Physical Gold Vs ETFs: Which is better investment? Know here pros and cons

In August 2025, there was a net inflow of Rs 2,189.5 crore in gold ETFs, which is an increase for the fourth consecutive month. According to the Association of Mutual Funds in India (AMFI), the asset under management (AUM) of gold ETFs reached a record Rs 72,495 crore during this period.

New Delhi: Gold has given huge benefits to investors in the last one year. If we look at the price of 24 carat gold, then on September 11, 2024, its price was around Rs 73,200 per 10 grams, which has increased to Rs 1,12,500 per 10 grams after a year. That is, there has been an increase of about 54 percent. During the same period, investors who were invested in gold ETFs have also got a return of up to 50 percent.

In August 2025, there was a net inflow of Rs 2,189.5 crore in gold ETFs, which is an increase for the fourth consecutive month. According to the Association of Mutual Funds in India (AMFI), the asset under management (AUM) of gold ETFs reached a record Rs 72,495 crore during this period. In August, a sharp increase of 74 percent has been seen in investment flow in gold ETFs.

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What Is Gold ETF And How Does It Work?

Gold ETF is an investment tool that is traded in the stock market. It tracks the price of gold. When the price of gold rises, the price of your ETF also rises. Investors can buy and sell it through demat accounts and trading accounts, just like shares.

Benefits Of Investing In Gold ETF

Security: There is no need to keep gold in physical form, so there is no worry of theft or purity.

Transparency: Prices are listed in the market, which can be easily tracked.

Liquidity: Facility to buy and sell anytime.

Facility of small investment: Investment can be started even with a small amount.

Is gold investment a smart choice or not? Here’s the guide

Risks Of Gold ETF

• It is linked to the stock market, so it is affected by market fluctuations.
• In this, fund management charge (expense ratio) has to be paid, which can reduce the return slightly.
• If the price of gold falls for a long time, then there may be a loss.

Investing In Physical Gold

Traditionally, people in India prefer to buy gold in the form of jewellery, coins or gold biscuits. But there are storage problems, making charges and concerns about purity. Still, its demand always remains due to marriage and family needs.

Warning for investors

Do not take investment decisions only by looking at past returns. Gold prices depend on the international market, dollar-rupee exchange rate and geopolitical situations. Therefore, there is no guarantee of returns in the future.

Other Options For Investing In Gold

Physical gold: Jewellery, coins, biscuits.

Gold ETFs: Through trading on the stock exchange.

Gold Mutual Funds: Indirect investment in ETFs.

Sovereign Gold Bonds (SGBs): Government bonds that also pay interest.

Both types of gold have given good returns in the last one year. While physical gold is suitable for traditional and emotional needs, gold ETFs are proving to be a convenient and safe option for modern investors. It is important to evaluate your needs, goals and risk tolerance before investing.