This article will define physical and digital gold, outline the respective benefits of each and explore their potential as investment avenues.
What is Digital Gold Investment?
Digital gold - or digital gold currency (DGC) - offers investors the ability to own physical gold, with the added benefit of lower costs, and wider accessibility to the everyday investor. Previously, gold was largely inaccessible to the majority of investors, due to its costly storage fees and the complexity of having to physically withdraw the asset from a storage facility, broker, or bank.
Investing in digital gold is beneficial for many as, in many cases, there are no additional storage or insurance fees associated with the investment. Moreover, it is predominantly a case of practicality. As digital gold can be transacted across the world, with the vaulting of the underlying metals handled by the trading company.
Benefits of Investing in Digital Gold
Some of the benefits of investing in digital gold are:
Invest at any level
Liquidate in seconds
With digital gold, investors are offered the ability to instantly liquidate their gold, removing the costly and time-consuming process of accessing and selling gold, which investors face with traditional gold investment. With digital gold, it is always possible to spend your gold in a manner that has a utility equal to that of fiat currency - with the added financial security that gold historically maintains value over time.
Investment in digital gold can be a cost-effective and efficient way of investing in gold. With no storage fees charged, investors are able to securely store physical gold without the primary expensive of traditional gold investment.
With all reputable providers, the gold bullion bars underpinning digital gold can easily and quickly be redeemed and delivered to the holder.
Safe and Secure Investment
Tracking of Investment
What is Physical Gold Investment?
Benefits of Physical Gold Investment
Some of the benefits of investing in physical gold are:
You hold it
Some investors, particularly collectors, choose physical gold because it is a tangible asset that they can hold in their hands, or store at home. While this presents certain security risks, some investors still choose this option as a reminder of the literal and symbolic wealth that physical gold still represents.
Some investors enjoy the security of having immediately accessible bullion within their homes. In the unlikely event of an economic failure, some investors prefer to keep their personal gold holdings close to hand.
Investors can pass on physical gold to relatives as a way to hold wealth within the family unit. This is particularly the case with luxury jewellery, which makes the precious metal a lucrative investment option.
Benefits of both digital gold and physical gold:
Some of the benefits of investing in physical gold or digital gold are:
Gold is considered to be inflation-proof. This means you can buy gold today and sell in 20 years and still have the same relative value. Since the gold price has historically appreciated alongside rising inflation rates, gold investment has proven to protect individuals from the depreciating effect of monetary expansion policies - otherwise known as overprinting of currency.
Historically appreciating value
Historically, gold has appreciated over time, and the return is based on price appreciation. If we compare the value of £100 worth of gold and £100 worth of British pounds in the 1980s, the purchasing power of that same £100 worth of gold in 2021 would certainly be stronger than the counterpart of £100 British pounds. Despite holding £100 worth of British pounds and £100 worth of gold, you would purchase less with GBP.
Is Digital or Physical Gold the better Investment?
When comparing physical and digital gold it is important to consider what’s most important to you as an investor. Digital gold offers superior liquidity, value and security, but some investors will always prefer to have their gold within reach. That said, it’s important to consider that investors can take delivery of the underlying bullion behind their digital gold.
* with Kinesis between October 2020 - October 2021. Yields will fluctuate based on transaction volume. Please note that past yield figures are not indicative of future figures.