This Article was fact checked and last updated for accuracy on July 17, 2025 by Mani Karthik
This number will blow your mind: ₹96,000 💥
That’s where ICICI Bank predicts gold prices will hit by the second half of 2025.
We’re currently at ₹88,996 per 10 grams.
If you’re an NRI like me, scratching your head about gold investing, you’re not alone.
The real question isn’t whether to buy gold.
It’s HOW to buy gold.
Market is Going Absolutely Crazy Right Now 📈
Let me hit you with some mind-blowing numbers from 2025:
Gold ETF Tsunami: Gold ETFs in India saw massive inflows of ₹14,948 crore in FY 2024-25. That’s nearly triple from the previous year. Assets under management exploded by 95.2% to ₹55,677 crore by February 2025.
Performance That Makes Everything Else Look Silly: Gold emerged as the top-performing asset class in India in 2024, posting 21% gains. Beat stocks. Beat bonds. Beat everything.
Long-term Track Record: From 2010 to 2025, physical gold prices rose from Rs 18,500 to Rs 88,996 per 10 grams. That’s a 17.01% compound annual growth rate.
People are literally rushing into gold like their financial lives depend on it.
My Jewelry Store Disaster (And What It Taught Me) 💍
Before I tell you which option is better, let me share my most embarrassing gold buying experience.
It was 2019. Two years after moving back to India.
My wife wanted to buy gold jewelry for Diwali. “Let’s go to that fancy store in Forum Mall,” she said.
I walked in feeling like a big shot. Former Silicon Valley guy. I’ve got this figured out.
The salesman quoted ₹3,200 per gram.
“Plus 15% making charges.” “Plus 3% GST.” “Plus 8% wastage charges.”
Wait, what?
By the time we walked out, a simple 10-gram necklace cost us ₹42,000.
For 10 grams of gold that should have cost ₹32,000.
That’s when it hit me. I paid ₹10,000 extra for basically nothing.
My tech brain started calculating. “There has to be a better way.”
That’s when I discovered Gold ETFs.
The Real Story Behind Gold ETF Performance
Here’s what most people don’t understand about Gold ETFs:
Digital Revolution in Gold: Gold ETFs are passively managed funds that track domestic gold prices. One unit equals one gram of gold backed by 99.5% pure physical gold.
Liquidity Like Stocks: Gold ETFs are more liquid. You can sell them instantly on the stock exchange during trading hours at market price.
Cost Efficiency: Gold ETFs don’t attract securities transaction tax (STT) or value-added tax (VAT), making them more suitable for investors seeking identical returns to gold.
Case Study: How My Portfolio Changed Everything
After my jewelry store disaster, I split my gold investments:
₹2 lakh in Physical Gold:
- Bought 24k gold coins from bank
- Stored in bank locker (₹3,000/year charges)
- Zero liquidity unless I visit the bank
₹2 lakh in Gold ETFs:
- Bought HDFC Gold ETF units
- Stored in demat account (free)
- Can sell anytime during market hours
Three years later: Both gave similar returns (~12% annually). But the experience? Night and day.
Physical gold felt like carrying a burden. Gold ETFs felt like freedom.
The Tax Bomb That Changed Everything 💣
Union Budget 2024 dropped a massive change that most people missed:
Old Tax Rules (Pre-April 2023):
- Long-term gains: 20% with indexation benefits
- This made Gold ETFs super tax-efficient
New Tax Rules (Post-April 2023): Long-term capital gains on gold sales are now taxed at 12.5% with no indexation benefit
The Kicker: For both physical gold and Gold ETFs, LTCG tax is now 12.5%. Short-term gains are taxed as per your income slab.
This leveled the playing field. Physical gold and Gold ETFs now have identical tax treatment.
Spotlight: Top Gold ETF Performers 🏆
Based on my research and actual investment experience, here are the champions:
Axis Gold ETF: Tops the list in terms of 1-year returns with strong 5-year CAGR performance
ICICI Prudential Gold ETF: Has the lowest expense ratio among top gold ETFs, offering liquidity and cost efficiency
HDFC Gold ETF: Established in 2010, tracks gold prices in India efficiently. One of the most liquid options.
Kotak Gold ETF: Market cap of ₹1,984.14 crore, making it one of the stable options with decent returns
My personal pick? ICICI Prudential Gold ETF. Lowest costs. High liquidity. Solid track record.
The Ultimate 3-Column Showdown ⚔️
| Factor | Physical Gold | Gold ETFs |
|---|---|---|
| Current Price | ₹88,996/10g + making charges (15-25%) | ₹88,996/10g (exact tracking) |
| Additional Costs | Making charges, wastage, GST (total 20-30%) | Expense ratio (0.4-0.6% annually) |
| Storage | Bank locker (₹2,000-5,000/year) | Demat account (usually free) |
| Liquidity | Visit jeweler, purity check, bargaining | Instant sale during market hours |
| Minimum Investment | Usually 1 gram minimum | Can buy fractional units |
| Theft Risk | High (even in lockers) | Zero (digital storage) |
| Purity Guarantee | Need hallmark certification | 99.5% guaranteed by ETF |
| Tax Treatment | LTCG: 12.5%, STCG: Income slab | LTCG: 12.5%, STCG: Income slab |
| Emotional Value | High (jewelry, gifts) | Low (just investment) |
| NRI Accessibility | Difficult (physical presence needed) | Easy (through demat account) |
| Emergency Access | Bank hours only | Market hours (9 AM – 3:30 PM) |
| Transaction Time | Hours to days | Minutes |
Financial Planning Strategies💰
The 70-30 Gold Strategy
After 7 years of experimenting, here’s what works for most NRI families:
70% Gold ETFs for Growth:
- Higher liquidity
- Lower transaction costs
- Easy to manage from abroad
- Perfect for wealth building
30% Physical Gold for Emotions:
- Jewelry for occasions
- Gifts for family
- Cultural connections
- Emergency backup
Cost-Effective Investment Pathways
For Beginners: Start with ₹10,000 in liquid Gold ETF. Test the waters. See how it feels.
