Gold ETF's or Physical Gold Bullion?

Author: Ian Davis - Bullion Manager

Published: 24 Dec 2018

Last Updated: 19 Aug 2019

If you are reading this page you are likely wondering about the difference between physical gold ownership and gold exchange-traded funds (ETF's).

An ETF is an investment fund operating on the stock exchange holding assets such as stocks, bonds or commodity

As a bullion dealer and a personal advocate of physical gold ownership we would always buy gold coins or gold bars instead of ETF's. Being able to access and use your gold without involving a third party is, for us, immensely beneficial. Third parties often demand fees to use their services sometimes charging for depositing currency into accounts, transaction fees and even withdrawal fees which will eat away into any profit you make or worse case you to lose money if price increases fall short to cover the fees.

Read on as we discuss both means of gold ownership......

Gold ETF Shares

An exchange-traded fund is a security that can be bought and sold on a stock exchange and investments are used to invest in 99.5% purity gold bullion. When you buy an ETF, you are not buying gold but instead purchasing shares of that said fund.

Many brokering systems operate online so you can deal from the comfort of your armchair without having to visit a dealer, worry about storing your precious metals and remove the risk of theft/intrusion from your property. If your worried about storage you can let Chards take care of it on your behalf as we offer allocated storage in our state-of-the-art strong rooms.

Sovereign Stack

ETF Pro's and Cons

A benefit of ETF's is that they are priced in fractions of a ounce which means that those with a lower budget can access a gold investment without having to splash out on a 1 ounce coin or similar. For example, GLD (a ticker symbol for SPDR Gold Shares ETF on the NYSE), value a share at the price of 1/10 an ounce of gold. Often physical 1/10oz gold bullion coins come with a hefty premium and are not idea investment options relative to 1-ounce coins and with ETF's you can circumvent this premium, but you may end up paying more fees depending on the fund/platform you trade with.

One big drawback of ETF's is that you never actually own the gold which you have "bought" as you have bought shares in a fund, so essentially own a debt. The shares do track the live gold price, as each are backed by physical gold, so will fluctuate accordingly, but you are trusting that the fund itself is healthy and will not become insolvent. If it does fold you want to hope their insurance pay-out covers your original investment value at least.

The smaller initial costs for ETF's have certainly opened the market for a full range of private investors. The industry is worth trillions of dollars, but it is unlikely all investments are fully backed by physical gold. So, in the end if a company goes into liquidation your investment may be at risk. Gold is the ultimate safe haven from inflation and geo-political turmoil so if your prerogative is to protect yourself against this it is illogical to us at least why you would choose an ETF over physical gold.

Allocated Physical Gold

Without a doubt physical gold ownership is our preferred modus operandi. The fact that you can hold your gold in your hands for us is true ownership, there is no need to consult third parties or pay any fees to access or use your gold.

Transparent Pricing

Buying physical gold from Chards is made very easy as we publish all of our premiums, so you can see exactly what percentage above gold spot price you are paying for your products. This can’t be said for some of our competition who hide this percentage away making it quite difficult to compare different weight products. Many often wrap up postage in the overall cost once and pushing this as "free postage" when it should more accurately be called "postage included" (read our page on why free postage might be cheating you out of the best deal). Not only this but you can also view our buy back prices and with these two pieces of information you have your spread between buy and sell. This is as complicated as it gets!

Gold Coins and Bars

On the other hand, gold ETF's are dealt predominantly online and for the privilege of using the services you are charged fees. These fees will change for each provider and possibly even change based on your transaction volume or value. Charges can apply for depositing cash, transacting and even for withdrawal of money. It is essential to read the small print and understand where these "hidden" fees are as you can get stung and lose out.

If you would like physical gold but are worried about storage and security, why not let us take care of it and store it on your behalf. This half-way house does require that we stay operational to continue our storage contract but rest assured customer’s gold always remains their possession. Never do we add a customers’ gold to our balance sheet, and you can access it at a moments notice should you need to withdraw part or all of your investment. Not only this but we offer preferential buy back rates up to 100% maximum on stored gold. 

Instead of duplicating content at this point we have a dedicated page on the benefits of physical gold ownership if you are interested in reading further.

Conclusion 

Firstly, owning either ETF's or physical gold is already better than holding all your money in the bank! For us physical gold ownership is the better option in terms of eliminating the need for a third party, reducing risk and likely to offer you the better deals (we show some of our best gold deals below). If storage and security of physical gold poses a problem or is encouraging you to buy ETF's then why not let Chards store your physical bullion for you in our state-of-the-art strong rooms. 

