One drawback to buying physical precious metals is the associated storage and insurance costs. Investments such as stocks and bonds do not incur any storage costs. Physical gold is an expensive commodity in any form. Storing it requires a safe space, such as a locker at home or in a bank, due to the risk of theft, and that involves a cost.
In addition, every time you need the gold, you'll have to physically go looking for it. It won't “come” to you like other financial products do. Any investment is made for the purpose of making a profit. In recent years, gold yields have been much lower than, for example, stocks.
In the past decade, in rupees, with a compound annual growth rate (CAGR) of 5.7 percent, physical gold yielded much lower returns than Nifty's 15.5 percent. Every investment has advantages and disadvantages. If you are opposed to having physical gold, buying shares in a gold mining company may be a safer alternative. If you believe that gold can be a safe bet against inflation, investing in coins, ingots or jewelry are paths you can take to gold-based prosperity.
Finally, if your primary interest is to use leverage to benefit from rising gold prices, the futures market may be your answer, but keep in mind that any holding based on leverage involves significant risk. However, investing in gold and other precious metals, and particularly in physical precious metals, involves risks, including the risk of loss. While gold is often considered a safe investment, gold and other metals are not immune to price drops. Learn about the risks associated with marketing these types of products.
One of the advantages of investing in physical gold is that, if you need to collect it quickly, you can do it. However, gold coins and ingots are often sold at a higher price and are bought at a discount, so you may not get the market price when you need to sell. Given the difficulties associated with physical gold as an investment, it's best for an investor to look for other options, such as paper gold. Investors can invest in gold through exchange-traded funds (ETFs), buy shares of gold miners and associated companies, and purchase a physical product.
While this value may change, one of the main reasons investors seek gold is because physical gold is easy to liquidate.