A gold derivative is a derivative which is based on the value of gold. Unlike gold certificates, gold derivatives such as gold warrants, gold options and gold futures are not title deeds and do not entitle their holder to physical gold. They are simply investment vehicles which allow investors to speculate on gold prices.
Gold derivatives can be used to speculate on the future value of gold. They allow for cheaper and more efficient investment in gold prices than gold certificates because they do not require the changing of gold ownership.
It is important to note, however, that gold derivatives are simply contracts based on the value of gold. They do not serve as title deeds and do not entitle their holder to physical gold. If the issuer of a derivative becomes insolvent, that derivative may become worthless.