Physical Gold vs Digital Gold

Physical Gold vs Digital Gold

Lear Capital Review

Scott R. Hillford

Author & Founder Gold Is Money 2

Disclaimer: Some or all of the companies reported here may provide compensation to us, at no cost to our readers. This is how we keep our reporting free for readers. Compensation and detailed analysis are what determines how companies appear on this website.

Gold has held its position as a timeless store of value for centuries. This precious metal possesses a unique quality – it remains unaffected by the control of governments or financial institutions. This makes it a powerful shield against inflation and economic uncertainties. Recently, a new avenue to invest in gold has emerged in the form of digital gold.

Digital gold offers a fresh perspective on gold investment. It's essentially a virtual representation of physical gold, securely stored in a vault and overseen by a trusted custodian. Similar to buying and selling stocks or bonds, you can conveniently transact digital gold online.

In this post, we'll take a neutral and insightful approach to compare physical gold and digital gold. You will learn about the benefits and drawbacks of each investment option that helps you make an informed decision.

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Physical Gold

Definition and Characteristics

Physical gold is not just a concept; it's the actual shiny gold bars, coins, and even jewelry that you can touch and hold. Imagine having your piece of this precious metal. Unlike digital things, physical gold is something you can feel, like holding a treasure in your hands.

And it’s not controlled by the government or banks. This means it's like a shield that keeps your money safe from times when prices go up and a lot of things in the economy get shaky. In the world of physical gold, there are bars – big and strong, kind of like gold bricks.

Then there are coins – smaller, like little golden tokens. You can even have fun collecting them. That pretty gold jewelry is also a way to have gold. But jewelry isn't the same as those bars or coins. It has a mix of other metals like silver or copper, so it's not as pure.

Enduring Appeal and Recognition

Gold has been around for ages and ages. People love it because it's not just shiny; it's also really tough and rare. Gold can also conduct electricity, which makes it super useful in things like phones and sparkly jewelry.

When you have physical gold, you're also showing that you're doing well. It's like a sign of good luck and riches. People even give it as a special gift or use it to buy things in some places. Our goal is to gain a better understanding of gold. Physical gold is just the start – there's a digital side too. 

Advantages of Physical Gold

Tangibility and Ownership

Having your piece of gold that you can touch and feel is physical gold for you. When you hold it, you know it's yours. This feeling of ownership is pretty special. And when things get a bit tricky in the economy, having something you can hold onto can make you feel better.

Some people like things they can touch, which also makes it special for some people. This can be comforting, especially when things seem uncertain.

Steady Through Time

Physical gold has stood the test of time and holds its value well, unlike digital assets or paper money. This makes it a trustworthy choice, especially when the economy isn't doing so well.

When the world faced big financial troubles, like:

  • The Great Depression (1929-1939)
  • The oil crisis of the 1970s
  • The Asian financial crisis of 1997
  • The global financial crisis of 2008

Physical gold didn't lose its value. It often became even more valuable. This is because gold is precious and wanted worldwide. Gold doesn't get affected by inflation, which means it keeps its value over time.

It remains strong, no matter what happens in the stock market or government. Your experience level or whether this is your first time investing, physical gold is a great investment.

Drawbacks of Physical Gold

It's not all sunshine and rainbows – there are some drawbacks you should know about.

Storage and Security

Physical gold needs a safe place to stay. But that safe place usually costs money. If you keep it in a bank vault, you might need to pay a good amount. And there's a worry about thieves or accidents – losing your gold would be a real bummer.

Talking about costs, storing physical gold isn't cheap. If you use a special box at a bank or rent a storage spot, it's an expense. Plus, you'll need to think about getting insurance to cover any problems.

Now, theft is a concern. Physical gold is valuable, and sadly, it can be stolen. If that happens, getting it back can be pretty tough.

Limited Accessibility

Physical gold isn't like stocks that you can sell in a snap. Selling gold can take time. You might need to wait until someone wants to buy it, and they might not pay you as much as you hoped for.

And if you're not selling in person, things can get tricky. Finding someone who wants to buy your gold and is willing to meet you or receive it through the mail isn't always easy. This could mean waiting and spending more time and money.

While physical gold is a cool way to invest, there are these points to remember. Knowing the good and not-so-good parts helps you make smart choices.

Digital Gold

Digital gold is not like the gold you can hold. It is like having gold on your computer or phone. You can buy it and sell it without actually touching it. Digital gold is kept safe by a third-party platform, such as a digital gold exchange or a custodian.

They store the digital gold in a secure vault, and it is insured against theft or loss. These platforms also use security measures to protect your digital gold account, such as two-factor authentication and encryption. They are regulated by a financial institution or government agency.

