by ISA Bullion Aug 24 2022

Gold Storing vs. Gold Trading: Which Is More Profitable?

Gold storing is a necessary step if you’re focused on safeguarding your valuables. You can either store your gold with a financial institution or at a place of easy access. Both forms of storage are ancient, however - storing with an institution will always be more secure than storing Gold yourself. 

People who store Gold believe their assets’ value will increase in the future. Another reason is that Gold is easier to hold as a store of value rather than hard cash. While other assets may depreciate, the risk of Gold deteriorating is way less in comparison because, if stored correctly, Gold’s value rises with the passage of time. 

However, Gold is a volatile asset and it may take Gold’s value years to multiply. That being said, gold trading is another viable option for your precious metal. You can exchange it as a commodity with other traders and use it to diversify your portfolio. 

It's also a good inflation hedge, so you're certain of protection from financial ruin. But does this mean you should trade your assets instead of keeping them locked up? This article has an answer to that debate, so keep reading to find out. 

What is gold storage?


Gold storage means to possess physical holdings of gold. These items are kept in a secure location. Depending on the owner's preference, these items can be in Gold coin or Gold bar form. Moreover, due to the high value of gold, Gold needs to be kept in a location where it can't be stolen or damaged by natural elements. 

Benefits of gold storage

The advantages of gold storing aren’t limited to protecting your precious metal’s value. Gold storage can be for the following reasons;

Close access to your valuables 

This is a benefit you get for storing gold at home. With this option, you can choose where you want to store or hide the gold. You can choose to see it anytime and show it off to whoever you want. This is still the case if you store the gold in the bank however, banks have an operating time and it may not be possible to access your Gold at all times of the day. This restriction will also happen in cases of war, riots or death. 

You can also make Gold transactions by exchanging the precious metal in your possession for any valuable item of your choice. 

Asset security 


Gold is a high-value commodity that puts you in a safe financial situation. However, your fortunes might change if your gold gets lost or stolen. You can use a financial institution to take care of this problem. 

For instance, at ISA BUllion, we provide our customers with safe and secure storage. We also insure your Gold against possible calamities so that you always remain covered against risk. We have partnered with Transguard and Bricks - The biggest security companies to ensure the safekeeping of your Gold assets. 

Another benefit ISA Bullion provides over banks is that we let you trade your Physical Gold and Silver stored with us to make instant profits on the go. 

Ways to store gold

Gold storing can happen in several ways which are secure and reliable. These include;

Home Storage

This cost-effective method works if you need instant access to your precious metals. You have many locations on your property where you can store your gold. These hiding spots include the garden, sock drawer, in the wall, and under the floorboards. You can also prevent break-ins by installing cameras and alarms around your home.

Home storage isn’t without its drawbacks though. You can never be completely robbery-proof as many people enter your household. Any one of them can stumble upon the gold’s location. Floods and similar natural disasters can also take your valuables away. Insurance options are limited because policies don’t cover the loss of gold.

Safe Deposit Boxes and Consumer Banks

A safe deposit box at your local bank branch offers better security than gold stored at home. It's a logical option for gold storage because you can store bullion, coins, and jewelry. In addition, you’re the only one who possesses the key except for the bank, who can open the box in certain circumstances. 

You can only access the box during banking hours which is an issue if you have a financial emergency. It also has limited space allowing for storage of only small-sized gold items. Banks also don’t insure the box's contents, and you can't hold them liable for the loss. This arrangement means you bear the risk completely.

Bullion Bank Vaults


These banks partake in selling, purchasing, leasing, and lending gold bullion. Given the scale of their operation, the institutions only permit large gold deposits. The gold deposits must also be in bar form. Despite this, bullion banks are still reliable with better security than consumer banks. It also can store gold in large amounts, which gives you a place to keep extra valuables. 

That said, bullion banks are only located in major cities, so getting access to one might be difficult. In addition, opening a storage account isn't cheap, as the smallest amount is 1,000 oz of gold. Finally, bullion banks only focus on institutional transactions. As a result, you're at a disadvantage as a private individual. 

Bullion Depositories

Bullion depositories are private companies specializing in storing and transferring bullion. These institutions use industrial-grade steel, so your precious metal is secure. Insurance is also provided and guarantees compensation for missing and damaged items.

Bullion depositories also function as reliable third parties in your business dealings. For instance, you can instruct your bullion dealer to send your gold to the depository. The institution will verify and audit your assets. It will then insure and add them to your stored holdings. 

You will have higher storage fees than other gold-saving options. There’s also a chance you’ll have to travel to the storage location. Your physical presence grants access. But, there are fees to pay before you can make a withdrawal.

At ISA Bullion, our customers don’t even need to ensure physical presence. We can hold the Gold for you and let you trade on your holdings from anywhere in the world. Moreover, we can even deliver your Gold physically to you on special request at a calculated rate and risk – a facility few other Bullion traders provide around the globe!

Check out the benefits of buying and trading your Gold and Silver holdings with ISA Bullion here

What is gold trading?


