Physical Gold or Gold Account

Especially gold is the most common investment area to protect against inflation and to prevent the depreciation of the economic power of people. A question that comes with the willingness to invest is how to make that investment. Physical gold or gold account?

First of all, It Is Important to Be the Legal Owner of Your Gold or Silver. Inflation is only one of the risks that must be protected.

The legal owner of the physical gold stored in the vaults of the banks, or the gold registered in the “gold accounts”, which has become very popular recently, are the banks.

Why is that?

Physical gold, which is 99.99% pure, is considered equal to cash and therefore it is among the cash assets of the banks and is recorded in the assets of the banks’ balance sheets. If the banks transfer the legal ownership of the gold in the vaults or indexed to the gold accounts to their customers, the transferred gold will come out of the bank’s assets and cash positions. In this case, the bank’s cash positions decrease, and the legal capital-cash parity is compromised, or it falls below the legal minimum.

Therefore, when banks sell physical gold, they do not transfer the legal ownership of the gold they sell to their customers but give their customers a “right” for a certain amount of gold that only belongs to them and remains in their balance sheet assets. In other words, it gives a right to the gold that belongs to the customer who buys gold from the bank. Thus, legal ownership remains with the bank. The customer loses his so-called gold because the “customer” gold in a bank that went bankrupt in a crisis is also among the bank’s assets.

Therefore, it is recommended that the cautious investor invest in gold so that he becomes the legal owner of his gold.