What is paper gold?

Avoiding the wrong type of gold

Within the gold market you’ll hear the phrase paper gold mentioned by commentators contrasting certain gold contracts, derivatives and products with physical gold bullion in a vault.

What these commentators are highlighting  the huge difference between paper gold positions that often cannot be delivered upon and gold bullion bars bought in the physical gold market. Paper gold is deemed more suitable for institutional traders, funds and speculators, whilst buying gold bullion is better for individuals wanting security and real diversification from the financial system.

The main reason analysts are wary of the paper gold market is that there is over 100 times as much paper gold traded as physical bullion that actually exists. Simply put, if all those holding paper wanted their gold bars, very few would be able to get their hands on the gold. This potential phenomenon has been compared in effect to a run on a bank.

We have no time for paper gold and only physical gold bars can be bought or sold or our platform. At the point of sale gold is allocated to you, meaning it becomes your legal property and can never appear on our balance sheet. We think this provides you with a far superior way of gold investing. No securities, no derivatives, no banks; just solid gold bullion, in a vault, with your name on it.