For Serious Investors: SIP in Gold ETFs. ₹5,000 monthly. Dollar cost averaging works with gold too.
For NRIs: Open demat account through NRE account. Invest in Gold ETFs. Repatriate easily.
Preparation Roadmap for Success 🚀
Comprehensive Checklist for Gold Investment
Before You Start:
✅ Open demat and trading account
✅ Understand your risk tolerance
✅ Decide your allocation percentage
✅ Research top-performing Gold ETFs
For Physical Gold:
✅ Find reputable dealers
✅ Verify hallmark certification
✅ Arrange secure storage
✅ Keep all purchase receipts
For Gold ETFs:
✅ Compare expense ratios
✅ Check tracking error
✅ Review fund house reputation
✅ Set up systematic investment
Monthly Investment Strategy
Month 1-3: Start with Gold ETFs only
Month 4-6: Add small physical gold purchases
Month 7-12: Find your optimal balance
Year 2+: Stick to your allocation, rebalance annually
The Harsh Reality About Gold Investing 🎯
Let me be brutally honest about something most financial advisors won’t tell you:
Gold is NOT a wealth creator.
It’s a wealth PRESERVER.
Over the last decade, gold prices increased by 12% annually. That barely beats inflation in some years.
But here’s why I still invest in gold:
- Insurance against chaos: When everything crashes, gold holds value
- Currency hedge: If rupee weakens, gold prices in INR go up
- Portfolio stability: Reduces overall volatility
- Cultural connection: We’re Indians. Gold is in our DNA.
My allocation:
- 10% of total portfolio in gold
- 70% of that in Gold ETFs
- 30% in physical gold
Personal Anecdotes That Changed My Mind 🔄
The COVID Crash Story
March 2020. Markets crashed 40%. My equity portfolio was bleeding red.
Gold? It held steady. Actually went up.
My Gold ETFs became my emergency fund when I needed liquidity. Sold some units. Got cash in my account within minutes.
Try doing that with your jewelry.
The US Visit Realization
Last year, I visited my friends in Silicon Valley. Bragged about my gold investments.
They laughed. “Mani, we buy GLD (US Gold ETF). Why are you complicating it?”
That’s when I realized. Gold ETFs aren’t just Indian innovation. Global investors use them everywhere.
Physical gold? It’s mostly an Indian thing now.
My Brutally Honest Recommendation 💯
For 90% of NRI families: Go heavy on Gold ETFs.
Here’s why:
✅ Convenience: Buy from anywhere, sell anytime
✅ Cost: No making charges, minimal expenses
✅ Transparency: Real-time pricing, no haggling
✅ Liquidity: Convert to cash in minutes
✅ Safety: No theft, no purity issues
Physical gold is still relevant for:
- Jewelry purchases (cultural/emotional value)
- Gifts for special occasions
- Emergency backup (apocalypse scenario)
My current split:
- 80% Gold ETFs (mainly ICICI Prudential Gold ETF)
- 20% Physical gold (jewelry and coins)
Getting Started Today: No Excuses 🏃♂️
Step 1: Open demat account (Zerodha, Groww, Angel One)
Step 2: Transfer ₹10,000 to trading account
Step 3: Buy 1 unit of ICICI Prudential Gold ETF (or HDFC Gold ETF)
Step 4: Watch it track gold prices for a month
Step 5: If comfortable, increase allocation gradually
Don’t overthink it.
The biggest mistake is not starting. The second biggest mistake is putting all money in physical gold.
Find your balance. Start small. Build gradually.
Remember: Every gram of physical gold you buy with 20% extra charges is money you’re donating to jewelers.
Every Gold ETF unit you buy is money working efficiently for your future.
Your call.
What I Tell My NRI Friends Today 📞
When NRIs ask me about gold investing, I give them this simple rule:
“If you can’t eat it, wear it, or gift it, buy the ETF.”
Physical gold for emotions. Gold ETFs for wealth.
Don’t complicate it beyond that.
The market will do the rest.
Connect with me at BackToIndia.com for more NRI financial insights.
P.S.: My mom still prefers physical gold. She touches her jewelry and feels secure. I check my Gold ETF NAV and feel smart. Both of us are right. That’s the beauty of having options! 😊
Data Sources & References 📚
All data and insights in this article are sourced from official financial institutions and market reports:
- Gold Price Predictions: ICICI Bank Global Markets Report – BusinessToday Gold ETFs vs Physical Gold Analysis
- Gold ETF Performance Data: World Gold Council India Market Update – Gold Focus: India Gold Market Update
- Tax Information: ClearTax Gold Taxation Guide – Income Tax on Gold in India
- Gold ETF Details: Tickertape Investment Platform – Best Gold ETFs in India 2025
- ETF Performance Rankings: Angel One Investment Research – Gold ETF List and Performance
- Market Analysis: Groww Investment Platform – Best Gold ETFs in India 2025
- Investment Strategy: 5paisa Research – Best Gold ETFs to Invest 2025
- Comparative Analysis: Kotak Mutual Fund Research – Gold ETF vs Physical Gold 2025
- Fund House Data: Scripbox Investment Research – Best Gold ETFs July 2025
- ETF Listings: Dhan Investment Platform – Gold ETFs List India
All data current as of July 2025. Gold prices and ETF performance are subject to market fluctuations. Past performance does not guarantee future returns. Please consult a financial advisor for personalized investment advice.