If you are searching about how to buy gold bullion or ETF online then this article is for you.
We all know that the prices of gold are touching new highes and everyone is thinking to make investment in gold for the better future.
So, after reading this article you will get to know what is Gold Bullion and ETF. Also what is the prime difference between them.
Later you can easily decide which is better to invest our hard-earned money. So that we can earn similar returns with full of safety.
Know more about Gold Bullion or ETF
Bullion is also known as precious metals such as gold that is officially recognized as being at least 99.5% of purity. And that is in the form of bars or ingots.
Bullion is often kept as a reserve asset by governments and central banks. But at a personal level investing in bullion form will be way more risky.
Let’s know about disadvantages of investing in Bullion
Disadvantages of Investing in Gold Bullion
There are several disadvantages of investing in Gold Bullion are as below.
Risk of Theft
When we have precious metals in physical form then undoubtedly we carry the risk of theft. Because thief may be always watching us vigilantly on our assets which he can see by his eyes. So, when we have decided to invest in a Physical Gold that i.e. Bullion we always carry Risk of transportation.
Bullion have higher cost of storage
If we are having gold then it will be cumbersome for a common man to maintain its storage at home. So, he seeks to make it safe with bank’s locker facility.
But still bank’s locker facility is too much costly.
No Dividend Income
The main unattractive feature for the bullion gold is that it has no dividend income.
Whatever we earn that is the capital income which arises when we sell those gold bullion
Higher Bid-Ask Price Spread
Before knowing about this concept you should know what is Bid and what is Ask price.
Bid Price is a price at which buyer is willing to buy. And Ask price is a price at which seller is willing to sell.
Bid Price is always a lower price because buyer always wish to buy products cheaper. And Ask is always a greater (costlier) price as seller wants to sell at a dearer rate.
A bid-ask spread is the difference between the Bid price and Ask Price. When there is greater difference between Bid and Ask price then it is caller as high Bid-Ask Spread.
In the bullion mode there is always higher Bid-Ask Spread as compared to ETF.
Some advantages of Bullion
In Hand Asset
No matter there is electricity available or internet facility in our area. But we always have our assets with us. We can always sell out those assets and encash it.
This is main feature everyone gets attracted. And the secondary feature is…
Can convert it into ornaments
If the price is not increasing as we are expecting then we can convert it into ornaments directly. Because we are not going to sell it in a loss.
And then we will look another options to utilize those assets.
Then other assets might not have this feature but Bullion always has.
It can be converted into beautiful ornaments and ladies and gents also can wear for the parties and increase their beauty.
Actually this is the primary reason that the gold have greater value in India than other countries.
ETF facility of Gold Bullion
The full form of the ETF is Exchange Traded Funds.
This means that,
A Gold ETF is an exchange-traded fund (ETF) that aims to track and copy the domestic physical gold price. By nature, they are passive investment instruments that are based on gold prices and invest in gold bullion.
In short, ETFs are units representing physical gold which may be in paper (now dematerialized or Demat) form.
One Gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity.
Gold ETFs combine the flexibility of stock investment and the simplicity of gold investments.
Benefits of Gold ETF
No Risk of Theft
As the whole gold investment is in the Dematerialized format there is no need to worry of physical theft.
All that gold is registered in our name at a remote safe place. We don’t need to worry. Because whole risk is not in our shoulders. That risk is managed by the other parties.
Lowest Bid-Ask Spread
When we buy or sell then we get the minimum difference in prices. So that we can enjoy selling in the short term also. Because little move also make us profitable. Unlike bullion investment we can sell instantly without having much risk of price gap between seller and buyer.
Enjoy dividend income
When we decide to invest in an ETF form of gold then you are inviting decent inflow of dividend from the traded gold.
Even though we just buy and sit relax the transaction still happens by the gold managing party to generate some returns.
As we are the owner of that gold, part of the return is transferred to us. So, we can enjoy some dividend income too by its trades.
List of ETFs to be Purchased Online
Before proceeding further I would inform you that, for purchasing ETFs you should have a Trading and Demat Account.
I would give you better suggestions to open your trading and Demat accounts for your benefits. Those are as below.
5 Paisa Account
This is the popular stock market participant which gives you facility to open free trading account with just ₹ 20 per order.
Upstox is also well known stock broker which is popular for 0% brokerage on investment of shares. So, this is very beneficial for you. And also it is popular for its best application interface which is understandable and suitable for all.
The List of ETFs are as below…
Some gold ETFs like HDFC Gold ETF, UTI Gold, SBI Gold ETF, and lot more
You can see all Gold ETFs list and their current prices with this link.
It is better to invest our money in ETFs rather than Bullion gold. Because bullion is not so profitable than ETFs and have ample risk of carrying.
We should avoid buying bullion. The only exception is the ornaments to make and wear by our own.
- About ETF – Amfi India