


Gold ETF
A gold ETF holds assets in a gold bullion but is listed on stock exchanges and traded like a stock. Every unit is backed by one gram of gold of assured purity held in a physical or demat form (digital). It combines the lucrative value of gold with the liquidity of stocks.
Invest from ₹50 onwards
No entry or exit loads
Highly liquid, sell it like a stock
Purity assured
Sovereign Gold Bonds (SGBs)
SGBs are government securities denominated in grams of gold combined with the convenience of bonds. They offer the dual benefit of capital appreciation along with guaranteed interest on your investment as listed securities, they can also be sold on the secondary market.
How it Works?
Apply to an open series - SGBs will be credited to your demat account.
Earn interest while holding - Receive 2.5% interest per annum.
Enjoy tax-free maturity - SGBs mature in 8 years. However, you can redeem them anytime after 5 years.
Details
No Open SGB Issue


Gold Funds
Gold funds are exactly like mutual funds that pool money from investors to buy gold or gold-related assets. They offer exposure to gold prices without the hassle of physically storing the precious metal.
Regulated by SEBI so purity assured
No demat account needed
Highly liquid
Build Wealth with a Gold SIP
Start your gold SIP via gold ETFs or gold mutual funds with ease and invest with 0% commission.


Physical Gold vs Digital Gold
Parameters
Brokerage
Physical Gold
Actual gold returns
ETFs
Return is usually less than actual gold
Gold Bonds (SGB)
More than actual return on gold
Gold Funds
Return is less than actual gold
Purity
Physical Gold
The purity of physical gold remains questionable, especially if it is in jewellery form
ETFs
Electronic form of gold and hence, high purity assured
Gold Bonds (SGB)
The gold is of .999 purity and backed by the government
Gold Funds
Electronic form of gold and hence, high purity assured
Safety
Physical Gold
Safety remains a concern; needs high protection from theft and wear/tear
ETFs
You don't have to hold the physical gold. Hence, no concern over safety
Gold Bonds(SGB)
The electronic form of gold is absolutely safe
Gold Funds
You don't have to hold the physical gold. Hence, no concern over safety
Collateral
Physical Gold
Accepted as collateral
ETFs
Accepted as collateral
Gold Bonds (SGB)
Accepted as collateral. Banks treat it as a gold loan after deciding the Loan to Value ratio
Gold Funds
Accepted as collateral
Liquidity
Physical gold
Moderately liquid
ETFs
Highly liquid and tradable like stocks in the market
Gold Bonds (SGB)
Liquidity remains a concern for sovereign gold bonds. Tradable after the fifth year during the special exit window. In the secondary market, sold at a discount rate because of the fewer number of buyers
Gold Funds
Highly liquid. Can redeem and get funds next working day
Tenure
Physical Gold
There is no tenure. You can hold it as long as you want, but daily wear/tear causes marginal loss in value
ETFs
No fixed tenure. You can sell your Gold ETFs like stocks and indices
Gold Bonds(SGB)
Gold bonds mature in eight years
Gold Funds
No fixed tenure. You can sell gold fund anytime
Tax Implications
Physical Gold
Capital gain tax levies when you sell gold jewellery, coins, or bars
ETFs
LTCG applies after three years
Gold Bonds(SGB)
Gold bonds are exempted from capital gain tax if redeemed on maturity after eight years. LTCG applies only to the interest-earning
Gold Funds
LTCG applies after three years
SGBs are government securities denominated in grams of gold. They are an
alternate to holding physical gold. SGBs are issued by RBI on behalf of the
Government of India.
SGBs offer investors with a range of benefits, such as
- The quantity of gold for which the investor pays is protected, since he
receives the ongoing market price at the time of redemption/ premature
redemption.
- No risks and costs of physical storage.
- No making charges and purity issues
- Earn interest at 2.5% per year on the initial investment. Interest is credited
twice a year.
Firstly, you must open a Demat account with a reputed broker like Arihant Capital.
Once the account is active, you can start buying and selling gold ETF units like
individual stocks through your mobile app or web trading platform.
A gold ETF holds gold assets like gold bullions or futures contracts, and is traded on
a stock exchange. Here, the ETF price is directly linked to gold price. For instance, if
gold price increases by 2%, the ETF value may also increase by 2% approx. On the
similar note, if the gold price decreases, the ETF value should decrease too.
Gold ETFs are basically the units representing physical gold. They can be in the
form of dematerialised nature. Note, 1 Gold ETF unit is equal to 1 gram of gold. It is
backed by physical gold which is very pure and of the highest quality.
Both Gold ETFs and Gold mutual funds are investment options that provide
exposure to gold as an asset class. But there are a few differences between them.
Gold ETFs are like stocks that are listed and traded on a stock exchange. These
funds invest in physical gold or gold futures contracts, and their prices fluctuate with
the market price of gold. Gold ETFs can be bought and sold throughout the day like
stocks, and their prices are transparent and readily available.
On the other hand, gold mutual funds are open-ended funds that invest in gold and other precious metals such as silver. The prices of these funds are determined based on the net asset value (NAV) of the fund, which is calculated at the end of each trading day. Gold mutual funds can be bought and sold through a fund house, and they usually have higher expense ratios than gold ETFs.
Also, you need a demat and trading account to invest in a gold ETF, while it is not needed for investing in a gold fund.