Paper Gold a Safe Investment
Gold is a commodity and it can be traded as a commodity. As with any commodity, it’s possible to trade futures contracts on gold. These are called paper gold because they only represent the value of the physical gold that is delivered at maturity.
The seller of such a contract is obliged to deliver the physical metal when the contract matures, while the buyer has to pay for it in advance.
If you buy a futures contract on gold today and hold onto it until maturity, you’ll get the physical metal when you need it. If you don’t have any use for physical gold but still want to benefit from its price movements, paper gold can be an alternative for you.
To get more information about paper gold feel free to call us at 0120 4400700
Paper Gold vs Physical Gold
If you want to buy gold then it is very important that you understand the difference between physical gold and paper gold.
Physical gold is the actual metal that is bought from dealers. This will be stored in a vault by the dealer and can also be kept at home.
It is advisable to keep gold at home rather than leaving it with the dealer as there have been instances where dealers have been robbed by thieves or even customers who have turned out to be fraudsters.
Paper gold on the other hand is paper certificates that represent physical gold. They are like money in terms of their use but are not actually real money but instead represent an amount of physical gold held by an issuer.
There are many types of paper certificates such as exchange traded funds (ETFs), futures contracts and options contracts but each one works slightly differently from another type of certificate so it is important that you understand how they work before you invest your money in them.
Is it Safe to Invest in Paper Gold
The answer to the above question is a big YES.
Paper gold has been around for a long time and is widely accepted by investors as a safe way of investing in gold. There are several reasons why paper gold is considered one of the most secure ways to invest in gold. The following are some of these reasons:
1) Paper gold does not require any cash upfront. This makes it possible for anyone interested in investing in gold to do so easily, irrespective of their financial status or income level.
2) Paper gold can be traded as easily as stocks or bonds on stock exchanges like NSE, MCX etc, and this makes it easy for investors to buy and sell their investments whenever they want.
3) Investors can use paper gold as collateral against loans from banks or other financial institutions if they need money urgently or need some extra cash flow for their business operations. This gives them more control over their finances and helps them avoid losing all their investment if things go wrong.
Also Read – Tax on Gold Investment in India
Most investors choose one or another type of gold investment based on their preferences. Some people prefer the ease and convenience of holding paper assets instead of actual bars and coins.
Others want the security that comes with having physical assets under their control. If you want safety and convenience, then paper assets are probably better suited to your needs than physical ones.