Gold price: Gold prices at 6-year high; should invest in gold funds, ETFs? (2024)

FAQs

Is it better to buy gold or a gold ETF? ›

Whether to hold physical gold or invest in gold exchange-traded funds requires examining the trade-offs with each, including their liquidity, costs, returns, risks, and the practicalities involved. In general, gold ETFs offer some tax advantages and lower costs over time than trading physical gold.

“With its stability against market fluctuations and ability to provide consistent returns against inflation, gold mutual funds offer a hedge against economic shocks. The primary goal of such investments should be to generate wealth over the investment period and safeguard against market downturns," said Gupta.

And although the price of the precious metal has risen significantly in the past few years, it still may make sense to buy now. After all, there's no guarantee that it will stop rising and, even if it falls, you'll lose vital inflation protection in the interim.

Gold ETFs may be as safe as gold coins or bars, but that's not always the case. There are two common types of gold ETFs, and whether or not they're as safe as investments in physical gold depends on the type of fund you purchase shares from.

What will gold be worth in 5 years? Two Jakarta-based commodity analysts forecast that the price of gold could reach as high as $3,000 per ounce in the next five years. While they remain bullish, they cautioned that many factors could affect the price of gold within this timeframe.

There are several potential risks to investing in gold, including: Price volatility: The price of gold can be volatile, and it may fluctuate significantly over short periods of time.

Our pick for the best overall gold ETF goes to SPDR Gold MiniShares Trust (GLDM). Despite not having the highest liquidity and total assets, GLDM still excels with its track record and low expense ratio — making it a great all-rounder ETF for gold exposure.

Which gold ETF is best for long term? ›

The commodity can also protect your portfolio from the stubborn inflation we've seen thus far in 2024 while acting as a diversification tool that could increase your risk-adjusted portfolio returns. So, consider adding gold to your portfolio today while it has the potential to grow in value.

Gold is better as a short to medium-term investment, as long-term returns on the yellow metal are often as low as 10 percent per annum. Do not make too heavy or long-term investments in gold. Allotting 5 percent to 10 percent of your investment portfolio to gold ETFs is a wise idea.

Keep in mind that you don't own any physical gold even if you invest in a physically backed ETF: You can't redeem or sell shares in exchange for gold.

Gold ETFs are more profitable than other gold-based investments if you plan to invest large sums, or indulge in regular trade. Since gold ETFs come with brokerage or commission charges of 0.5 to 1 percent, shop around the ETF market a bit to find a stockbroker/fund manager whose charges are low.

The most direct way to buy gold is to purchase actual gold bars or coins, but these can be illiquid and must be stored securely. Exchange-traded funds (ETFs) and mutual funds that track the price of gold are also popular.

Sovereign Gold Bonds are the safest way to buy digital Gold as they are issued by the Reserve Bank of India on behalf of the Government of India with an assured interest of 2.50% per annum. The bonds are denominated in units of grams of gold with a basic unit of 1 gram.