March 15, 2023


Digital Gold vs. Physical Gold: Pros and Cons


Gold has been a valuable asset for centuries, serving as a store of value, a hedge against inflation, and a safe haven in times of crisis. However, in the modern era, there are different ways of owning gold, each with its own advantages and disadvantages. In this blog post, we will compare two of the most popular forms of gold ownership: physical gold and digital gold.

Physical gold refers to tangible gold products such as coins, bars, jewelry, or ornaments that you can buy from dealers or jewelers and store in your home or a secure vault. Digital gold refers to intangible gold products such as exchange-traded funds (ETFs), certificates, tokens, or accounts that represent ownership of a certain amount of vaulted gold that you can buy and sell online.

Both physical and digital gold have some common benefits

  • They are backed by real gold bullion that has intrinsic value and limited supply.
  • They are not subject to counterparty risk or default risk as they do not depend on any third party for their validity or redemption.
  • They are globally recognized and accepted as a form of money that can be easily converted into cash or other currencies.

Nevertheless, there are notable variations between them that could influence your investment objectives and inclinations. Here are some of the pros and cons of each form of gold ownership:

Physical gold


  • You have direct control and access to your gold assets at any time without relying on intermediaries or platforms.
  • You can enjoy the aesthetic appeal and satisfaction of holding real gold in your hands or wearing it as jewelry.
  • You can benefit from potential numismatic value or collector's premium if you own rare or historical coins or bars.
  • You can easily and conveniently buy, sell, and trade digital gold assets online 24/7 from anywhere in the world with internet access.
  • You can benefit from lower transaction fees and premiums compared to physical gold products as digital gold eliminates many intermediaries and overhead costs.
  • You can choose from a wide range of digital gold products that offer different features, functionalities, and investment strategies to suit your needs and preferences.


  • You have to pay high premiums over the spot price of gold when buying physical gold products due to manufacturing costs, dealer margins, taxes, etc.
  • You have to bear the costs and risks of storing, transporting, insuring, and securing your physical gold against theft, loss, damage, etc.
  • You may face liquidity issues when selling your physical gold as you have to find buyers who are willing to pay a fair price for your specific products
  • You have to trust the platform, custodian, or issuer that holds and manages your digital gold assets as they may not be fully transparent, secure, or reliable.
  • You may face regulatory, legal, or tax risks as digital gold assets are not always recognized or regulated in the same way as physical gold products in different jurisdictions.
  • You may not be able to physically possess or control your digital gold assets as they are typically held in electronic wallets or accounts that are subject to cyber attacks, technical failures, or other vulnerabilities.

Digital gold


  • You can buy and sell digital gold products at low premiums over the spot price of gold due to lower operational costs and higher market efficiency.
  • You can diversify your portfolio across different types of digital gold products such as ETFs (which track the price movements of physical gold), certificates (which entitle you to redeem physical gold upon request), tokens (which use blockchain technology to verify ownership), or accounts (which allow you to buy fractional units of vaulted gold).
  • You can enjoy high liquidity and convenience when trading digital gold products as you can access global markets 24/7 through online platforms with minimal transaction fees
  • You can use digital gold products as a hedge against inflation, currency devaluation, geopolitical risks, or other economic uncertainties that may affect traditional financial assets.
  • You can enjoy greater transparency, auditability, and traceability of your digital gold transactions as they are recorded on a distributed ledger and can be verified by multiple parties.
  • You can benefit from advanced features and functionalities of digital gold products such as smart contracts, automatic rebalancing, or fractional ownership that are not available in physical gold products.


  • You do not have physical possession or access to your underlying gold assets unless you redeem them for delivery which may incur additional costs and delays.
  • You may face technical issues such as hacking, cyberattacks, or system failures that could compromise your digital gold holdings or transactions.
  • You may face regulatory uncertainty or legal disputes regarding the ownership, taxation, or jurisdiction of your digital gold assets depending on where they are issued, stored, or traded
  • You may face counterparty risks when dealing with digital gold products such as issuer defaults, bankruptcy, or fraud as they are not backed by physical gold in all cases.
  • You may encounter operational or technical difficulties when managing your digital gold assets such as password loss, device theft, or software errors that could result in permanent loss of your holdings.
  • You may not be able to redeem your digital gold assets for physical gold in certain situations such as market disruptions, system failures, or force majeure events that could lead to a mismatch between supply and demand.
  • You may face environmental concerns when using digital gold products that rely on energy-intensive processes such as mining, minting, or storage on a global scale.

In conclusion, the decision to own physical gold versus digital gold depends on individual preferences, investment goals, and risk tolerance. While both forms of gold provide exposure to the precious metal, they come with different trade-offs in terms of cost, security, liquidity, and convenience. Therefore, it is essential to carefully consider the pros and cons of each option before making a decision on which one better aligns with your needs and preferences. By taking such measures, you can arrive at an informed judgment that optimizes your profits and minimizes your exposure to hazards.

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