Today, there are some exchange-traded funds (“ETFs”) that are offered as an alternative to holding physical precious metals. However, these come with their own risks and complications. First, most people buy physical precious metals because there is no counterparty risk. No bank or government can tamper with your gold. But with these ETFs, there are many parties involved. If a severe financial crisis strikes and one party can’t or won’t fulfill their obligation, it can impact the value of your investment. A recent Forbes article outlines this and other dangers of these physical gold ETFs.
Additionally, with the popular GLD ETF, other financial professionals have warned that these funds do not have appropriate safeguards. They warn that as a result, these funds may lose value precisely at the time you need them most.
That’s why it is usually wise to stick with physical gold so these complex (and unproven) arrangements don't threaten the value of your investment