Gold’s run since 2022 (and what ₹10 lakh would be worth today)
Indian gold prices have surged from ~₹52,000 per 10g in Aug 2022 to about ~₹1,00,000 per 10g by Aug 2025—almost 2× in three years. ₹10 lakh invested in Aug 2022 would be roughly ₹19–20 lakh today (before costs/taxes). So what’s the best way to buy Gold in 2025? If you used Sovereign Gold Bonds (SGBs), you’d also earn 2.5% p.a. on your initial investment (about ₹75,000 total on ₹10 lakh over 3 years, taxable), on top of the price move. So is it SGBs? Let’s find out. Reserve Bank of India
Why Indians love gold… but jewellery is the worst way to “invest”
Jewellery is wonderful to wear, terrible to invest in:
-
Heavy mark-ups: making/wastage charges + margins; plus GST on gold and GST on making charges, costs you never recover on resale.
-
Buy–sell spread: you’ll typically get less than spot when selling back.
-
Purity risk: hallmarking rules have tightened (HUID), but enforcement issues crop up; liquidity is still shop-dependent.
Bottom line: Jewellery is for occasions, not compounding.
Your investable gold choices (pros, cons, who it suits)
1) Gold coins/bars (physical)
-
Pros: simple, tangible.
-
Cons: GST, making/assay premiums, storage/insurance risk, resale friction/discounts. Not ideal for SIPs or tracking spot.
2) Sovereign Gold Bonds (SGBs)
-
Pros: Govt-backed; tracks market price at redemption; 2.5% p.a. interest on face value (taxable); capital gains tax exempt if held to maturity (8 yrs); tradable on exchanges; premature redemption allowed from year 5 on interest dates. Reserve Bank of India
-
Cons: Tenor/lock-in; secondary-market liquidity can be patchy with premiums/discounts to intrinsic; interest is taxable; purchase limit per FY. Also, no new public tranches announced recently, you’ll likely buy on the secondary market.
3) Gold ETFs (via Demat/broker)
-
Pros: SEBI-regulated, transparent; near-spot pricing, daily liquidity, SIP/STP friendly; no GST on buy; institutional custody. Typical expense ratios around 0.5–0.8% (varies by fund). You decide the amount you want to invest, you can even start with Rs. 100.
-
Cons: Brokerage/DP charges; Demat required; taxed as non-equity mutual funds as per current rules (check your purchase date—post-2023 rules treat most debt/commodity funds similarly). The Economic Times
4) Gold Fund-of-Funds (FoFs) (no Demat)
-
Pros: Easy SIPs via any MF platform; no Demat; invests in an underlying gold ETF; good for first-timers.
-
Costs: You pay the FoF TER plus the underlying ETF TER; many direct-plan FoFs still land around ~0.2–0.6% on the FoF + ~0.5–0.8% at ETF level (varies widely by AMC).
-
Cons: Slightly higher all-in cost vs buying the ETF yourself; small exit loads in some FoFs if redeemed very early. The Economic Times
5) “Digital gold” (wallet/apps)
-
Pros: Tiny ticket sizes; easy to buy/sell; some providers offer delivery.
-
Cons: Not SEBI-regulated; stock exchanges barred brokers from offering it; counterparty and custody risks vary by provider. Treat as a convenience product, not a core investment.
6) Multi-asset funds (with some gold)
-
Pros: One-stop diversification (equity/debt/gold); automatic rebalancing. It invests in Equity, Debt and Gold in 1 single fund.
-
Cons: Gold allocation is small and manager-determined; you can’t dial gold up/down precisely.
How much gold should you own?
A ~10% allocation is a sensible “shock absorber” in Indian portfolios—gold tends to diversify equity/bond risk and often shines during stress. The World Gold Council’s research shows gold’s low correlation and portfolio-hedging role across regimes.
Quick comparison to decide best ways to invest in gold (at a glance)
-
Lowest friction & best liquidity: Gold ETFs / Gold FoFs
-
Highest potential tax efficiency (if held full term): SGBs (8-year maturity; CG exempt on redemption)
-
Worst for investing: Jewellery (high, non-recoverable costs)
So… what’s the best way to buy gold (2025)?
For most investors, Gold ETFs or Gold Fund-of-Funds are the sweet spot:
-
They track spot closely and are easy to buy/SIP/redeem. Groww
-
Costs are transparent and competitive (pick low-TER, liquid funds).
-
FoFs give the same exposure without a Demat, perfect if you want set-and-forget SIPs. Vipulam Financial Services
When SGBs make sense: If you’re comfortable with an 8-year horizon, can navigate secondary-market pricing, and value the 2.5% interest + tax-free maturity gains, SGBs can edge out ETFs on after-tax outcomes and be the best way to buy gold. Otherwise, ETFs/FoFs win on simplicity and liquidity. Reserve Bank of India