With Diwali approaching, gold buying season is here again — and this year, the usual advice you’ll find online is quietly out of date. Many articles still list Sovereign Gold Bonds (SGBs) as an option to consider. They aren’t, at least not as a fresh purchase: the government stopped issuing new SGB tranches after the 2023-24 Series IV in February 2024, and there’s no issuance calendar for FY 2026-27. If you already hold SGBs from an original RBI issuance, hold on to them — Budget 2026 restricted the tax-free capital gains exemption to original subscribers who hold to full maturity, so buying SGBs second-hand on the exchange no longer carries the same tax advantage it once did.
That leaves three real options for fresh gold exposure this festive season: Gold ETFs, digital gold apps, and physical gold. Here’s how they actually compare.
Gold ETFs: the regulated default
Gold ETFs are mutual fund units backed by physical gold of 99.5% purity, held by a SEBI-registered custodian and independently audited twice a year. They trade on the NSE and BSE like shares, through your existing demat and trading account, with one unit typically representing a small fraction of a gram — making them accessible even for modest investments.
The costs are transparent: an annual expense ratio of roughly 0.5% to 0.9%, disclosed upfront, plus ordinary brokerage on buying and selling. There’s no GST on purchase, unlike physical or digital gold. Tax-wise, gains are treated the same as other gold investments post-2024: long-term capital gains (after a 12-month holding period) are taxed at 12.5% with no indexation benefit, and short-term gains at your income tax slab rate.
For most investors looking for straightforward, liquid gold exposure without storage worries, Gold ETFs are the sensible default.
Digital gold: convenient, but unregulated
Digital gold apps let you buy fractional gold online, often starting from just a few rupees, with the promise that your gold is stored in an insured vault and can be converted to physical delivery later. The convenience is real. So is the catch: in November 2025, SEBI issued an explicit public caution that digital gold and e-gold products fall outside its regulatory purview. There’s no SEBI oversight, no mandated custodian audits, and investors carry full counterparty risk if a platform runs into financial trouble.
The costs also stack up faster than they first appear — typically 3% GST on purchase plus a buy-sell spread of 2.5% to 5%, meaning you can start several percentage points behind the moment you buy, before gold has moved at all. Digital gold makes more sense as a way to accumulate small amounts toward a specific goal — say, saving gradually for wedding jewellery — than as a core investment holding.
Physical gold: the traditional choice, with traditional costs
Buying jewellery, coins, or bars remains the emotionally familiar choice, especially around Diwali and weddings. But it comes with the same drawbacks it always has: making charges that you don’t recover on resale (particularly for jewellery), GST on purchase, purity concerns unless you’re buying BIS hallmarked gold, and the practical burden of safe storage. It’s worth remembering there’s no wealth-creation case for jewellery specifically — treat it as a purchase for use and sentiment, not as your gold investment allocation.
What this means for your festive season buying
If the goal is investment exposure to gold as part of your portfolio, Gold ETFs are the most cost-transparent, regulated, and liquid option available today, now that SGBs are off the table for new investors. If you’re buying jewellery for a wedding or for wear, that’s a separate decision driven by sentiment and utility rather than returns — just go in aware of the making charges and treat it accordingly. Digital gold sits in between: fine for small, goal-based accumulation, but not a substitute for a regulated core holding.
As with any allocation decision, how much of your portfolio should sit in gold at all depends on your broader asset allocation and risk profile — gold works best as a small stabilising slice of a diversified portfolio, not as a primary wealth-building tool.
Related reading: investing in gold: what you should know, and asset allocation strategy for middle class investors.
