Gold has been an important commodity for society as well as the financial system. Historically, it was used as currency, jewellery, and a symbol of wealth.Before the 1990s, each U.S dollar in circulation was fully backed by physical gold, and you could redeem physical gold in exchange for dollars.However, the dollar or other currencies are no longer backed by gold. Following the end of the gold standard in the 1970s. Many investors hold gold in their portfolios.
But most investors don’t buy physical gold, such as gold bars and coins because of the difficulty in ascertaining its purity and ensuring its safe custody. Instead, they get exposure to gold indirectly by buying different financial assets, such as gold stocks, futures, or ETFs.
Ways of investing in physical gold
1- Coins
Gold coins are usually available in weights ranging from quarter ounces to one or two ounces. Many coin collectors like to invest in popular collectable coins, which mostly trade at a premium in comparison to the gold content they have. You might have a better deal if you shop coins at your local collective store, but it is recommended to shop from an authorized and licensed gold dealer to get pure and high-quality coins.
2- Bullion
Gold bullion comes in the form of gold bars weighing from a few grams to 400 ounces, depending on the manufacturer. Investing in bullions is expensive, so you should deal with licensed and reputable bullion dealers to be sure about the quality and purity of the bullion.
3- Jewellery
Jewellery or ornaments is another form of physical gold you can buy. Jewellery designers and manufacturers charge a premium for the jewellery they make. Again, you should deal only with licensed and reputable jewellery dealers so that you can be sure of the purity and quality of the jewellery you are paying for.
Benefits of investing in physical gold
Investing in physical gold means that you have invested in gold directly without using a derivative or financial instrument, such as gold stock, gold futures, or ETFs. Here are some benefits of investing in physical gold:
- You can get a loan by depositing your physical gold with banks as collateral.
- You can pass on the physical gold to your loved ones as a gift.
- Gold collectible coins usually sell for a premium, particularly the antique, less common, and historic ones, which can be a good investment.
- During times of economic uncertainty and instability, gold outperforms other investment assets, so it makes sense to invest a part of your wealth in gold.
What is virtual gold?
Virtual gold or digital gold allows you to buy gold online. The companies engaged in providing online virtual gold services should be licensed so that investors could freely buy and sell virtual gold without worrying about purity, quality, and quantity of the gold.
When you buy virtual gold online and make the required payment, the virtual gold company buys physical gold based on the prevailing prices and the amount you deposited and stores it under your name in a secure vault. You can later choose to sell your gold online at the prevailing market rate, or if you want to take physical delivery, you can request the company for physical delivery to your home as well.
Benefits of investing in the virtual gold
Investing in virtual gold has the following common benefits:
- You can invest any amount of money in virtual gold, which makes it easier for low-capitalized investors and traders.
- You can also get physical delivery of the virtual gold you buy online.
- Purity and genuineness of the gold is ensured by the company offering the virtual gold.
- Your gold is held in safe custody and is insured as well, which means that your investment is secure.
- You can easily sell your digital gold at the prevailing price or choose to hold it for realising long-term gains.
Conclusion
Virtual gold is an innovative product that makes investing in gold easier for common and undercapitalised investors. With digital gold, you don’t need to have a large sum of money to buy gold as you can purchase gold with whatever amount you have. Also, purity, genuineness, and secure custody of your gold is promised by the issuing company, so you can confidently make your investment in virtual gold.
