Paper gold can convert to physical gold. So to me, there is no difference. Paper gold save me a lot of trouble for keeping it safely. And it is cheaper too

If we talk about inflation, I dont think gold is a good hedge against inflation. Look at the US$ price over the years :

1975 US$150+
1980 US$600+
1985 US$300+
1990 US$300+
1995 US$300+
2000 US$200+
2005 US$400+
2010 US$1200+
2011 US$1500+ (highest US$1900+)

http://www.nma.org/pdf/gold/his_gold_prices.pdf

It goes up and down. If you bought in the early 80s and sell in the 90s, you actually lose a lot of money ! Only in recent years, gold made a lot of gains

I treat gold as a high risk investment. I think property is more of an investment hedge against inflation. Malaysia property prices steadily goes up with some minor adjustment along the way. It has not come down drastically before (yet ?  )