30 years back the only way to invest in precious metals like Gold and Silver was through buying it in hard real form, but then markets evolved and then came the precious metals ETF. Electronic purchase without having the real Gold or Silver in hand. In this also many schemes came up of which some turned out to be frauds. Personally I have always been a fan of buying real gold in hand and not ETFs. I guess it's the mind conditioning that we Indians have that real Gold is value. But to be honest it may not be the right thing.
Buying real gold does make it feel good, especially when you pass them on to your children as gifts, they too feel good, it feels real. Whereas the ETF feels like any other fund which is giving good returns. I have done some Math and the fact is that if one is buying Gold from a short term investment perspective then buying it in real form may actually be a loss then profit. While buying real Gold, apart from the Gold price we end up paying making charging, taxes, and of course the dealer's commission. In ETF there is no making charges and no dealer's commission, it is the published gold price in the market. Now if I want to sell that gold within a short period of time, while selling the dealer will make deductions, the additional making charges that has been paid at the time of purchase will get deducted and will never get the same value of the published price. While buying and selling ETFs all these hassles are not there.
Buying Gold biscuits is still better then buying Jewelry for investment purpose, because in jewelry the deductions are more, and sometimes the dealer will also tell you that your piece of jewelry is not 100% pure gold. I have faced this. During my wedding my father had bought a bangle for me, years later I wanted to change it. I went to a different jeweler and he told me that the Gold used in making the bangle was not 100% gold, there was other metal mixture in it and he made too many deductions which felt like a loss to me. Later I went to the person from who we had purchased and he was not willing to accept that there was mixture in it. They were all small time jewelers. Later I made it a point that if I want to purchase any piece of jewelry I buy it from a good brand store and the piece should have a Hallmark stamp on it. That makes it some what safe.
Now the Gold price is too high, so probably with this kind of rise, and ETF would be a better choice if it's only from investment perspective. Gold and Silver are the future but how we invest in them does matter. With ETFs you may not have any sentimental value attached, so it becomes easy to sell, but real Gold, most of us find it difficult to sell, even in times of need, because it has some sentimental value attached to it.
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