What’s the most economical way to buy gold as an investment?

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1. Sovereign Gold Bonds (SGBs)

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Most Economical for Long-Term Investors (India-specific)

Pros:

• Issued by RBI, backed by the Government of India.

• Earn 2.5% annual interest on top of gold price appreciation.

• No capital gains tax if held till maturity (8 years).

• No storage or insurance costs.

Cons:

• Locked in for 8 years (though tradable after 5 years).

• Not suitable if you want physical gold or short-term liquidity.

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2. Gold ETFs (Exchange-Traded Funds)

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Good for Liquidity & Safety

Pros:

• Traded on stock exchanges, easy to buy/sell.

• Backed by physical gold held by the fund.

• No need to worry about purity or storage.

• Low expense ratio (around 0.25%-0.50%).

Cons:

• Brokerage and demat account needed.

• Small annual fund management fees.

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3. Digital Gold (e.g., via apps like PhonePe, Paytm, Groww)

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Good for Small, Flexible Investments

Pros:

• Buy in small quantities (even ₹1).

• Backed by physical gold stored with a custodian.

• Easy to convert to physical gold or cash.

Cons:

• Higher spread (buy-sell difference can be 3–6%).

• Not regulated like SGBs or ETFs.

• Charges for physical delivery.

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4. Physical Gold (Coins/Bars)

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Less Economical Unless Buying in Bulk

Pros:

• Tangible, you hold it directly.

• No third-party risk.

Cons:

• Making charges (especially on coins/bars from jewelers).

• Storage and security issues.

• GST (3%) at purchase, no tax benefits.

• Lower resale value due to purity/deduction issues.