AKG Money

Gold: jewellery or ETF?

Gold is how many Indian families save. But making charges, GST and buyback deductions mean jewellery holds less gold than you pay for. See the difference against a gold ETF or fund.

These are example numbers. Change any of them to see your own answer.

Your gold savings
₹

= ₹2 L

years

Gold has risen about 8–10% a year in rupees over long periods, with long flat spells.

%
Jewellery costs

8–25% of the gold value, more for intricate designs.

%

Jewellers deduct for purity and wastage; making charges never come back.

%
Gold ETF

₹2 L of jewellery holds only ₹1.69 L of gold: making charges and GST take ₹31,152 on day one. After 10 years and tax, the gold ETF would be worth ₹3.84 L against ₹3.34 L for the jewellery.

₹2,00,000 in gold for 10 years
ItemJewelleryGold ETF or fundMore money
Gold you actually own₹1,68,848₹2,00,000
Costs going in15% making + 3% GSTAlmost none
Costs while holdingLocker, if any0.5% a year
Costs coming out3% deductedAlmost none
After tax at the end₹3.34 L₹3.84 L
Yearly return5.3%6.8%

Jewellery has real value beyond money: weddings, gifting, wearing it. Buy it for those reasons, and use gold ETFs or funds for gold as savings.

Gold ETF ahead by₹49,946

How this is worked out

  1. Jewellery: what you pay covers the gold, making charges on it, and GST on both. Only the gold is worth anything when you sell, less the jeweller's deduction.
  2. Gold ETF or fund: almost all of your money buys gold; a small fee is taken each year.
  3. Both grow at the same gold price growth. Long-term gains are taxed at the rate you set when you sell.

Questions people ask

What about Sovereign Gold Bonds?

They paid 2.5% interest a year on top of gold's price and were tax-free at maturity, but the government has stopped issuing new ones. Existing bonds can still be bought and sold on the stock exchange.

Is digital gold the same as a gold ETF?

No. Digital gold sold by apps isn't regulated by SEBI or the RBI, and usually carries 3% GST plus a buy-sell spread. Gold ETFs and gold mutual funds are regulated.

How much of my savings should be in gold?

Many advisers suggest 5–10%, as a hedge when markets or the rupee fall. Gold pays no income and can stay flat for years.

Do I need a demat account for a gold ETF?

Yes, for ETFs. Gold mutual funds (fund of funds) don't need one and allow SIPs from ₹500, at a slightly higher fee.

Is my data saved anywhere?

No. Everything is worked out in your browser. Your numbers stay on your own device, and the page link holds them so you can share them.

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