Physical gold is better than paper

• J.Rotbart: Why physical gold is better than paper
• ZeroHedge: Turbulence is expected in the gold derivatives market
• BNN Bloomberg: Bitcoin's volatility - a risk acquisition or a safe haven?

J.Rotbart: Why physical gold is better than paper

J. Rotbart compares the benefits of owning physical gold versus so-called paper gold (ETFs and similar holdings) in his review. Paper gold is a common and easy way to buy and sell gold, but the article provides eight good reasons why one should prefer physical bars and coins:
The main benefits of physical gold come from its physicality. It is a genuine product that cannot be artificially created. Only a limited amount can be mined, and its value is determined by both mining and refining costs, while the issuer defines the value of paper gold. Physical gold has a lot of historical trust as a currency, and its value is known to hold - for this reason, it is an effective hedge against inflation.
Physical gold is not tied to the regulations of any government or monetary system. Paper gold is traded through banks or other intermediaries, which makes it susceptible to cyberattacks and volatility. This makes physical gold more stable than paper gold, and it can be traded confidentially without a regulatory intermediary. Therefore, it is also ideal for passing down family inheritance.
Due to its stability, physical gold is also a popular stabilizing asset for loans. The value of paper gold is typically tied to the spot price of gold instead of actual gold, which can lead to problems if multiple investors want to exchange their electronic holdings for real gold at the same time.
Gold is an essential part of a diversified stock portfolio. While paper gold may be an easier option, ultimately, physical gold is a much better investment due to its characteristics.
Read full article in English / 11/5/2019, staff writer

ZeroHedge: Turbulence is expected in the gold derivatives market

Basel 3: The new regulations have sparked protests at the London Bullion Market Association (LBMA) and the World Gold Council (WGC) regarding their impact on the unallocated gold markets. In his article, Alasdair Macleod discusses the proposed regulation and its effects on the markets, as well as why the LBMA is so vehemently opposed to it.
In summary, the regulation coming into effect at the end of June will require 85% of stable funding for gold and other precious metals. According to the LBMA, this would effectively mean the end of gold speculation, increase financing costs, reduce liquidity, and restrict central bank operations. Macleod reminds us that nothing is certain yet: the given deadline may be postponed or the proposal may be altered.
According to Macleod, the public discourse deliberately blurs the differences between unallocated and allocated gold markets to exploit the characteristics of physical markets. In practice, these are completely separate functions, as paper gold is essentially based on the creation and sale of bank loans. In unallocated markets, the customer does not actually own gold; instead, they have an account tied to its value. In physical markets, the bank acts merely as a custodian of the physical amount of gold. The bank acquires and delivers gold to the unallocated owner only when they request physical delivery (which banks do not favor).
A significant shift towards physical ownership could pose challenges for central banks, as their liquidity of physical gold is actually much lower than is commonly understood: estimates suggest that of the 9,461 tons of gold in the LBMA vault, only 500 tons are in liquid form.
According to Macleod, trading in gold futures and options has played a key role in regulating the price of gold to safeguard the dollar's position. He believes that Basel 3 experts must have taken these risks into account when drafting their proposal. This proposal would effectively mean the end of derivatives trading. So far, London’s unallocated gold trade has overshadowed China’s majority ownership of physical gold production. However, the balance may strongly shift towards Asian and Russian gold holdings, thereby increasing their control over fiat currency markets.
Read full article in English / 5/15/2021, Alasdair Macleod

BNN Bloomberg: Bitcoin's volatility - a risk acquisition or a safe haven?

The competition between Bitcoin and gold for the title of the best inflation hedge took a hit when its value dropped by 31% in a single day amid a surge in inflation, drawing the attention of regulators. Bitcoin's 60-day realized volatility has been significantly higher than that of gold, and the gap continues to widen. Supporters of Bitcoin believe that the cryptocurrency's investment position is still evolving, which is why hasty decisions should not be made just yet. This stance may seem radical in light of recent events. According to Oanda Corp analyst Edward Moya, Bitcoin was one of the best-performing investment assets throughout 2020 and up until last April, which is why this week's drop was particularly unpleasant for many. The article suggests that the cryptocurrency should be treated as a risky asset rather than a true safe haven. Meanwhile, gold is experiencing its third consecutive weekly rise, buoyed by a weak dollar and sluggish government yields. The drop in the cryptocurrency has also contributed to the rise in gold. full article in English / 21.5.2021, Eric Lam & Rajeentha Pakiam 
This is Jalonomi's weekly review of interesting precious metal news from various sources around the world. Our goal is to provide the reader with a concise and quick-to-read overview of the news on a weekly basis. We particularly focus on news related to investment gold. Lue edellinen artikkeli