The Arguments For Physical Metal
1. No Counterparty Risk
When you hold physical gold, you don't depend on anyone else's promise. No bank needs to stay solvent. No company needs to honor its obligations. No government needs to maintain its currency.
This matters during systemic stress—the exact moments when counterparty risk tends to materialize unexpectedly.
2. Purchasing Power Preservation
In 1971, gold was $35/oz and a new car cost about $3,500. Today, gold is over $2,000/oz and a new car costs substantially more. Gold's purchasing power roughly tracked reality. The dollar lost 97% of its value.
Gold doesn't grow wealth. It tends to preserve purchasing power over long timeframes.
3. Portfolio Diversification
Gold has historically shown low correlation to stocks and bonds. During the 2008 crisis, gold rose while stocks fell 50%. During COVID, gold hit all-time highs while markets crashed.
This doesn't mean gold always goes up when stocks go down—but the correlation is low enough to provide meaningful diversification.
4. Privacy & Control
Physical gold held outside the banking system offers a level of privacy and control that digital assets cannot match. It can be held privately, moved privately, and transacted privately within legal limits.
Historical Context
The Arguments Against Physical Metal
Honesty requires presenting the other side. Here's what critics say—and they have valid points:
No Yield or Income
Gold doesn't pay dividends or interest. Money in gold is money not earning returns elsewhere. Over long periods, stocks have outperformed gold significantly.
Storage & Insurance Costs
Physical metal requires secure storage and insurance. These ongoing costs create a drag on returns that paper assets don't have.
Volatility
Gold dropped from $1,900 to $1,050 between 2011-2015. Silver fell from $49 to $14. Long-term holders can face years of underperformance.
Premiums & Spreads
You buy above spot and sell below spot. This spread can be 5-10% for coins, meaning you start underwater on day one.
Physical vs. Paper Gold
Physical Gold
- ✓You own the actual metal
- ✓No counterparty risk
- ✓Can take physical delivery anytime
- ✗Storage and insurance required
- ✗Higher premiums than paper
Paper Gold (ETFs, Futures)
- ✓Lower costs and tighter spreads
- ✓Easy to trade in brokerage account
- ✓No storage concerns
- ✗Counterparty risk exists
- ✗May not perform as expected in crisis
Still Deciding?
We welcome questions about any aspect of precious metals investing. Our goal is to ensure you have complete information before making any decision.