Additionally, these platforms are audited by a third-party firm to ensure that it is operating properly. Digital gold is connected to physical gold by a process called "gold backing." This means that for every unit that you own, there is a corresponding unit of physical gold that is stored in a vault.

The gold backing process is typically overseen by a third-party auditor, who verifies that the amount of physical gold in the vault matches the amount of digital gold that is outstanding. Therefore you can trust that your digital gold is safe because the platform is regulated and audited.

Lower Storage Costs

With digital gold, you don't need a special place to keep it like you do with real gold. So, no need to pay for a special box at a bank or a storage place. That means you keep more of your money.

Higher Liquidity

You can sell digital gold quickly. If you need money fast, you can do it. This is a bit harder with real gold.

Remote Accessibility

You don't need to go anywhere to deal with digital gold. You can buy it or sell it right from where you are. No need to travel or meet someone.

Easy to Purchase

You can easily purchase digital gold online, on websites that help with this stuff. No need to do anything complicated – just a few clicks and you're all set. Digital gold is like a new version of an old favorite. Whether you're just starting with investing or you know a lot, digital gold is a smart choice for those who want to try something fresh.

Advantages of Digital Gold

The advantages of digital gold will become clear as we discuss them. It comes with some super cool benefits that you'll love.

Accessibility and Convenience

Digital gold is all about making life simple. You can buy, sell, and keep it safe online. No need to go anywhere – you can do it all from your comfy spot at home.

Fractional Ownership

With digital gold, you don't have to buy a whole bunch. You can own just a piece.

Lower Transaction Costs

Buying and selling digital gold doesn't cost as much as buying and selling real gold. The fees are usually lower because online places make everything quick and smooth. They're like super-fast helpers that save you money.

Digital gold is easy to get, you don't need a ton of money, and you save some money too. It doesn't matter if you're new to investing, or you're an experienced investor, digital gold is a smart choice.

Drawbacks of Digital Gold

Taking a closer look at digital gold will help you understand it better. It's not all perfect, so pay attention to these points.

Counterparty Risk

Digital gold means you're relying on a platform run by someone else. This could be a company that trades digital gold or safekeeping. It's like giving your favorite toy to a friend to look after. But what if they lose it or something bad happens to them? That's a risk to think about.

Also, some people worry about how secure these platforms are. There's a chance they could get hacked, and all the digital gold could vanish. It's like someone sneaking into your digital toy box.

Lack of Tangibility

Digital gold isn't something you can touch. You don't physically own it. 


The price of digital gold goes up and down fast. This might be a worry if you don't like to take risks. While digital gold has its perks, it is important to keep certain things in mind. You need to play it smart. If you're thinking about trying digital gold, just keep these points in mind to make the best choices.

Factors for Consideration

Here are the key factors which can help you to decide between physical gold and digital gold:

Investment Goals and Risk

Figure out what you want from your investment. If you want safety over time, go for physical gold. If you're after bigger profits and okay with some risk, try digital gold.

Market and Timing

Look at the world around you. If it's uncertain, physical gold is like a safe place. If things are steady, digital gold might be better. Also, think about when you want to invest – when prices go up or down?

Costs and Fees

Remember costs. Storing physical gold can cost you. When you buy it, you might pay more than the price. There are also fees for buying and selling. Pick what suits your goals, comfort with risk, and what's happening. Research and understand before you decide.

Time to Make Your Move

Taking everything into consideration, it's quite clear that both physical and digital gold have their merits, although we see physical gold as the better option. Why? Because it's stable, real, and has a lasting presence. If you're after a solid investment, go for the real thing.

Frequently Asked Questions

What is the best way to buy gold?

You can buy gold from dealers, banks, or online. Find a trustworthy place, compare prices, and pick what works for you. Remember, do your research and buy from a reliable source.

Is gold better than cash?

Gold can be steady and grow over time. Cash is handy but might lose value due to inflation. Both have pros and cons – it depends on your goals and comfort level.

What is the safest option to buy gold?

Buying from reputable dealers or banks is safest. They ensure real gold and proper documentation. Avoid deals that sound too good – they might not be legit.

What's Better Than Gold?

It depends on what you're after. Gold is good for stability and holding value. Other investments like stocks can offer higher returns but come with more risk


Conclusion: Your Investment, Your Way

That's the scoop on physical and digital gold, two awesome options to put your money into. They each have their good sides and not-so-good sides, so the one you pick depends on what you like.

Quick Reminder of the Differences:

  • Tangibility: Physical gold you can touch, digital gold you can't.
  • Storage Costs: Physical gold needs a safe spot and costs, digital gold doesn't.
  • Liquidity: Selling digital gold is faster.
  • Risk: Physical gold is steadier, digital gold can bring bigger rewards.

Let our expertise and analysis help you before you invest your savings by reading our list of the best companies!

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