Investor Corner/The asset classes/Real Assets: REITs, InvITs and Gold
2.5.5 Ways to Own Gold
Gold can be owned as physical jewellery, sovereign gold bonds, gold ETFs or funds, and digital gold. Sovereign gold bonds and gold ETFs are generally the cleanest options for pure investment purposes.
Comparing the main routes
Physical jewellery carries high making charges and storage concerns, and it is rarely the most efficient route for pure investment purposes, though it obviously serves other personal and cultural purposes as well. Sovereign gold bonds, issued by the government, pay a small annual interest on top of tracking the gold price, and offer specific capital gains tax benefits if held to maturity. Gold ETFs and gold Fund of Funds track the gold price closely and trade with reasonable liquidity, without the interest payment SGBs offer.
Where digital gold fits
Digital gold, sold through various apps and platforms, allows buying small quantities of gold that are held on the investor's behalf by the provider. It offers convenience for very small or frequent purchases, though it generally lacks the same level of regulatory oversight as ETFs or SGBs, which is worth weighing before relying on it for a meaningful allocation.
Choosing between the cleaner options
Between sovereign gold bonds and gold ETFs, the choice often comes down to a trade-off between the SGB's extra interest and tax benefit if held to full maturity, versus the ETF's greater flexibility to buy and sell on any given day without being tied to a specific bond's issue and maturity schedule.
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