Should I buy physical gold or invest in gold ETFs (Exchange-Traded Funds)?
Before the ETFs were introduced, we had very little choice. We could either buy jewellery or gold coins and biscuits. The good thing about owning physical gold is that you can hold it in your hand and feel assured about it. A digital contract note may not give you that pleasure. However, there are solid reasons that ETFs are a much better mode of investing in gold. One, it saves you from the dangers associated with owning physical gold. Your gold ETF cannot be robbed. Secondly, there is no scope for getting duped by a jeweler. Gold ETFs do guarantee the purity of the gold. Further, physical gold is taxable under the wealth tax law, whereas units of gold ETFs are not. Also, the ETFs give you a lot of flexibility since there are basic units starting with one gram. And lastly, such units can be easily exchanged for either cash or the underlying gold itself. And the prices they offer are pretty much in sync with the ruling market price of gold. Given all these reas ons, we believe it is wiser to invest in gold ETFs than in physical gold.
Source: Equitymaster
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