- Physical Metals vs ETFs: The Old Reality and the New Option
- The Power of SIP in Gold & Silver ETFs
- Why Many Indians Still Prefer Physical Metals And Why They Should Reconsider
- Final Thought
Imagine this. You decide to buy a small 10-gram gold coin every few months. You visit a jeweller, wait in queues, haggle on making charges, worry about purity, and then store it, hoping it stays safe. Every Diwali or wedding season, you might buy more, but many coins sit unused, locked away.
Now imagine instead that from the comfort of your home (or via your broker app), you simply buy units of a fund whose only job is to mirror the price of gold (or silver), with no making charges, no storage worries, no purity checks, no security needed. And you do this regularly, say ₹1,000 every month. Over time, you quietly build a growing asset that appreciates with metal prices.
Let’s break down with this blog why ETFs shine better than physical metals, and how SIPs in Gold & Silver ETFs can work powerfully for long-term investors.
Physical Metals vs ETFs: The Old Reality and the New Option
The Hassles of Physical Gold and Silver
- Buying physical gold (coins, jewellery, bars) often involves extra costs like making charges, hallmarking fees, premium over spot price. That reduces your effective investment.
- Once bought, you need safe storage. At home you worry about theft or loss. If you use a bank locker or safe deposit vaults, there are charges involved.
- Liquidity is lower. To convert to cash, you need to find a buyer, possibly at a discount (and again depend on purity and weight).
- Transparency can be an issue: at the time of selling you may face a discount, you may have to negotiate purity or pay hall-marking or certification costs, it may eat into gains.
These frictions like additional costs, storage hassles, liquidity constraints quietly erode the advantages of owning physical gold or silver.
ETFs: A Simpler, Cleaner Way to Own Metals
That’s where ETFs (Exchange-Traded Funds) focused on gold or silver come in. For example, Nippon India ETF Gold Bees offers investors exposure to gold price without actual physical handling. The scheme invests in physical gold and aims to mirror domestic gold prices.
Likewise, Nippon India Silver ETF gives exposure to silver since its launch in 2022.
With ETFs you get:
- No making charges or hallmarking premiums, you can simply buy at NAV/market price, which closely tracks the underlying metal price.
- No need for lockers or physical storage as holding happens via your demat/trading account.
- High liquidity, since ETFs trade on stock exchanges, you can buy or sell anytime during market hours.
- Transparent pricing as NAV reflects real-time underlying metal price; you don’t worry about purity, weight verification or resale discounts.
In short, ETFs take away nearly all the friction and cost associated with physical metals, while maintaining exposure to metal price movements.
Click here to see different Gold ETF options available.
Click here to see different Silver ETF options available.
The Power of SIP in Gold & Silver ETFs
Where metal investing really begins to shine is when you combine ETFs with the discipline of a monthly SIP. Instead of trying to time gold rates or waiting for “the right moment,” a SIP simply lets you invest a fixed amount every month and quietly accumulate units through market cycles.
Gold SIP Example: ₹1,000/month in GoldBees (Jan 2020-Nov 2025)
- Total months: 71
- Total invested: ₹71,000
- GoldBees price in Nov 2025: ₹104.51
- Total units accumulated: ≈ 1,424 units
- Final SIP value: ~₹1,48,795
Gold SIP Returns
- Final value: ~₹1,48,795
- Gain: ₹77,795
- Total growth: ~109%
- Approx CAGR: ~15.3%
What this shows:
Since 2020, gold has moved through multiple ups and downs, but the SIP kept accumulating units at every level. Even without timing the market, the investor ended up with more than double their investment with a steady, disciplined path to building gold exposure.
Silver SIP Example: ₹1,000/month in ICICI Pruli Silver ETF (Jan 2022–Nov 2025)
Silver ETFs started in India in early 2022, with ICICI Pruli Silver ETF being the first silver etf product.
- Total months: 47
- Total invested: ₹47,000
- Silver ETF price in Nov 2025: ₹163.31
- Total units accumulated: ≈ 598 units
- Final SIP value: ~₹97,619
Silver SIP Returns
- Final value: ~₹97,619
- Gain: ₹50,619
- Total growth: ~108%
- Approx CAGR: ~17-18%
What this shows:
Despite being a relatively new product, silver delivered strong results. The SIP benefited from silver’s rising industrial demand and price swings, quietly turning small monthly contributions into almost double the invested amount in under four years.
Source: Calculation made using monthly prices from Investing.com
Why Many Indians Still Prefer Physical Metals And Why They Should Reconsider
It is natural for many Indian households to prefer physical gold or jewellery. Emotional value, cultural significance (festivals, weddings), tradition of gifting gold, tangible assets you can hold; these make physical gold attractive.
However, for purely investment purposes, such emotional or decorative considerations may add cost and inefficiency. Jewellery often carries high making and hallmarking charges, and converting jewellery back to cash involves discount/valuation losses.
Moreover, physical assets carry storage and security risks, be it home safekeeping or locker charges, which reduce effective returns.
ETFs, on the other hand, offer pure price-linked exposure to metals. If your goal is wealth accumulation rather than adornment or gifting, ETFs often make more sense.
For silver, which has lower emotional or cultural baggage compared to gold, the ETF route becomes even cleaner: you gain exposure to silver’s upside (including possible industrial demand growth), without having to buy physical coins or bars.
Final Thought
In a country like India, where gold and silver hold traditional significance, it is easy to default to buying coins or jewellery when thinking of precious metals. But if your aim is financial growth, regular savings, transparency and ease, ETFs paired with SIP offer a smarter, more modern path.
Gold & Silver ETFs remove cost, friction, and inefficiency. SIP makes investing disciplined and stress-free. Over time, small monthly investments can grow into meaningful wealth, without the worries of storage, purity, liquidity or resale.
For any long-term investor who sees metals not as ornaments but as wealth-building instruments, ETFs deserve serious consideration.
Disclaimer:
This post is for general/educational information purpose and is no way to be considered as an advice, or recommendation for investment or otherwise. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Past performance are not indicative of future returns. The securities quoted are for illustration only and are not recommendatory.The logos above are property of respective trademark owners and by displaying it, INDmoney has no right, title, or interest over it. The numbers are on estimate basis only. Neither Company nor its affiliates provide guarantee as to accuracy, or completeness of data / information and as such disclaims all liability. Percentages are commonly rounded when presented in tables. As a result, the sum of the individual numbers may not always add up to 100%. INDstocks Private Limited (formerly known as INDmoney Private Limited) 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), AMFI Registration No: ARN-254564, SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.