Buy Real Gold or Virtual Gold - that is the question?

Not much contest, you might think. But if you were to buy stocks and shares in, say, a steel-making company, would you expect a delivery of girders and store them under your bed?

Now although gold is pretty heavy, very few of us are likely to be able to buy enough that would present us with storage problems, but it could present a security problem, not to mention the nightmare of having it meld undetectably with the metal fittings during a fire.

So, it might be advisable to buy not the real thing, but the virtual variety. Virtual gold is available for investment at companies like BullionVault.com. Besides the peace of mind this offers, you also get to buy and sell for better prices than when dealing with the physical stuff.

Now, the important thing is that when you buy virtual gold you really do own actual bits of gold. It’s there in a vault being notionally divided up according to how much people are buying. So, if everyone suddenly decided they wanted to realize that gold, it would indeed be realized, and off you would walk, staggering slightly, with your gold in your pockets.

So why would you want to do anything other than buy virtual gold? Well, you might want to occasionally enjoy eyeing up the extremely rich colour of a 22-carat gold coin or two. Krugerrands will afford you this luxury, if you can afford the luxury of Krugerrands. But while they might offer you a conversation point when you bring them out at a dinner party, it’s not advisable to have them on constant display since they are, after all, very portable. So, you’d need a damn good fire-proof home-safe bolted to the foundations of your house, because a one-ounce Kruger is going to lose you close to £1,000 if it walks off with the window cleaner one day.
But are you prepared to accept the fact that experienced locksmiths can break into safes? Or that very hot fires can damage durables kept in safes?

Are you prepared to pay the premium for the best-rated burglar- and fire-proof safe? You might weigh up the chances and think, Ah, it’ll never happen… But what if you’re on your well-earned summer holiday in the Med and you suddenly have a paranoia attack! You start to think about all the people at the last dinner party who you really can’t trust after all, and who might at that very moment be nosing around under your floorboards with a hooked pin!

Of course, if you’re a well-balanced and well-loved coin collector then you’ll have no worries. And you’ll probably have a few quid tucked away in other commodities to offset unexpected losses. But for most of us, the safest option is to simply treat gold as we would stocks and shares: buy a notional lump then sit back and watch the price rise. Let someone else deal with the headache of securing vaults and insuring loss. Logging in to your online virtual vault while relaxing in the Med will sure beat logging in to Google Earth and finding your house no longer exists!

Be Sociable, Share!

•