Is it better to buy Gold and Silver ETFs such as GLD and SLV… or are you better off buying gold and silver coins and bullion, and owning the actual metal that you can hold in your hand?
As you know, there are practically an unlimited number of different ways to invest in gold & silver. Some make much, much better investments than others. Let’s take a quick look at the key factors of the most popular precious metals investment options.
So what exactly are gold and silver ETFs? ETF is an acronym for Exchange Traded Funds. ETFs are simply securities that trade like stocks. They are easy to buy and easy to sell. You can buy them from any broker or simply buy them yourself in your online account. When you purchase them or sell them, you buy or sell at the current price… unlike buying a mutual fund where you can make a purchase or a sell during the day, and you get the price that the fund closed at, at the end of the trading day.
GLD is the most popular gold ETF and SLV is the most popular silver ETF. In my opinion, these ETF funds can be very good ways to trade gold and silver…but they lack a lot of important safeguards when it comes to investing in gold & silver. These ETF funds are intended to offer a simple and cost-effective way of investing in gold and or silver that is similar to an investment in the actual metals themselves.
However, several different investment analysts and economists who have researched many of the precious metals exchange-traded funds now suspect that many ETF share prices may not be exclusively tied to the actual performance of the metal itself. This is a very important point. My suggestion is to always do your due diligence and carefully research each ETF before investing in any ETFs.
Another significant concern with ETF investing is the fact that many financial advisors and economists believe the share prices of all stocks will be pulled down in the downdraft when the overall stock market falters or crashes. Just as a falling tide lowers all boats, a crashing stock market will take a lot of good stocks down with it.
Additionally, as the demand for physical silver and gold continues to rise, and as the supply of investment grade silver and gold becomes tighter and tighter…it’s very likely that the price of the physical gold and silver itself could greatly exceed the spot price of the metal. On the other hand, the GLD and SLV ETFs, for the most part, are tied to the spot price of the metal, so it’s possible that physical gold and silver bullion price increases could greatly exceed the share prices of gold and silver ETFs.
More and more investment experts and economists now believe the actual physical metals will perform far better than most precious metals ETFs and mining stocks in the long run. Many believe when stocks take their next precipitous fall, the masses will flock to physical gold and silver causing the physical metals prices to soar, just when stock prices, including gold and silver ETF prices, hit the skids.
Lastly, many people simply have a personal comfort level that comes with having the actual physical metals in their hands. It makes it real when you can touch it, feel it, and you have possession of it. There’s just something about holding a gold or silver coin in your hand. It gives you a feeling that can’t be matched by holding a brokerage report in your hand.
You need to make the investment choices that make the most sense to you but it’s my opinion that you have a lot fewer moving parts and concerns when investing in the physical precious metals, the actual bullion, and coins, instead of the exchange-traded funds.