Paper Gold

November 10, 2021
Written by Peter Anderson

Disclosure: Some of the links in this article are from sponsors. The list below is an honest review gathered from thorough research, experience, and consumer-based feedback. 

Paper Gold Summary

Gold can be a great investment once you know all about it and the various methods in which to invest in it. 

Many only think of gold as being in the shape of a bar or coin. 

However, there are many different forms of gold available today.

Besides the normal physical gold, there is a type of  "paper gold" that has begun to become more popular recently. 

Regardless of that, the tangibility of gold does not really exist in the paper form as others do.

While there are many benefits to a gold investment, it is not an easy process in terms of being physical in nature.

You need to make sure that you have all of the information needed concerning maintenance, costs, storage, and fees if you want to make a substantial gold investment.

Types of Paper Gold 

Three common examples of paper gold exist in the world of investing and they are:

  • Gold ETFs
  • Gold Paper Mining Stocks
  • Gold certificates

Gold ETFs

With gold ETFS, it is traded like a stock share on the market and allows the investor to obtain gold. It is the best way in order for its performance to be tracked.

Depending on the way it is used to monitor fluctuations in price, the gold ETF may represent commodity ETFs.

On the flip side, a share may be held in order to have a better idea about shifts in gold mining.

If so, then it may be referred to as industry ETFs.


Gold Paper Mining Stocks

These are what you expect when you hear the name.


By investing in mining companies, they have a higher number of benefits stemming from gold's spot price as the infrastructure also makes an effect on the business, foreign interests, and debts.

Mining stocks represent two different types.

The first is a major mining stock and the other is a junior mining stock.

With a major mining stock, it represents a well-known company that has an established history.

 Although it may seem easy to go with this type of gold, you need to keep in mind the risk and that the reward will be limited.

With stocks that are junior in nature, their history is not yet established. 

The amount of cash is limited and they do not have much performance of being a competitive stock.

 Starting out, a junior is not heavily into gold as it is with being inconsistent within itself.

However, what will matter will be the trends that the gold market sets.


Paper Gold Certificates

Having a paper gold certificate allows you to cash them out for actual gold assets.

The gold certificate is used because of the shortage of actual gold for the traded certificates on the market.

In fact, the amount of certificate ounces has increased to over 560 ounces of gold certificates for a single gold ounce.

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What is Paper Gold?

With paper gold, it is often pertaining to an investment related to a gold ETF. 

You can easily relate it to a mutual fund, as they have similar aspects. 

Basically, when you obtain a gold ETF you receive a certain number of shares for the ETF.

When you have the shares, their value will be tracking gold's price, which will cause it to fall or rise.

A gold ETF has many similarities to other mutual funds, including that you will not be able to actually hold it, but still be the owner of it.

After you have the ETF gold shares, it will be managed by a custodian.

You can then have its value tracked in the same manner as a stock because of its stock market trading.

The good thing is that they
don't require you to choose one or the other.

However, when you are a beginner investor, you need to keep in mind how your lifestyle will benefit from the investments you make.

Where Do You Buy Paper Gold?

Having a broker already will help in the process of obtaining a gold ETF that you will benefit the most from.

When there are questions to be answered, they will be able to assist in obtaining the best gold ETF you should have.

What Are the Advantages of Investing in Gold ETFs? 

The strategies you use in your investments will determine how positive your gold ETF will be used. A few other advantages involve the following:

The Cost

You do not need to buy a lot and it does not need to be delivered or stored by you. You also don't need to worry about the fineness of the gold you're investing in.

Purchasing & Selling

A gold ETF can be traded easily on the market and having easy access to a bank can turn them into quick cash. 

If you want, using options for trading your gold ETF is also possible.

It's a Flexible Asset

When the gold you invest in is not of importance, then you would benefit greatly from a gold ETF.

 This is due to it being so liquid in nature.

What Are the Disadvantages of Investing in Gold ETFs? 

Along with advantages, there will always be disadvantages of a gold ETF. 

Below are a few of the disadvantages often seen:

Risk is High

When the gold is not owned by you and managed by others, there will be a higher risk involved

This higher amount of risk can include additional costs.

Then, your fund manager could easily go bankrupt or never disclose the obtainment of the gold that was originally purchased by an investor.

No Choice

As compared to actual gold, where you can choose the type of gold based on the value, a gold ETF does not permit you the option of what type of gold. 

This can lead you into purchasing gold with an unknown value or one that can fluctuate easily

With a gold ETF, you are actually making a blind investment.

Shares of gold are being purchased, so you may experience some restrictions relating to the growth of your investment as time goes by.

Based on the Market

Your gold ETF is based on the market, which will determine your gold's value and if market trading is considered good. 

This will increase gold's volatility instead of remaining as a secure investment.

Operating Expenses

Having operating expenses will occur on a yearly basis and every ETF will charge these fees differently. 

It is done to cover the managing of the gold ETF

Payment may need to be included with other fees such as commissions for the trading.

 Knowing if a purchase is a good investment is very important to understand.

Which Should You Obtain, Paper Gold or Real Gold?

Although real gold and paper gold are both stable due to their gold backing, you may experience quite a few differences as I mentioned above. 

However, what you use may not always be what others may need too.

By diversifying, you are able to grow your investments. 

If you feel that you are scrambling to make gold a great investment, then you may need to think about adding both paper gold and real gold investment types to a portfolio.

When it comes to physical gold, the gold purities and alloys are something that should be looked into as well.


No matter which form the gold is in, you should have other investments along with it. 

Although gold alone is reliable enough, you can expect a fluctuation in the gold price.

 Comparatively, it is considered a sound investment choice as long as the strategy is well balanced.

 When it is well balanced, your spending and objective will remain clear.


All in all, both paper and physical gold have their benefits, but physical gold is my choice.