Jewellery, bricks or ETF: Here is the experts' pick for investment in gold

This Dhanteras, experts break down costs, risks and real returns to reveal the smarter pick

With Diwali and Dhanteras on the horizon and global uncertainties in the backdrop, the prices of gold are on the rise, prompting many to consider it as an investment option. But in which form? There are many options like physical gold, jewellery, digital gold, and gold exchange-traded funds (ETFs). So which is the smartest choice?

 

We spoke to experts to break it down for everyday investors.

 

Physical gold versus gold jewellery: Purity and costs matter

Physical gold in the form of bars or coins often outperforms jewellery for investment purposes, as it maintains higher purity and comes without heavy add-on costs. Experts emphasise that while jewellery holds cultural appeal during festivals, its financial drawbacks can lead to regrets.

 

 

- Key pros of physical gold: Typically 24-karat with minimal premiums over market rates, making resale straightforward and profitable, explains Aditya Agarwal, co-founder of Wealthy.in, a wealth-tech platform. 

 

- Main cons of jewellery: Involves 8-25 per cent making charges, wastage fees, and design premiums that jewellers deduct at resale, resulting in 10-15 per cent value loss, according to Agarwal and Arjun Guha Thakurta, executive director at Anand Rathi Wealth Limited, a wealth management company.

 

- Emotional angle: Jewellery provides sentimental value for occasions like Diwali, but it's not ideal for wealth growth, notes Ajay Lakhotia, founder & chief executive officer of StockGro, a stock trading and investing platform. 

 

Real examples highlight these pitfalls: A Bengaluru couple purchased 22-karat bangles on Dhanteras, only to forfeit most making charges when reselling two years later amid rising prices, Lakhotia said. Similarly, Agarwal recalls a buyer who invested Rs 2,00,000 in jewellery, discovering Rs 44,000 went to making charges alone, causing a 25 per cent immediate loss. Thakurta shares a case where an investor lost 8-10 per cent on a Rs 2 lakh Akshaya Tritiya jewellery buy during resale.

 

 

Digital gold vs gold ETFs: Liquidity and regulation

Digital gold and ETFs both eliminate the need for physical storage, offering modern ways to invest without handling the metal. However, they vary in accessibility, oversight, and fees, making ETFs generally more reliable for long-term holders.

 

- Digital gold advantages: Allows investments from as low as Rs 1 with round-the-clock app access and insured vault storage, ideal for beginners, says Agarwal. It's handy for short-term buys, adds Lakhotia.

 

- Digital gold drawbacks: Includes 3 per cent GST on purchase, unregulated platforms, wider buy-sell spreads, and potential delivery costs, cautioned Lakhotia and Agarwal.

 

- ETFs strengths: Sebi-regulated with low expense ratios (0.2-1 per cent), no GST at buy-in, and stock-like trading via demat accounts for high liquidity, highlight Thakurta and Lakhotia.

 

- Tax breakdown: Both options incur 20 per cent long-term capital gains tax with indexation after three years, clarifies Agarwal.

 

During volatility, one investor in 2025 shifted from digital gold to ETFs, avoiding GST erosion and securing better profits from a quick price spike, as shared by Agarwal.

 

Best pick for middle-class families this Diwali

In today’s rising market, experts advise middle-class families to prioritise financial efficiency over tradition when buying gold for festivals. This means balancing small sentimental purchases with smarter instruments that offer real returns and ease.

 

- Top recommendation: ETFs: They provide transparent pricing, no hidden charges, and quick liquidity as an inflation hedge, recommend Lakhotia and Agarwal. Thakurta suggests capping gold at 5-10 per cent of your portfolio to avoid overexposure.

 

- Jewellery advice: Limit to minimal amounts for cultural joy, not as core investment, urges Agarwal. Supporting stories: Lakhotia describes a Meerut family who began ETF SIPs in 2022, easily liquidating a portion in 2025 for a medical expense at a profit. Agarwal points to an investor who doubled returns via gold bonds since 2022, far outpacing jewellery. Thakurta notes gold's inconsistency, with just a 20 per cent chance of over 10 per cent returns in the past decade based on rolling analysis.

 

Hidden traps and perks for new investors

First-timers should look beyond surface appeal to uncover costs and benefits across options. Physical forms demand vigilance on purity, while digital and ETF routes simplify life but aren't fee-free.

 

- Costs to flag: Require BIS hallmarks for physical gold purity; expect annual ETF expense ratios and brokerage; factor in digital gold's GST and spreads, advise Lakhotia, Agarwal, and Thakurta.

 

- Benefits explained: All forms hedge against inflation and diversify portfolios, with digital/ETFs eliminating storage risks and offering transparent pricing without making charges, per Agarwal.

 

For pure investment this season, ETFs stand out as the simple, regulated choice.