Owning an asset on paper is not quite the same as having physical possession of it. At one point, currency was primarily in the form of coins where the value was straightforward, derived from the gold or silver content itself. As recently as a century ago, most coins were minted from precious metals; it didn’t matter which country the coin came from or even if the issuing government still existed. The intrinsic value remained because the coin was, quite literally, gold or silver.

For example, until 1932, the United States issued $20 gold coins called “Double Eagles,” which contained 0.9675 troy oz. of gold. In 1932, the price of gold was $20.69 per ounce, making the melt value of that coin $20.02. By 1933, the price of gold rose to $26.33, which is likely why the Double Eagles minted that year were recalled rather than circulated, ending the run of the $20 gold coin. If you had kept a $20 gold coin from 1932, you could sell it for its gold value today for several thousand dollars. Meanwhile, a paper $20 bill from that same era is still only worth $20 and buys significantly less than it did in 1932.

Keeping your savings in paper assets—such as currency, certificates, notes, titles, stocks, and bonds—is only as reliable as the entities signing those documents. Once the government or the companies that issued them are bankrupt, dissolved, or replaced, you are simply holding a piece of paper. On the other hand, holding tangible physical assets like gold, silver, jewelry, artwork, chattel, and real estate has its advantages. However, physical assets must also be within your control. While a land title may be in your name, you must manage the physical property itself. If, for instance, there are squatters on your land, the building is condemned, or the property is under litigation, its value will be—at best—heavily impaired.

Both physical and paper assets carry risks of being counterfeit, contested, or stolen. Regarding paper assets, signatures or the documents themselves can be forgeries. If they are bearer instruments, they can be lost or stolen and may be impossible to replace. Regarding physical assets, while you may have possession of gold or jewelry, you must ensure they are authentic. If they turn out to be fake, you have very little recourse. While certain artworks, coins, and jewelry can be protected against theft and loss by reputable insurance companies, they do come with a carrying cost for those premiums.

Remember to deal only with reputable people. Do your own due diligence and don’t just take someone’s word for it; ensure that the property, precious metals, or paper instruments you own are authentic and legally sound. Whenever I have the choice between holding gold and silver in my physical possession or owning it via a certificate, I will always prefer to have it where I can see it and touch it—after it has been authenticated, of course!