Paper gold is a recent phrase, becoming common amongst internet bloggers in the last few years. It refers to investment products which are related to gold prices, but without the investor gaining physical ownership of any metal. This means the supply can be increased at will by banking providers, undoing the rarity which investors seek when buying real gold.
Most typically, the phrase ‘paper gold’ means US gold futures and options contracts, which are effectively a bet on the price moving higher or lower. Futures contracts may be settled for physical gold, but they don’t refer to any specific metal, and they are settled for cash in the vast majority of instances. Some bloggers also include exchange-traded gold funds in the phrase ‘paper gold’, even though the largest and most widely traded gold ETFs are backed with physical gold.« Back to Glossary Index