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Who sells gold bullion?

What are pros and cons of investing in gold bullion vs gold mutual funds or etfs?

  • The obvious ones are: Gold Bullion: You have to take care of storage and safety. But you have the gold with you and are the prime controller of the investments. Gold Mutual Funds or ETFs: Here you do not have to store the gold per se, but are they risky in terms of the mutual fund companies themselves? I am a recent college graduate. The answer I am looking here is in terms of what if I want to secure myself against rough economic times and have long term savings, when these banking companies, the fed or these mutual funds are not doing well. Does it make more sense to owe the gold personally rather than investing in mutual funds? My entire question is based on a theory that I have. Because the money that is printed these is not backed by gold but by bonds. So as the number of these bonds increases the value of money decreases. But the amount of gold is limited. This question is definitely debatable though :)

  • Answer:

    If you think that the US dollar is going to become worthless and the coming apocalypse is going to be followed by a gold-based economy, you should buy gold coins (I would suggest small ones).  If you are using investments in gold as a diversification tactic, stick to ETFs.  But I should warn you, gold is not an investment - it is a hedge against inflation.  Long term prices of gold have not moved much above inflation.

Neel Kumar at Quora Visit the source

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Big Gold Bullion Con: Rate when sold and liquidity. When you sell the bullion it will likely be less than the going rate of gold unless you are purchasing and selling at wholesaler levels. Let's say minimum 100 lbs which at today's rate would be $2.4MM. The reason is that the gold in industrial(electronics) and craft (jewelry) require the gold to either be mixed with other materials or further refinement so that it can be applied as a plating. Only by buying and selling at these wholesaler levels can one reduce the transmission of those costs due to volume. Even then there'd be some loss. Liquidity would be the other issue as you would have to be part of a physical gold wholesaling market. Considering you would be a low transaction individual, you'd likely need a broker in that market which would cut into what you can sell. That or be willing to make multiple transactions which would require paying transportation, security and insurance costs. Instead of doing all this work just buy a Gold tracking mutual fund/etf which has the advantage of volume (they buy hundred of millions to billions of dollars worth of the stuff) and let them do all the work for you.

HsiaoWei Shieu

Unless you're trading/investing in gold for profit, there's no point buying ETFs. ETFs are good for selling quick. But if you're buying gold for the safety, then take physical delivery. I say this because you make profit when the price of gold goes up, but it goes up at crisis times. And what can happen in crisis, electricity outage, anarchy, nuclear holocaust. The thing is, you don't know when the world's going to turn upside down, physical gold has some value then, but you can't sell gold ETFs at that time, and even if you could, the money you'll receive wouldn't have much value. Uncoherent answer......... PS: iNcoherent answer PPS: INcoherent answer

Billu Mandal

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