Gold vs Gold ETF: Which one is best suited to make money? Check what experts say
Gold vs Gold ETF: Physical gold is one of the most preferred metals in India for investment. Keeping gold as an asset is an age-old practice in our tradition.
Gold vs Gold ETF: Physical gold is one of the most preferred metals in India for investment. Keeping gold as an asset is an age-old practice in our tradition. However, over the years with financial inclusion, many unconventional products have come to the market. Now, many gold buying options are available in the investment world. One can buy physical gold, which is the traditional practice, can buy digital gold or invest in gold ETFs (exchange-traded funds). Gold offers liquidity to its owners and it is a good investment option when the stock market is down. If a person wants to buy gold as an investor, they can take a gold ETF or e-gold (electronic gold) from exchanges, as it is cost-effective. Physical gold involves the cost of keeping it safe.
Experts say that there are advantages and disadvantages to keeping physical gold. There are now various options from which a person can choose the right investment that suits them the best.
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Jitendra Solanki, a SEBI registered tax and investment expert, said that "If a person buys gold for investment purpose they should opt for gold ETF or e-gold of MCX. These are cheaper and safer options. However, one who wants to feel and touch the yellow metal, they can opt for any hallmarked gold."
Deepesh Raghaw, a SEBI-registered investment expert, said, "Now there are various gold buying options available in the market. One can buy gold from jewelers or from stock exchanges. There are advantages and disadvantages of buying gold physical and buying over the exchanges. The investor has to consider their priorities while buying gold. If they are investing for short-term than physical gold is better, as they can sell it at any point in time. For the long-term, they can opt for gold ETF or e-gold."
Gold bond is the only option where the investors can earn up to 2.5 percent interest. The difference between the buy price and the sale price will also come to their account. In case of exchange-traded gold, there might be sometimes liquidity issues that mean no buyer available to buy, Raghaw said.
In physical gold, keeping it safe may incur a cost. In gold ETF also charges some money on the investment. Therefore, the investors should factor in all these costs involved in buying gold to maximise their returns on investment.