subject: Physical Or Paper Gold [print this page] Many individuals are starting to invest in gold. It is even being invested into by many individuals through a self directed IRA. Currently gold is one of the safest investments because of the inflation.
There are different forms of gold. Two different forms of gold are paper and physical gold. Some individuals may not understand or have even heard of paper gold.
The individuals that do know what paper gold is probably cannot decide to invest in paper or physical gold. They are both gold, but that does not mean that they are equal. One can be a safer investment than the other one.
Paper gold was invented before there were banks. The local goldsmiths started up paper gold. The goldsmith would protect individual's gold in a vault and give them a receipt of what they owned creating paper gold.
Eventually the owners would use these receipts as money to pay for things. The paper gold then got passed around from owner to owner as if it was money. No one would actually come in and collect the gold, so the goldsmith decided to run a loan business.
These receipts were essentially loans because the goldsmith gained interest on them. Paper gold then is just fine, so long as the goldsmith did not write out too many receipts. It is the same way today.
The paper gold would decrease in value if there were too many extra receipts written out and the gold was collected. This is the risk that individuals take when they invest with their self directed IRA. It is easy to conclude that paper gold is more risky than physical gold.
The physical gold is a more guaranteed investment, including for a self directed IRA. Gold holds its value very well and is safer. Many individuals want the safest investment they can get and that would be physical gold.
