Why The Case For Gold Bullion Is Strengthening Over ETFs

Forbes

09-07-2025

Max Baecker is the President of American Hartford Gold, a leading precious metals retailer.
As geopolitical tensions intensify and economic uncertainty continues to dominate headlines, investors are turning to gold in numbers not seen in years. According to the latest data, total gold demand rose 1% year over year to 1,206 tons, driven by tariff news, uncertainty and stock market volatility.
While gold-backed exchange-traded funds (ETFs) have surged in popularity, offering liquidity and low fees, a growing chorus of experts and institutions is pointing toward a renewed case for physical gold. Thus, the core dilemma facing gold investors today is which form to invest in: paper or tangible metal.
Paper Gold's Rally
Gold ETFs are having a breakout year. In the first quarter of 2025, investors added 226.5 tons of bullion to gold ETFs, the largest quarterly inflow since 2022. This influx helped fuel a rally in gold prices over the three-month period, with gold ultimately hitting an all-time high around $3,500 an ounce on April 22.
The reasons for ETF enthusiasm are clear. They offer:
• High liquidity: Shares can be traded in real time like stocks.
• Lower costs: There is no need for vaults, insurance or dealer premiums.
• Accessibility: Fractional ownership means more people can invest.
• Transparency: Prices track global markets in real time.
• Portfolio integration: ETFs fit neatly into digital-first investment platforms, favored by younger investors.
In fact, physically backed gold ETFs saw five straight months of net inflows through April, with $11 billion added that month.
The Case For Tangible Gold
While ETFs offer speed and scale, physical gold offers something paper cannot: direct ownership. And in today's climate, that's starting to matter more.
In contrast to ETFs, which rely on financial intermediaries, physical gold represents a direct, tangible asset held by the investor. Whether in the form of bullion bars or government-minted coins, it's touchable and independent of digital infrastructure.
Central banks understand this well. They purchased 244 tons of gold in Q1 2025, continuing a trend of elevated buying over the past three years. These institutions are not choosing ETFs. They're taking physical delivery. The motive? Uncertainty and diversification away from the U.S. dollar. Large sovereign buyers are prioritizing control and security over convenience.
That same rationale is now resonating with private investors. Yes, gold ETFs are easier. They're cheaper. They're faster. But when the system is stressed, when headlines turn to sanctions, inflation spikes or liquidity freezes, the question becomes: Do you want paper, or possession?
While ETFs may outperform during periods of relative calm, physical gold's appeal lies in its resilience. It can't be hacked. It isn't a promise; it's the asset itself.
For investors looking beyond quarterly returns toward security and wealth preservation, physical gold becomes more appealing.
Key Considerations For Investing In Physical Gold
For first-time buyers seeking to guard against uncertainty, investing in physical gold requires certain considerations. Different types of gold serve different purposes. Government-minted coins, such as the American Gold Eagle or Canadian Maple Leaf, tend to be more recognizable and easier to resell. Bullion bars often come with lower premiums, but they may not offer the same flexibility or ease of resale as coins. Choosing which form of gold to invest in depends on the investor's priorities, such as liquidity, affordability or recognizability.
Secure storage is another key factor. Some investors prefer to store gold at home for direct access, but this can increase the risk of theft. Safe deposit boxes at banks and private vaulting services offer enhanced security, along with insurance options that can better protect the investment. Evaluating where and how to store gold should be part of any buying decision.
Insurance coverage is essential. Most homeowner insurance policies only cover small amounts of precious metals, if any. Investors should explore dedicated bullion insurance policies or choose storage options that include coverage. This added layer of protection helps provide peace of mind in uncertain times.
It is also important to verify the purity and authenticity of the gold being purchased. Reputable dealers will provide products stamped with weight and purity, along with certificates of authenticity. Investors should approach collectible or numismatic coins with care unless they are experienced in that niche, as these products often carry high premiums and fluctuating value.
Finally, consider the long-term implications of selling. Some gold products are easier to liquidate than others, and dealer buy-back policies can vary. Investors should also be aware that physical gold is considered a collectible by the IRS, and any gains may be taxed at a rate of up to 28%. Understanding these financial and logistical details can help investors make informed, confident choices as they turn to gold as a hedge against today's growing risks.
Conclusion
In an era marked by systemic risks and shifting global power dynamics, owning physical gold provides clarity and control that paper assets often lack. As the global financial landscape continues to evolve, physical gold remains a timeless anchor for those focused on lasting value.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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