Should I own physical metals or invest in futures/ETFs?’ This age-old debate continues to pop up in our inboxes so we thought we would attempt to tackle why we believe it is important to own physical metals.
What is the difference?
Owning physical metals involves buying amounts of one or more precious metals such as gold, silver, platinum, and palladium. These metals are more commonly purchased in the form of coins or bars such as those available on coininvest.com. With Futures and ETFs (exchange-traded funds), we are still talking about precious metals but you don’t physically own real quantities. Futures are contracts based on the estimated value of precious metals on a future date. ETFs are funds that hold precious metals as their main store of value. Investors can buy shares that will then appreciate or depreciate based on the overall value of the fund.
Why we believe in owning physical metals
- Physical metals are tangible assets – you can hold them in your hand. They are also portable, you can carry them anywhere in the world with ease.
- Investments in precious metals are confidential. There aren’t many investment opportunities that offer such high levels of privacy.
- Precious metals have a high level of global liquidity. This means that you should be able to easily sell any physical metals at a widely recognised and fair price on the open market. This is particularly useful if you are in a bit of a bind and need to have quick access to cash.
- Precious metals can offer protection during global crises. When investors lose faith in paper currencies and other assets, precious metals tend to retain or increase in value.
- Demand for precious metals is increasing – they are used for a number of different products, including the auto and medical industries. As the demand increases, the supply decreases thus pushing the value higher and higher. This suggests good things for the future!
- In some countries, the holding of physical metal is tax-exempt while ETFs are not. This makes an investment in physical metal that little bit more appealing!
Just take a look at 2020. This has been a turbulent year when it comes to the economy, predominantly as a result of the global Covid-19 pandemic. During this time, physical precious metals decoupled from paper metal because of the lack of availability in precious metals (mints closed down or working at 50% capacity). This means that you could sell your physical precious metal assets for a much higher amount than expected.
We hope this article may have cleared up any doubts you had been harbouring about investing in physical precious metals. If you have any further questions, feel free to reach out to our fantastic team at [email protected], they will be more than happy to help you out!