Exchange-traded Funds vs physical gold: Why you should invest in Gold ETF

Exchange-traded Fund vs physical gold: Buying gold is considered most safe mode of investment in India. However, with the changing times, modes of investment have also changed. Now, an investor has both physical gold and electronic gold available for investment in the markets. As physical gold investment is deeply rooted among Indians, it becomes important to know which option of gold investment is better, Gold ETF (Exchange-traded Fund) or physical gold? According to the investment experts, investing in Gold  ETF is better than the physical gold as it gives around 4.5 per cent to 5 per cent more returns. Apart from this, Gold ETF investment doesn't require any storage problem and one can buy or sell Gold ETF with a single click on his or her device, which also means managing the Gold ETF portfolio is much easier than the physical gold.

Speaking on the exchange-traded funds in gold mutual funds Kartik Jhaveri, Director, Wealth Management at Transcent Consultants explained that in physical gold transactions, investors end up paying 2-3 per cent extra from the spot market price in the name of making charges, depreciation etc saying, "In physical gold transaction, an investor has to pay around 2.5 to 3 per cent extra from the spot market gold price to the goldsmith while buying and the same he or she has to pay again while selling. Today, gold bars and biscuits are available in banks also and they also charge above the spot price, which is higher than the goldsmith. So, while investing in physical gold, an investor loses around 4.5 per cent to 5 per cent of the net transaction he or she does while buying and selling of the physical gold." 

See Zee Business Live TV streaming below:

Jhaveri went on to add that in Gold ETF investment, the prices are transparent and one can buy or sell it by clicking a single button on one's device. He said that when an investor invests in physical gold, he or she needs to pay for secured storage of the gold either in the locker at their banks or take the risk by keeping it at their home locker. So, by investing in Gold ETF, one can save this secured storage charges as well.

Explaining the benefits of Gold ETF investment , SEBI registered investment expert Jitendra Solanki said, "Both Gold and Gold ETF give same return to an investor while a Gold ETF investment is safe, easy to buy and sell, transparent and full freedom in pricing as one can buy or sell one's fund on one's bid price."