InvestorQ : How does investing in Physical gold compare with investing in Gold ETFs and Gold Funds in the Indian context?
Riya Dwivedi made post

How does investing in Physical gold compare with investing in Gold ETFs and Gold Funds in the Indian context?

Answer
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rhea Babu answered.
1 year ago


Physical Gold Holdings

Gold ETFs (Exchange Traded Funds) Holdings

Gold Funds Holdings

Here the investment is made in physical gold like bars, coins, jewellery etc

Investor buys a proportionate value of gold but not in the physical form but in ETF form

The investment is made in bullion and companies involved in mining gold

No need for Demat account

The investor needs a Demat account

No need for a Demat account to invest

Market fluctuations directly affect the prices of physical gold and is linked to global price

Changes in the gold prices affect that of Gold ETFs indirectly by impacting the underlying

Changes in the gold prices doesn’t affect Gold funds directly

No additional charges other than the physical gold itself

Gold ETFs involve asset management and brokerage fees with the TER debited daily

There’s a minimum charge to manage the gold funds.

Risks of theft and burglary associated with storing physical gold is quite high and that is a major demerit of this method

Gold ETFs remove the burden of trading gold in the physical form and is one of the safest ways to hold gold

Eliminates the risk of theft/ burglary and buffers investments to changing market fluctuations

No paperwork required for investing

Paperwork required for investing in Gold ETFs including KYC

Paperwork is required for investing in Gold funds

Systematic Investment Plan (SIP) not available

No SIP option since ETFs are closed ended

SIP available

Best suited for conventional investors

Best suited for investors who have the required time and skill set to trade

Best suited for investors who expect high returns taking calculated risks