Jewellery, coins, ETFs, SGBs, digital gold: what each one actually is

People talk about buying gold as though it were one decision. It is at least five different ones, and they behave nothing alike. What follows is mechanics, not advice: what each product is, and what it costs to get in and out.

Jewellery

You pay the metal price for the purity, plus making charges, plus GST on both, plus a hallmarking fee. Making charges are the number that matters: typically 8 to 25 percent of the metal value, and largely unrecoverable when you sell. Buy-back is usually at that day's rate for the metal alone, minus a deduction, and often only at the same chain. Jewellery is the most expensive way to own gold and the only one you can wear — a real reason to buy it, just not an investment argument.

Coins and bars

The same metal without the jewellery premium, though not free of one: minted coins carry a smaller making charge, and 3 percent GST applies. Banks that sell coins generally do not buy them back, which surprises people; jewellers and bullion dealers are the practical exit. Storage becomes your problem, and a locker has an annual cost.

Gold ETFs

Exchange-traded units backed by physical gold held by the fund, bought and sold on the exchange through a demat account like any share. You pay brokerage and an annual expense ratio instead of making charges, and there is no storage question and no purity question. Liquidity is intraday. Buying units is buying a security, so the 3 percent GST on metal does not apply.

Sovereign Gold Bonds

Issued by the RBI on behalf of the Government of India in tranches, denominated in grams, with an eight-year term and an exit option from the fifth year. They pay 2.5 percent a year on the original investment on top of the price movement, and for individual investors the capital gain on redemption at maturity has been exempt from capital gains tax. Nothing to store, no making charge. The trade-off is the lock-in: leaving early means the secondary market, which is often thin. Whether a tranche is currently on offer depends on the government, so check the RBI or your bank rather than assuming.

Digital gold

Fractional gold bought through apps and payment platforms, with metal held in a vault by the provider. Convenient, and the ticket size can be tiny. The important caveat is regulatory: digital gold is not a SEBI-regulated security and not an RBI product, so you are relying on the provider and its vaulting arrangement. Spreads between the buy and sell price are typically wider than an ETF, and there is a GST component on purchase.

The comparison that actually matters

• Cost to enter: ETFs and SGBs lowest, jewellery highest.
• Cost to exit: SGB at maturity cleanest, jewellery worst.
• Custody: yours for coins, the fund's custodian for ETFs, the government for SGBs, the platform for digital gold.
• Regulator: SEBI for ETFs, the RBI and the government for SGBs, nobody specific for digital gold.
• Wearability: jewellery only — which for many Indian buyers is the entire point.

None of this is a recommendation, and Tathya Post does not give investment advice. Tax rules change and depend on your circumstances; confirm the current position with a qualified adviser or the scheme documents before committing money.