The best way to invest in gold

GOLD RUSH: Historically, gold has been one of the most preferred ways of investing.

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It's no secret that Indians are the largest consumers of gold. Come Dhanteras and we flock to the jewellers (or banks) to buy that token gram (or few grams) of gold. This, irrespective of prices.

But the options are far more now than there were a few years back. It's no wonder then, that retired Army Colonel Alok Govil, wants to invest in gold this year, but differently.

An avid reader and active Internet surfer, Govil doesn’t believe in leaving his investments to chance. He has a well-diversified portfolio of stocks, mutual funds and fixed deposits.

Govil has also put money in physical gold (trinkets for his wife and daughters). Now, he wants to invest in a gold ETF.

Before taking the plunge, he wants to know:

1. If gold ETFs score over physical gold?

2. If it is better to buy gold bars and coins from a jeweller or a bank?

Wealth answers his queries.

What are gold ETFs?

• A mutual fund scheme that invests in gold, which is held in paper or dematerialised form, just like stocks.
• Returns on gold ETFs are more or less same as that of physical gold.
• Investors get units for their holding in the gold ETF.
• Gold ETFs are listed and traded on the stock exchange.
• At present, there are five gold ETFs in India; one each by Benchmark, Kotak, UTI, Reliance and Quantum mutual fund.