Why The Case For Gold Bullion Is Strengthening Over ETFs

Published in Stocks and Investing on Wednesday, July 9th 2025 at 7:21 GMT by Forbes
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The core dilemma facing gold investors today is which form to invest in: paper or tangible metal.

Summary of "Why The Case For Gold Bullion Is Strengthening Over ETFs"

The Forbes article, authored by a member of the Forbes Finance Council, delves into the growing appeal of physical gold bullion as an investment option compared to gold exchange-traded funds (ETFs). The piece argues that while gold ETFs have been a popular and convenient way for investors to gain exposure to gold prices without the logistical challenges of owning physical gold, there are emerging economic, geopolitical, and practical reasons why gold bullion is becoming a more attractive choice in 2025. The author presents a detailed case for why investors—both individual and institutional—should consider allocating a portion of their portfolios to physical gold over ETFs, emphasizing factors such as security, control, and long-term value preservation.

The Appeal of Gold ETFs and Their Limitations

The article begins by acknowledging the historical popularity of gold ETFs, which have democratized access to gold as an asset class since their introduction in the early 2000s. ETFs like the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) allow investors to buy and sell shares that track the price of gold without needing to store or secure the metal themselves. This convenience has made ETFs a go-to option for many, especially retail investors who lack the resources or desire to manage physical gold. Additionally, ETFs offer liquidity, as they can be traded on stock exchanges like any other security, and they often come with lower transaction costs compared to buying and selling physical gold.

However, the author quickly pivots to the limitations of gold ETFs, which form the crux of the argument for physical bullion. One major concern is counterparty risk. When investors buy into a gold ETF, they do not own the underlying gold directly; instead, they own shares in a fund that holds gold on their behalf. This introduces reliance on the fund manager, custodian, and other intermediaries, any of whom could face financial distress or operational failures. In extreme scenarios, such as a systemic financial crisis, there is a risk that the ETF may not be able to deliver the promised value or access to gold. Furthermore, the article highlights that some ETFs do not hold 100% physical gold backing for their shares, with certain funds using derivatives or other financial instruments, which can further complicate the investor’s exposure to the actual asset.

Another limitation of ETFs discussed in the article is the lack of direct control. Investors in ETFs cannot take physical possession of the gold, which can be a significant drawback for those who view gold as a safe haven during times of crisis. This inability to access the underlying asset directly undermines one of the primary reasons many investors turn to gold: its role as a tangible store of value that can be held outside the traditional financial system.

The Case for Physical Gold Bullion

In contrast to ETFs, the article makes a compelling case for owning physical gold bullion—whether in the form of bars, coins, or other tangible assets. The primary advantage of bullion is the direct ownership it provides. When an investor purchases physical gold, they have full control over the asset, free from the counterparty risks associated with ETFs. This direct ownership is particularly appealing in an era of heightened geopolitical uncertainty and economic instability, as the article notes. For instance, in times of war, currency devaluation, or banking crises, physical gold can serve as a portable and universally accepted form of wealth that does not depend on the stability of financial institutions or digital systems.

The author also emphasizes the psychological and practical benefits of holding physical gold. Unlike ETF shares, which exist as digital entries in a brokerage account, physical gold offers a sense of security and tangibility. Investors can store it in a safe, vault, or other secure location of their choosing, ensuring that they have immediate access to their wealth if needed. This is particularly relevant in scenarios where access to financial markets or banking systems might be disrupted, such as during natural disasters or cyberattacks.

Moreover, the article points out that physical gold bullion often carries a premium over spot prices due to its intrinsic value and the costs associated with production, storage, and insurance. However, this premium can be justified as a form of "insurance" against systemic risks. The author argues that in a world where central banks are increasingly engaging in monetary expansion and governments are grappling with unprecedented levels of debt, the risk of inflation and currency devaluation is rising. Physical gold, with its long history as a hedge against such risks, becomes a more reliable option compared to ETFs, which are still tied to the broader financial system.

Geopolitical and Economic Drivers

The article ties the growing case for gold bullion to broader geopolitical and economic trends in 2025. It references ongoing tensions in regions like the Middle East and Eastern Europe, as well as trade disputes and sanctions that have disrupted global markets. These factors have led to a renewed interest in gold as a safe haven asset. Additionally, the author notes that central banks around the world have been increasing their gold reserves at a rapid pace, signaling a lack of confidence in fiat currencies and a desire to diversify away from U.S. dollar-denominated assets. This trend, the article argues, should encourage individual investors to follow suit by prioritizing physical gold over paper-based alternatives like ETFs.

Economic uncertainty also plays a significant role in the argument. With inflation remaining a concern in many economies and interest rates fluctuating, the traditional appeal of bonds and other fixed-income assets has diminished. Gold, which does not pay interest or dividends but retains its value over time, becomes a more attractive option for wealth preservation. The article suggests that physical gold, in particular, offers a level of certainty that ETFs cannot match, as it is immune to the operational risks and market manipulations that can affect financial instruments.

Practical Considerations and Challenges

While the case for gold bullion is strong, the author does not shy away from addressing the practical challenges of owning physical gold. Storage and security are significant concerns, as investors must ensure their gold is protected from theft or loss. Options such as home safes, bank safety deposit boxes, or third-party vaults come with their own costs and risks. Additionally, buying and selling physical gold often involves higher transaction costs and less liquidity compared to ETFs, which can be traded instantly on an exchange. Despite these challenges, the article argues that the benefits of direct ownership outweigh the drawbacks, especially for long-term investors who prioritize safety over convenience.

Conclusion and Broader Implications

In conclusion, the Forbes article presents a nuanced and compelling argument for why the case for gold bullion is strengthening over ETFs in 2025. It highlights the growing risks in the global financial system, the limitations of paper-based gold investments, and the enduring value of physical gold as a tangible asset. While ETFs remain a useful tool for short-term speculation or for investors seeking ease of access, the author urges readers to consider the security and autonomy that come with owning physical gold, particularly in an era of uncertainty.

This perspective resonates with broader trends in the investment world, where distrust in centralized systems and a desire for self-reliance are driving interest in alternative assets. The article serves as a reminder that gold, one of the oldest forms of money, continues to hold relevance in modern portfolios—not just as a speculative investment, but as a bedrock of financial security. For investors willing to navigate the logistical challenges, physical gold bullion offers a level of protection and peace of mind that ETFs, despite their convenience, cannot fully replicate.

Read the Full Forbes Article at:
[ https://www.forbes.com/councils/forbesfinancecouncil/2025/07/09/why-the-case-for-gold-bullion-is-strengthening-over-etfs/ ]

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