Physical Gold vs Gold ETF - A better comparison on Investment

Physical Gold vs Gold ETF - A better comparison on Investment


Which is a better Investment - Physical Gold or Gold ETF ?

The prices of gold varies day by day due to the import on Dollar-Rupee conversion. As gold prices were increased in the last year and the demand for Gold was increased in the face of Festival Seasons. Last January, the Import of Gold in India were at 46 Tonnes. This is 64 percent growth on gold import as compared to the Previous year's January 2018.

In the year of 2013, the gold price rose by Rs. 35,074 per 10 grams in the Benchmark Gold Futures of Bombay Stock Exchange. On February 2013, the gold price of 10 grams was traded at Rs. 33,646 /-. It is noteworthy that the price is currently trading at the same rate.

The reason for increase in the Gold prices in India, due to the domestic demand and related to the import on Dollar value. Generally, the import of Gold will increase the Fiscal deficit for a Country. As far as the Government is also concerned to decrease the import numbers on Gold, it is only seen as a hedging position. On other times, it will only be used for the sake of People's favorite in a country like India.

For the Past decade, the gold has been linked to the Bank Deposit interest rates, when finding as an Investment. But, the gold was not beating the Inflation in the recent years. Last year, the Stock Market was sluggish globally and the Gold earned more than that. Since Inflation in India has been low and the gold has no impact.

There is no use of Gold as a Jewellery that we are thinking as it's an Investment. Investment should move towards Capital Appreciation or Growth. Any investment can have profit or loss, but simply as an Ornament is like a Depreciation - Called Liability. So that buying gold as a Jewellery is not considered as an Investment.

Those who want to invest in gold and looking for an appreciation in Gold related investments, one can invest in Gold Bonds (Gold ETF). There are so many advantages of investing in Gold ETF (Exchange Traded Fund). Investing in Gold ETF is simply invest in Gold related Mutual Funds which gives you 99.5 percent of purity on Gold as a Financial Asset.

Impurity risk in Gold Exchange Traded Funds were absent and it allows the investors to buy a gold in quantities as low as 1 gram. In Mutual Funds, each of 1 gm of Gold converted into units and it can be stored in a Demat Form. The Transaction costs are low in the Gold ETF Funds and you have to pay the brokerage only. Expense ratio is also very low as compared to other investments. There is no Wealth tax while investing in Gold Bonds or Gold ETF.

Apart from the Gold ETF, there are Sovereign Gold Bond Scheme from the Government of India and Gold Deposit Scheme by the Nationalized Banks. The investment you make must be grow and not the burden.

Kindly Share your views / comments with a smile :)

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