Tradition Meets Investment On Dhanteras, the ritual of buying gold jewellery is deeply ingrained in Indian households. Yet, the same amount of money can be deployed in a gold ETF, offering a different risk‑return profile. Recent data from the World Gold Council shows a sharp decline in jewellery demand (‑18% in volume) and a surge in gold ETF demand (+47% to 28.8 tonnes) during January‑September 2026.
What Do You Really Pay for Jewellery? Jewellery carries emotional value, but the price tag includes making charges and a 3 % GST on the total value. With 12 % making charges, a ₹1 lakh purchase delivers only about ₹86,685 worth of gold. Even if the market price rises, a 15.4 % increase is needed just to recover the original outlay, assuming the buyer can realise the full metal value at resale.
> *“The first question isn’t about choosing the right gold; it’s about why you’re buying it,”* says Kumar Binit, CEO of airpay money.
Coins or bars may have lower premiums than jewellery, but GST, storage costs and resale deductions still apply. Buyers should also verify the BIS hallmark and the six‑character HUID.
Gold ETFs: Lower Cost, No Storage Hassle Gold ETFs invest in physical gold and trade on stock exchanges. They eliminate making charges, GST on unit purchases and personal storage concerns. Investors need a demat account and must account for expense ratios, brokerage and trading spreads. Before investing, it is prudent to compare an ETF’s tracking difference, liquidity and market price against its NAV.
Gold Mutual Funds and SIPs Gold mutual funds, typically structured as funds‑of‑funds (FoFs), invest in gold ETFs. They allow SIPs without a demat account, but investors bear both the FoF’s expenses and the underlying ETF’s costs. Several fund houses have paused fresh investments and new SIP registrations in gold FoFs since mid‑October, though existing SIPs and redemptions remain unaffected. Checking the latest subscription status is essential.
Tax Treatment Listed gold ETFs qualify for long‑term capital gains tax after 12 months, while physical gold and unlisted gold FoFs generally require more than 24 months. Long‑term gains attract 12.5 % tax without indexation; short‑term gains are taxed at the applicable slab rates.
For example, a ₹30,000 gain after 18 months would incur a ₹3,750 tax (12.5 %) on a gold ETF, whereas the same gain on physical gold would cost ₹9,000 for someone in the 30 % tax bracket, excluding cess and surcharge.
Practical Tips for Dhanteras - **Assess your purpose**: Jewellery is for personal use; ETFs are for portfolio diversification. - **Consider costs and liquidity**: ETFs avoid GST and storage, but require a demat account and incur expense ratios. - **Check fund status**: Verify whether gold FoFs are accepting new subscriptions. - **Plan for taxes**: Understand the holding period required for favourable tax treatment.
> *Nehal Mota, co‑founder of Finnovate Financial Services, advises that gold allocation should align with financial goals and risk appetite.*
> *Pankaj Mathpal, Founder & CEO of Optima Money, recommends a gradual approach through Gold ETFs rather than chasing short‑term price swings.*
Gold can diversify a portfolio but offers no regular income and is subject to price volatility. The decision to buy jewellery or invest in gold should hinge on costs, liquidity and long‑term objectives, not merely the festive mood.
What to Watch - Monitor the resumption of new subscriptions in gold FoFs. - Track changes in GST or other regulatory policies affecting gold purchases. - Observe market trends that could influence the cost‑benefit balance between physical gold and ETFs.
*Disclaimer: The views expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to consult certified experts before making investment decisions.*