Gold ETFs, explained properly
A Gold ETF is a fund that holds physical gold and trades on the stock exchange like a share. One unit usually tracks roughly 1 gram of gold. It's currently the most practical route for most new gold investors in India, now that SGBs are closed to new money.
How it actually works
1. You need a demat account
Same account you'd use for stocks. If you already invest in equities, you're set up already.
2. You buy units on the exchange
Price moves through the trading day, like a stock — unlike a mutual fund, which settles once daily at NAV.
3. The fund holds real gold
Backed by physical gold held in custody by the fund house, audited periodically.
4. You sell whenever markets are open
No lock-in. Settlement is standard T+1, same as equities.
What it really costs
The expense ratio is the headline number, but it's not the only cost.
| Expense ratio | Typically 0.4–0.8% per year, deducted from fund NAV automatically |
| Brokerage | Usually small/flat per trade — check your broker's specific rate for ETFs |
| Demat/AMC charges | Your existing demat account's annual charges, if any — not specific to gold |
| Bid-ask spread | Usually narrow for popular gold ETFs with decent trading volume — check before buying a thinly-traded one |
| GST | None — unlike physical or digital gold, ETF purchases don't attract GST |
Who this suits
Good fit
You already have a demat account, want liquidity, and don't want to deal with storage or purity concerns.
Less ideal fit
You want to invest tiny, irregular amounts with zero setup — digital gold apps have a lower barrier for that, at a higher ongoing cost.
See the full five-way comparison, or check the cost calculator against digital gold directly.