Choosing the right form of gold is a decision that should never be made lightly, or without carefully evaluating and comparing all of the potential vehicles that can be used. Stocks in a company that locates, develops, recovers, or refines this bullion can be one option, and this method has a number of pros and cons that you need to be aware of before you put any money at risk. In some situations the advantages may far outweigh any drawbacks, but the reverse may also be true. Since each individual share reflects the underlying company it can be more time consuming to research stocks in this category than it is to evaluate the actual ore instead.
One factor that needs to be looked at is the fact that these securities are not actually tied to the spot price or market value of the actual precious metal. The physical form is a commodity, but that is not the case when you own stock. On the other hand when you buy and store bullion there are some storage and security considerations. Since a share is electronically registered it can not be lost or stolen, but it can lose all value if the business behind the security goes belly up.
Bullion offers an intrinsic value that is never fully eliminated. No matter what happens on the market or where the price heads as far as the actual ore is concerned as long as you retain the physical asset you will have something of worth. If the company goes under then you could be left with nothing except for a useless electronic certificate that can not be sold or traded. Another consideration is the state of the economy and the current dollar value that is seen. Buying stock will not offer hedging protection against currency devaluation or a financial system collapse, but owning gold in any physical form can provide this protection to some degree.
Since this precious metal will cost around $1,700 an ounce or more it can be very expensive, and some investors may not have a budget big enough to take advantage of any of these products. It is possible to locate stocks in this sector that can be purchased for under $100 a share, making them much more affordable and possibly cost effective as well. It is possible to time the market, so that you wait for price dips and then jump in. When the market corrects a decent profit is possible because of the higher cost that is set.
Liquidity and an ability to sell the asset when needed are also important considerations. The bullion itself is instantly recognizable as something that is valued and desired, but this may not be the case with some of the companies in this sector who offer shares for sale. If you purchase these securities then you could have a wait while a buyer is located, and this will depend on the specific business that you have chosen to invest in. Some of these are very well known while others may be less popular or recognized, and this can impact how fast the asset can be sold if this becomes necessary.