Modes of Investing in Gold: Understanding Returns, Liquidity and Taxation
Modes of Investing in Gold: Understanding Returns, Liquidity and Taxation Gold continues to play a crucial role in Indian investment portfolios, acting as a hedge against inflation and market volatility. While investors today have multiple ways to invest in gold— Physical Gold, Sovereign Gold Bonds (SGBs), Gold ETFs, and Gold ETF Fund of Funds (FoFs) —each option differs significantly in terms of liquidity and taxation, which directly impacts net returns. Physical Gold Physical gold, such as jewellery, coins, and bars, remains the most traditional form of investment with no upper investment limit. However, it involves concerns around storage, insurance, and purity, which depends on the jeweller. Liquidity: Physical gold is relatively liquid, but investors may face price cuts due to making charges, buy–sell spreads, and discounts at the time of sale. Taxation: If physical gold is sold within 24 months , gains are treated as short-term capital gains (STCG) and taxed as per th...
