Sambaran Mitra wants to know what would be better in an extreme crisis, physical gold or Gold ETFs
08-Dec-2008 •Research Desk
If I want to have gold in my portfolio as a hedge against extreme crisis, Gold ETFs may not help much. If there is a national calamity and the government is in danger, Gold ETF (as it is after all merely a paper) may be difficult to encash. On the other hand, solid gold bars/coins in your hand can always be used even in case of extreme crises.
Can you please confirm my above conclusion? If there is a flaw, can you please point it out? Due to the above mentioned reasons, I shy away from investing in Gold ETFs.
Investing in gold may be a good option to hedge against inflation and extreme crisis. It can be done in two ways. One can either hold gold in physical form or can make investment in Gold ETF. If you are over cautious and always play on the safe side, then it would be better to keep physical gold but you have to bear the risk of purity and safety of gold.
There is a possibility that due to national calamity or extreme difficult condition of the economy, it may be difficult to liquidate Gold ETFs. But such an occurrence would be rare; you can enjoy the same benefits by investing in Gold ETF without taking the risk of the quality and safety of the physical gold.