers in the World – Perth Mint, Valcambi Suisse, PAMP, Austrian Mint (Münze Österreich), etc.

Digital Gold might seem like a convenient way to invest in gold, especially since many transactions have moved to the Internet. Digital gold can be bought online and is stored in insured vaults by the seller on behalf of the customer. Buying gold virtually can be more comfortable, and there is no need for safe storage because the seller already offers that.

Buying digital gold works quite similarly to digitally buying stocks or other assets. One needs to make an account with the bullion dealer and invest money in gold through them. However, it should be noted that digital gold comes with the counter-party risk(s) of the entity storing the gold. (bankruptcy, financial turmoil, etc.).

Why own gold physically?

By owning physical gold, you are independent of third parties and institutions. There is also no need to worry about a possible transaction, as gold is traded freely and universally in the open market. Additionally, Precious metals can be sold back in all Tavex offices.

Owning gold on paper or digitally always comes with a third or even fourth party risk. However, physical gold you can feel and touch yourself, and you will always have it with you if necessary. Fundamentally the safest way to own gold is to own it physically by yourself.

Which physical gold products to buy?

We, here at Tavex, have monthly offers with a discounted premium. Currently, we have a promotion for two well known 1 oz investment coins:

American $20 Liberty Head Double Eagle gold coin

American $20 Saint Gaudens Double Eagle gold coin

For investors who think about investing more than 45 000 SEK, we offer three Investment starter packages, including the world’s most known and popular products. You can check them out here:

Gold investment Package – Starter

Gold investment Package – Medium

Gold investment Package – Advanced

To see the complete list of our products, please visit our gold pricelist page.

 

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