Gold ETF vs Digital Gold vs Jewellery: What ₹1 Lakh of Gold Costs Each Way
The gold price is the same whichever way you buy it. What you get back is not. Here is what each route takes from ₹1 lakh, and which one is cheapest depends on how long you hold.
Figures checked · How we calculate
₹10,825the gap between the cheapest and the dearest way to hold ₹1 lakh of gold for five years
Same gold, same price, bought and sold on the same days. A gold ETF charging 0.50% a year gives you back ₹97,510. Jewellery gives you back ₹86,685, and that assumes the jeweller buys it back at the full gold value.
Dhanteras 2026 is on Friday, 6 November. Gold is up 11.2% since last Dhanteras, measured by Nippon India Gold BeES. It is also 18.0% below the high it reached on 29 January 2026, which is a reminder that gold can fall too. Whether gold earns more than shares is a separate question, answered for every Dhanteras since 2009 in Dhanteras gold vs the Nifty. This page is about what the route costs.
Held five years, the cheapest route returns ₹10,825 more than the dearest
The comparison holds the gold price flat, so the only thing that differs is the route. Whatever gold actually does, it does to all five equally.
- Gold ETF charging 0.50% a year₹97,510Such as ICICI Prudential Gold ETF. No GST; one ₹15 depository charge when you sell.
- Nippon India Gold BeES, 0.81% a year₹96,000The largest gold ETF, and one of the more expensive.
- Digital gold₹94,1753% GST on purchase, and a sell price assumed 3% below the buy price. Free storage assumed for all five years.
- Coins or bars₹91,432Assumes a 3% dealer premium plus 3% GST, sold to a jeweller 3% below the gold value.
- Jewellery₹86,685Assumes a 12% making charge plus 3% GST, and a jeweller who buys it back at the full gold value, which is the best case.
Expense ratios are the funds' published figures in August to October 2026. Premiums, spreads and making charges vary by seller and are assumptions: check your own bill and the app's live buy and sell prices.
The route that is cheapest depends on how long you hold
A gold ETF takes its fee every year. Digital gold, coins and jewellery take theirs on the day you buy. So the longer you hold, the more the ETF's fee adds up.
| ₹1 lakh held for | Gold ETF at 0.50% | Gold BeES at 0.81% | Digital gold | Coins or bars | Jewellery |
|---|---|---|---|---|---|
| 1 year | ₹99,485 | ₹99,175 | ₹94,175 | ₹91,432 | ₹86,685 |
| 5 years | ₹97,510 | ₹96,000 | ₹94,175 | ₹91,432 | ₹86,685 |
| 10 years | ₹95,096 | ₹92,174 | ₹94,175 or less | ₹91,432 | ₹86,685 |
Over ten years, a gold ETF charging 0.81% costs more than digital gold's entry cost, if digital gold's storage stayed free. It usually does not: providers typically give a few years free and then charge a yearly fee. The cheap ETF is ahead at every holding period. The fee is the thing to compare between gold ETFs, since they all hold the same gold. Over ten years, 0.50% instead of 0.81% is worth ₹2,922 on each ₹1 lakh.
Gold ETFs and gold funds: regulated, no GST, a yearly fee
- Gold ETF. Each unit is backed by physical gold held by the fund, and it trades on the exchange like a share. You need a demat account. Expense ratios run from about 0.5% (ICICI Prudential Gold ETF) to 0.81% (Nippon India Gold BeES, the largest). Brokerage is zero at most discount brokers for delivery; selling costs one depository charge of about ₹15. Gains on units held more than 12 months are taxed at 12.5%, plus cess.
- Gold fund. A mutual fund that buys a gold ETF, for anyone without a demat account, and the easy way to run a monthly SIP in gold. It charges its own fee on top of the ETF's: HDFC Gold ETF Fund of Fund's direct plan adds about 0.20%. Gains become long-term only after 24 months.
Both are regulated by SEBI, and neither pays GST on purchase.
Digital gold: 3% GST, a spread, and no regulator
Digital gold sold through payment and broking apps is bought from a bullion company such as MMTC-PAMP, SafeGold or Augmont, which stores the metal for you. You can buy ₹10 at a time and ask for delivery as coins.
On 8 November 2025, SEBI warned investors that these products are neither securities nor regulated commodity derivatives, so none of the market's investor protection applies to them. If the seller or the vault operator fails, there is no regulator to complain to. SEBI pointed investors to gold ETFs and electronic gold receipts instead.
The cost is 3% GST on every purchase, which you never get back, and the gap between the app's buy and sell prices, commonly 3% or more on top. For tax, digital gold counts as physical gold: long-term only after 24 months.
Coins, bars and jewellery: the cost is paid on day one
- Coins and bars. No making charge on plain bullion, but 3% GST and a premium over the gold price. Banks sell coins but generally do not buy them back, so you sell to a jeweller, usually below the gold value.
- Jewellery. 3% GST on the whole bill, making charge included. Making charges vary from a few percent on plain chains to 20% or more on intricate pieces; this page assumes 12%. Jewellers usually buy back or exchange at the gold value, sometimes less a deduction, and the making charge is never returned.
Jewellery is a fine thing to buy because you want to wear it. As an investment, it starts 13% behind.
Sovereign Gold Bonds lost their tax advantage for anyone buying them now
The government has not issued new Sovereign Gold Bonds since February 2024. Bonds already issued trade on the exchange, and they still pay 2.5% a year in interest on the issue price.
From 1 April 2026, the Budget's change to the tax rules means only an investor who subscribed when the bond was first issued and holds it until maturity is exempt from capital gains tax on redemption. If you buy a bond on the exchange now, the gain at maturity is taxed. That removes most of the reason to pay a premium for them.
Frequently asked questions
Is digital gold safe? The gold is usually real and stored in insured vaults. What is missing is a regulator. SEBI said in November 2025 that its investor protections do not apply to digital gold, so if something goes wrong with the seller, your remedy is a contract claim against a private company.
Can I buy a gold ETF without a demat account? No. Buy a gold fund instead, which holds the ETF for you, through any mutual fund platform. It costs a little more each year and its gains take 24 months, rather than 12, to count as long-term.
Which gold ETF is best? They all hold gold, so the differences are the fee and how easily it trades. Compare the expense ratio first, then check that the ETF trades enough each day that its price stays close to the gold it holds.
Is gold a good buy after this year's rise? Nobody knows. Gold rose 63% between Dhanteras 2024 and Dhanteras 2025, has fallen 18.0% from its January 2026 high, and is still up 11.2% on a year ago. Buy it as a fixed share of your portfolio, not as a forecast.
Where do the figures come from? Gold price moves are Nippon India Gold BeES closing prices, to 16 October 2026. Expense ratios are the funds' published figures from August to October 2026. The digital gold spread, coin premium and resale discount, and the making charge are assumptions, stated next to each figure.