Physical Gold VS Gold Stocks: Which is Better Investment?

Hey there! Have you ever found yourself torn between the allure of owning physical gold and the potential gains from investing in gold stocks? I know I have. The age-old debate of “Gold vs. Gold Stocks” is a fascinating one, and it’s something that has piqued my curiosity more than once.

On one hand, there’s the tangible beauty and historical significance of holding a solid piece of precious metal. On the other, the world of gold stocks offers a doorway to the fast-paced world of financial markets and the chance to benefit from the ups and downs of the gold industry without the need for a vault.

When is Gold a Better Investment?

There are times when choosing gold as an investment makes sense. Here are three situations where it’s a good idea:

When you want to play it safe

Gold is seen as a safe investment because its value doesn’t jump around as stocks do. While you might not make huge profits like with stocks, you also won’t face big losses. Gold benefits are:

When you want protection from rising prices

Gold typically holds onto its value better than other investments, which makes it a good shield against prices going up. When interest rates rise and the dollar’s value drops, things like gold become even more important.

When you want stability in a shaky economy

Gold stays relatively steady, which helps you during tough economic times with higher prices and uncertain banks. It’s especially helpful when the stock market is in chaos.

In six of the eight biggest stock market crashes in the past 40 years, gold prices actually went up. For example, during the recession from October 2007 to March 2009, the S&P 500 fell a lot (56.8% to be exact), while gold prices went up 25.5%, according to GoldSilver data.

Are Gold Investments for Me?

If you are a risk-averse investor seeking stability in turbulent markets, then this one is for you. This is also beneficial for those aiming to hedge against inflation’s eroding effects and those desiring diversification within their portfolios.

Additionally, this is perfect for individuals looking to preserve wealth across generations and those seeking a safe haven during economic uncertainties can find value in gold investment. Moreover, collectors and enthusiasts appreciate the historical, cultural, and aesthetic value of gold coins and bars.

Types of Physical Gold to Investment

When considering physical gold investments, several distinct types emerge, each offering unique characteristics and suitability for various investment goals. Here are some notable types of physical gold:

  • Gold Coins: This includes the American Gold Eagle, Canadian Gold Maple Leaf, and South African Krugerrand.
  • Gold Bars: Including cast gold bars
  • Gold Rounds: Including minted gold bars
  • Gold Jewelry
  • Gold Sovereigns
  • Numismatic Coins
  • Gold Certificates
  • Gold IRAs

When is Gold Stocks a Better Investment?

There are moments when picking stocks as an investment is a smart move. Here are three situations where they’re worth thinking about:

When you’re aiming for bigger gains

Stocks often change a lot in price, which means they can bring bigger rewards but also come with more risk.

You shouldn’t put all your money into stocks, but when you mix them with other investments, they can help grow your money over time.

When you plan to keep them for a while

Even though stock values can go up and down quickly, historically, the stock market has gained about 10% on average.

This beats other types of investments like bonds. But to see this growth, you should be ready to hold onto your stocks for years (maybe even decades). If you try to trade stocks quickly, you might end up losing a lot of money fast.

When you want to get paid even before selling

When you sell your investment at a higher price than when you bought it, you make money. But usually, you don’t get anything until you sell.

Stocks, however, can bring you dividends. These are like regular payments from the company to its investors.

You can use this extra money to buy more stocks or for your expenses. If you want an investment that gives you extra money regularly, stocks are likely the better option.

Note: There’s a chance you could get dividends from gold stock or gold ETF, but these are riskier compared to investing in physical gold like bars and coins.

Are Gold Stocks for Me?

Gold stock investment has many perks. They work much like the usual stocks and give access to the dynamic gold market.

For investors seeking relatively swift returns in comparison to physical gold bullion, the world of gold stocks holds distinct appeal.

Investing in gold mining stocks gives a high chance for quicker profits within the world of gold investment.

Unlike gold bullion, which may hold value primarily as a long-term asset or a hedge against economic uncertainties, gold stocks tap into the fast-paced nature of the stock market, potentially yielding quicker and more responsive gains.

You can also try diversifying your gold investment strategy. This assists you encompass other factors of the precious metal world. Exploring avenues like gold coins, gold IRA (Individual Retirement Accounts), and the gold mining sector can further amplify the scope of your gold-related portfolio.

ETF or gold exchange traded fund presents a striking option for investors fascinated by gold, but still in the hunt for diversified exposure.

This investment vehicle pools resources and tracks the gold price. This offers an alternative way to partake in the gold market devoid of direct ownership of physical gold.

What is more gold mining companies are a useful consideration with regards to gold stocks. Gold mining companies are associated with fluctuations in gold prices and the wider gold industry, which affect the results of the investment.

Gold certificates are worth considering when it comes to gold stocks. The gold certificates represent your ownership and act as a paper-based manifestation of gold holdings.

Your choice to invest in stocks hinges on your tolerance in risk, timeframe as well as investment goals.

Final Thoughts

With regard to investment, obtaining a good and resilient portfolio is very vital. This takes account of a strategic combination of different asset classes to manage risk efficiently and optimize rewards, most particularly during financial market downturns and economic uncertainties.

Amidst this intricate mix, the enduring debate of “Gold vs. Gold Stocks” emerges, each providing exceptional features which add to a balanced investment approach.

Stocks and gold have superb vulnerabilities and features. The two serve as pillars of development and stability. They complement each other in manners that keep financial assets safe and sound in due course.

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started IRA Investing to share his expertise in using his Self-Directed IRA for alternative investments. His views on retirement investing have been highlighted in USA Today, Business Insider, Tech Times, and more. He invested with Goldco.