If you are planning to buy Gold for the purpose of investments, it is important to understand the medium in which you should buy. Generally three options of buying gold are available i.e. Jewellery, Gold coin from bank or buying Gold ETF in exchange. Here are some important factors compared among these three options, which one should consider before buying.
So, Let us study the comparison of Gold ETF with Physical Gold.
| Parameter | Jeweller | Bank | Gold ETF |
| How Gold is held | Physical (Bars / Coins) | Physical (Bars / Coins) | Dematerialized (Electronic Form) |
| Pricing | Differs from one to another. Neither transparent nor standard. | Differs from bank to bank. Not Standard. | Linked to International Gold Prices and very transparent. |
| Buying Premium above gold price | Likely to be more | Likely to be more | Likely to be less |
| Making Charges | Charges levied | Charges levied | No Charges |
| Impurity Risk | High | Nil | Nil |
| Storage Requirement | Locker / Safe | Locker / Safe | Demat Account |
| Security of Asset | Investor is responsible | Investor is responsible | Fund House takes the responsibility |
| Resale | Conditional and uneconomical | Banks do not buy back | At Secondary Market Prices |
| Convenience in Buying / Selling | Less convenient, as Gold needs to be moved physically | Less convenient, as Gold needs to be moved physically | More Convenient, as held in electronic form under the demat account |
| Quantity to Buy / Sell | Available in standard denomination | Available in standard denomination | Minimum is ½ or 1 gram according to the fund |
| Bid Ask Spread | Very High | Can’t Sell Back | Very Low |
| Risk of Theft | Yes, possible | Yes, possible | No, Not possible |
| Wealth Tax | Yes | Yes | No |
| Long Term Capital Gains Tax | Only after 3 years | Only after 3 years | After 1 year |
