Gold bulls have always said it: buy physical gold and not derivatives, also known as paper gold. Because when the big crisis comes, the value of physical gold will decouple from the paper market and easily outdo it. I’ve been waiting for it myself since 2006 – and now this moment could have come. Today there was a first serious price deviation in favor of physical gold in the USA.
Paper gold has advantages, but that also led to market distortions
Banks and also many investors love paper gold, i.e. derivatives and securities, the price of which depends on the price of gold. Paper gold can be futures and options, ETFs and certificates, ETC and Xetra-Gold. The advantage of paper gold is that it can be reproduced in any way. In principle, there can be an infinite number of gold futures, although of course the futures sellers often also hedge themselves. But the fact remains that there is more paper gold than real gold in the world. This is not a problem as long as enough investors have no interest in physical gold ownership, but only want to benefit from the price developments of the precious metal.