Why buy physical gold rather than gold mining shares

There are several ways to invest in gold. There are several reasons why investing in physical gold is more stable and safer than investing in gold mining shares. The Silver Mountain gives you an insight into some of the key reasons why investing in physical gold is more attractive than investing in gold mining shares. 
 

Possession and control of physical gold

The main advantage of buying physical gold is that it creates an actual possession. This ensures instant control. When you buy physical gold as an investor, you really own the gold. Physical gold offers tangibility and security. It can be safely stored in a vault or other secure location. If you choose to invest in gold mining shares, you do not own a gold mine. If you can't hold it, you don't own it. 
In addition, the value of the investment does not depend on operational results of a mining company or the performance of a management team. Despite fluctuations in the gold price, gold maintains a fixed value. 
 

Buying physical gold is safe

Investing in gold mining shares is considered a riskier investment compared to buying physical gold. This is mainly due to the fact that the value of physical gold is less sensitive to market dynamics and company-specific risks. Company performance affects the value of gold mining shares, as do market fluctuations, management errors and problems within the company's operational processes. 
In addition, the value of mining companies can also be affected by external factors, such as geopolitical tensions, labour disputes and environmental legislation. These business and market-related risks have little or no impact on physical gold, making buying physical gold a more stable investment. Physical gold retains its value. 
 

Physical gold as inflation protection

Physical gold has long been recognised as an effective protection against inflation. When prices rise and the purchasing power of currencies decreases, physical gold acts as a safe haven for investors because gold retains its value. 
Gold mining shares can benefit from higher gold prices, but on the other hand, these shares are also subject to both profit margins and variable costs. As a result, gold mining shares are affected by inflation. 
Mine operational costs may rise. This can include rising costs for equipment, energy and salaries. This reduces their profitability. Physical gold, on the other hand, remains an immediate and reliable store of value that inflation cannot control. 
 

Global gold trade

Physical gold is a precious metal that has been accepted as a means of payment for centuries. It can be used and traded globally, making physical gold a unique investment. Physical gold can be easily converted into cash in times of political or economic uncertainty, but it can also serve as a medium of exchange at any time. 
The universality of physical gold creates more liquidity and an extra layer of security for investors. Gold mining shares do not have this flexibility. The value of gold mining shares is limited to specific operating conditions, the mining sector and financial markets.