Physical Gold vs Paper Gold: Why is the Gold Price Spread so High?

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Usually so far the physical gold vs paper gold ratio has always been close to 1. In other words, the price of physical gold vs paper gold has always been within a few dollars from one another and they’ve been steadily moving at the same rate comparing to one another. Hence, this gold price spread has always been rather efficient.

However, in the wake of the coronavirus pandemic things changed and as a result we have seen a rather significant divergence between physical gold and paper gold. Namely, the paper gold price went through the roof in late March as the crisis hit a vast number of countries around the world. And as a result, the price rallied going up a whopping $80 above the physical gold price.

In a way, the pandemic and global lockdown measures (read stop to international and transatlantic flights that can transport the yellow metal), created a perception of physical gold shortage, which largely contributed to this situation. Currently, the market is trying to return back to normalcy, however, although the gap is still pretty large of some $35/oz.

Watch our full video to find out whether or not investing in gold is a good idea at the moment and how the current market situation may affect prices in the future.

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