Gold trading is the buying and selling of gold to profit from its price movements. Generally, Gold markets are volatile, so traders lock in profits speculating on the market. Pro traders buy when gold prices are low and sell when they’re high. It requires careful consideration due to price fluctuations and many available instruments. These include contracts for difference (CFD) and futures to gold mining company stocks. 

Benefits of gold trading

The advantages of trading gold include the following;

Safety and Security

Traders and investors rely on gold trading transactions. This is because gold is stable regardless of economic situations. The cost of gold tends to go higher, making it a good profiting option in times of financial uncertainty. Gold trading also gives traders access to extra money when entering the marketplace. 

No storage issues

Gold commodities are exchanged between traders and investors. So there's no need to worry about finding a location for home storage. You also don't need to worry about paying extra fees for bank vaults and safe deposit boxes.

At ISA Bullion, we charge a nominal fee to keep your Physical Gold possessions safe. We’ve partnered with top global security companies such as Transguard and Bricks to ensure your Gold possessions stay aversive to most risks including theft and natural disasters.

Lock Profits in Real-Time

You can make real-time trades and lock profits on the go – (22 hours a day, 5 days a week) from anywhere across the globe with ISA Bullion’s unique trading application. Track profits, catch trends and view live spot charts for gold and silver prices worldwide in just a few taps. Start profiting from Gold trades with ISA Bullion here.

To download for iOS, click here. For Android, download now

Tradeable Gold assets

In gold trading, there are different instruments you can invest in, such as:

Gold Futures

These are contracts traded on exchanges. The buyer agrees to buy a specific commodity at a predetermined price. This agreement will become valid later, and many hedgers use it to manage price risk. Investors can also take long or short positions on future contracts. For example, in a long position, the investor buys gold with the expectation that the price will rise. There is also the obligation to take delivery of the metal. But, the investor sells the commodity in a short position and intends to recover it for a lower price later.

With the transaction happening on exchanges, investors get more financial leverage and flexibility. Gold can also be bought and sold at the trader's discretion with no management fees. Thanks to the margin, every $1 put up in gold futures represents over $20 in physical gold.

Gold Stocks

Gold stocks are shares in gold that a person owns in a gold company. It can be either a mining corporation or a gold mutual fund. You're buying the stock of a company that mines, refines, and trades gold

When buying gold company stock, remember that shares correlate with gold prices. They are also affected by the company’s current expenses and profitability fundamentals. This means investing in gold companies carries the same risk as other stocks.  

Gold ETFs

These are commodity funds that trade like stocks. Gold ETFs are made of gold-backed assets, but the investor doesn't own the actual commodity. Instead, they get small quantities of gold-related assets, diversifying the portfolio. These instruments allow traders and investors to gain exposure through short investment positions. Compared to physical investment and future contracts, financial profit is more achievable.

Traders can put money into the gold market without investing in the physical commodity. This possibility is desirable for traders who don’t have much money. That said, long-term investment exposes traders to high capital gains tax. The greatest rate for long-term ETF investment is 28%. This rate is higher than 20% for other long-term capital gains.

ETFs can also expose investors to liquidity-related risks. For example, the SPDR Gold Trust prospectus can liquidate when the balance falls below a certain level. In addition, shareholders owning at least 66.6% of outstanding shares can also agree to liquidation. 

Gold Options

This options contract uses gold futures or physical gold as its underlying asset. It’s an agreement between two parties to create a potential transaction on a gold quantity. There are two gold options: call gold options and put gold options. 

The holder of a call gold option has the right to buy a specific gold before the agreement expires. Put gold options give the owner the right to sell a specific amount of gold at the strike price until the end date. Investors can only exercise their gold option rights if favorable conditions are favorable. They can sell for a quick profit if gold trades far above the strike price. They can either break even or take a loss if it's selling near the strike price.

Gold Storage vs Gold Trading - What is a better option?

Considering your finances, trading gold is a better profiting option than storing Gold because Gold is generally a volatile asset. While you can’t make guarantees on which price point Gold will reach in the next five years, you can use its volatility to your advantage. 

You can gain knowledge from our resources and learn to trade like a pro. Also, visit our Blog section to catch the latest Gold tips and trends to make lucrative trades with every dip and resurgence in Gold price. 

Like most assets, Gold is also impacted by real-world events and if you educate yourself on what those factors are, you can speculate effectively and profitably. 

Conclusion

Gold trading is a much more secure and profitable option when pitted against Gold Storage. With Gold trading, you can make daily profits because Gold prices fluctuate frequently. However, if you store gold, you are at a high risk of theft, robbery and a decline in Gold purity over time. Also, even if you buy Gold at a certain price say $1800 an ounce, there’s no guarantee that its price will cross, say $2500 an oz in the next 2 years. 

With that being said, we hope this article helps you make better decisions in Gold possession. For more information on trading, get in touch with us and start your profitable Gold & Silver trading journey today! 

See you in the next blog!

 

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