Why Holding Real Gold Beats Gold ETFs

Gold has long been viewed as a store of value, a hedge against inflation or currency devaluation, and a safe-haven asset when things get crazy. Today, investors have more options than ever to gain exposure to gold, but not all are created equal. One of the perennial debates is: physical gold vs. gold ETFs. Below, we explore why many investors favor holding real gold rather than paper substitutes.

1) True Ownership & No Counterparty Risk

When you own physical gold (bars, coins, bullion), you possess the metal itself—you can hold it, see it, weigh it, and store it wherever you choose. That direct ownership means there is no intermediary between you and your metals.

By contrast, a gold ETF is a financial vehicle, similar to stocks, that holds gold (or gold derivatives) on behalf of investors. While many ETFs are physically backed, your claim is a share in that fund, not the metal itself. That introduces counterparty risk: in extreme scenarios (custodian default, fraud, regulatory changes), your exposure is to the fund structure, not the metal directly.

Because physical gold is an asset you literally can hold in your hand, it cannot vanish with the collapse of a fund. The principal risks lie in storage, theft, or mismanagement and not in a fund’s solvency.

2) No Ongoing Management Fees Eating Into Your Gains

Gold ETFs charge annual expense ratios, fees to cover storage, auditing, administration, and fund management. Over time, that fee eats away at your returns. Even a modest 0.2%–0.4% per year can compound meaningfully over decades.

By contrast, owning physical gold has no built-in annual “management” fee. Your costs are upfront (premium over spot, storage, insurance) and periodic (vault fees, security), but not a percentage deducted year after year. Particularly for long-term holdings, avoiding recurring fees can improve net performance.

3) Independence from Fund Tracking & “Tracking Error”

A well-run gold ETF aims to mirror the spot price of gold. But in practice, ETFs can suffer from tracking error—the fund’s performance deviating from gold itself due to administrative costs, transaction costs, rebalancing, or imperfect hedging. Over time, those small divergences can create a drag.

Since physical gold is the underlying asset itself, you bypass that layer of abstraction and the risk of mismatch. You aren’t depending on a fund’s ability to perfectly track gold; you hold what you want directly.

4) Tangibility & Psychological Confidence

Money isn’t just numbers. It’s trust. For many investors, there’s psychological comfort in physically moderating an asset. Having a bar or coin in your possession provides a visceral and reassuring sense of control that paper claims lack. This emotional and mental factor can’t be ignored, especially for investors who value certainty.

5) Flexible Use & Private Transferability

Physical gold can be transferred privately, gifted, or used as collateral (depending on where you live). You have flexibility in how it changes hands. You could, for instance, deliver gold to someone directly without needing to liquidate something.

You can also store your gold wherever you like. In a home safe, private vault, or bank safe deposit box. That gives you control over jurisdiction, security protocols, and access.

When done the right way…buying recognized bullion, choosing safe storage, and dealing with Blanchard…the net advantages often outweigh these drawbacks for many serious investors.

Conclusion

If your objective is long-term preservation, real ownership, and minimizing structural and counterparty risk, physical gold has a strong case.

Holding the real metal means no dependency on fund structures, no ongoing management fees, no tracking error, and a tangible, portable asset you control entirely. For those who see gold as more than just a ticker symbol and as a foundation for financial security, owning physical gold wins the argument.

At Blanchard, we believe tangible precious metals offer a level of diversification and portfolio control that paper substitutes can’t match. Whether you’re a seasoned buyer or just getting started, reach out to us for guidance. We’ve been in business for over fifty years, and that counts for something: Trust.