Gold shines on the auspicious day of Akshaya Tritiya as demand for the yellow metal rises. The festival, celebrated on Saturday, marks one of the biggest purchases of gold and jewelery in India. On this day jewelers will give attractive discounts and offers to the customers. But gold prices have risen sharply since last year, and are currently near 60,000 mark making it expensive for everyone to buy. In such cases the digital alternative to physical gold can become an attractive investment option.
Pritam Patnaik, Head of Commodities, HNI and NRI Acquisitions said, “We expect this Third day of Akshaya will be as vibrant as ever, but the traditional practice of buying physical gold may dim due to rising gold prices, currently quoted at over Rs. 60,000/- per 10 grams, which makes it challenging for potential investors. We expect token buying to continue, but volumes may reduce.”
But Patnaik also said, “Those looking for other gold related instruments can opt for gold ETFs.”
gold etf They are a virtual alternative to the yellow metal as they track the price of domestic physical gold.
Windmill Capital recently cited MCX data which showed gold prices rallied by over 20% From 60,800 on April 13, 2023 50,800 by May 3, 2022 (Akshaya Tritiya, 2022).
FYERS Head of Research Gopal Kavalireddy explains the difference between physical gold and gold ETFs. These:
In India, gold has always played an important role in the country’s culture, and Indians appreciate the yellow metal for a variety of reasons. Traditionally, gold has been a favorite investment during auspicious occasions. But with significant investor interest, gold ETFs have also become an attractive investment avenue. Both physical gold and gold ETFs have their own advantages and disadvantages. Although physical gold has a high emotional and cultural value, being preferred during auspicious occasions, it also requires storage and security arrangements along with concerns about its purity and making charges.
Gold ETFs, on the other hand, are convenient and cost-effective, as they trade on stock exchanges like any company share, without storage or security concerns. Furthermore, gold ETFs offer liquidity without any lock-in period or exit load, making it an attractive investment option for short-term investors. However, gold ETFs do not have the same emotional and cultural value as physical gold, and there may be concerns about the quality or quantity of gold held by the ETF.
Furthermore, in the case of gold ETFs, Windmill notes that this investment vehicle is preferred over buying gold in physical forms such as jewelry, coins and bars. It can be either dematerialized or traded in paper form on the stock exchange like regular funds. They are bought and sold all over India at the same rate, giving them an edge over physical jewellery. There is complete transparency in prices, and these funds can be traded through a broker from any location at any time. The investor does not have to worry about storage, paying locker charges and security issues as they hold these funds through demat.
In conclusion, Kavalireddy concluded, “Ultimately it depends on individual investor’s preferences and investment goals whether they should invest in physical gold or gold ETFs.”
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
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