If your operating on a smaller budget ETF's are good to get your foot in the door and benefit from gold price. The accessibility of trading online should you live on the Outer Hebrides may also be an advantage but if you are within driving distance of a bullion dealer, we highly encourage you to visit them to buy physical gold over ETF's. If you do end up buying ETF’s, please watch out for the fees and do your homework on the platform and fund you invest in! Remember you are buying shares from a company ran by people who can become corrupt and fail you. Sure people make a lot of money in ETF's but if your prerogative is to preserve wealth and distance yourself from the economy and financial institutions go with physical gold.

Physical Gold Bullion For Sale

The easiest way to compare the prices of coins is to look at the premiums on the following products:

1 oz Gold Coin Bullion Best Value Secondary Market

Available

ourchoicesecondarymarketsilver500-B-1

Quantity Premium % Total
1
2.5
£1,212.43

Price Per Item:
£1,212.43
2
2.4
£2,422.50

Price Per Item:
£1,211.25
5
2.25
£6,047.35

Price Per Item:
£1,209.47
10
2
£12,065.20

Price Per Item:
£1,206.52
25
1.9
£30,133.25

Price Per Item:
£1,205.33
50
1.85
£60,237.00

Price Per Item:
£1,204.74
100
1.6
£120,179.00

Price Per Item:
£1,201.79
500+
1.5
£600,300.00

Price Per Item:
£1,200.60

1 oz Gold Coin Krugerrand Bullion Best Value Secondary Market

Available

2011southafricakrugerrandoneouncegoldrev500-B-1

Quantity Premium % Total
1
2.7
£1,214.80

Price Per Item:
£1,214.80
2
2.6
£2,427.22

Price Per Item:
£1,213.61
5
2.4
£6,056.25

Price Per Item:
£1,211.25
10
2.3
£12,100.70

Price Per Item:
£1,210.07
25+
2
£30,163.00

Price Per Item:
£1,206.52

1 oz Gold Britannia Coin Bullion Best Value Secondary Market

Sourced to Order

ourchoicesecondarymarketsilver500-B-1

Quantity Premium % Total
1
2.5
£1,212.43

Price Per Item:
£1,212.43
5
2.25
£6,047.35

Price Per Item:
£1,209.47
10
2
£12,065.20

Price Per Item:
£1,206.52
20+
1.9
£24,106.60

Price Per Item:
£1,205.33

1 oz Gold Coin Bullion Best Value Secondary Market In Capsule

Available

2011southafricakrugerrandoneouncegoldrev500-B-1

Quantity Premium % Total
1
3
£1,218.35

Price Per Item:
£1,218.35
2
2.9
£2,434.32

Price Per Item:
£1,217.16
5
2.75
£6,076.95

Price Per Item:
£1,215.39
10
2.5
£12,124.30

Price Per Item:
£1,212.43
25
2.4
£30,281.25

Price Per Item:
£1,211.25
50+
2.35
£60,533.00

Price Per Item:
£1,210.66

1 oz Gold Coin Maple Bullion Best Value Secondary Market

Out of Stock

ourchoicesecondarymarketsilver500-B-1

Quantity Premium % Total
1
3.5
£1,224.26

Price Per Item:
£1,224.26
5
3
£6,091.75

Price Per Item:
£1,218.35
10
2.75
£12,153.90

Price Per Item:
£1,215.39
25+
2.6
£30,340.25

Price Per Item:
£1,213.61

1 oz Gold Coin Bullion Best Value Newly Minted

Available

2011southafricakrugerrandoneouncegoldrev500-B-1

Quantity Premium % Total
1
3.6
£1,225.44

Price Per Item:
£1,225.44
5
3.5
£6,121.30

Price Per Item:
£1,224.26
10
3.4
£12,230.80

Price Per Item:
£1,223.08
25
3.35
£30,562.25

Price Per Item:
£1,222.49
50
3.3
£61,094.50

Price Per Item:
£1,221.89
100
3.25
£122,130.00

Price Per Item:
£1,221.30
250
3.2
£305,177.50

Price Per Item:
£1,220.71
500
3.15
£610,060.00

Price Per Item:
£1,220.12
1000+
3.1
£1,219,530.00

Price Per Item:
£1,219.53

Further Reading

You may wish to view all of our articles on our gold guide

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