Gold as an investment: is it worth it in India?

From March 2007 to the end of September 2026, the price of gold in India rose 15.06% a year on average.^[1] This figure comes from the note of the Nippon India ETF Gold BeES, which compares its ETF with the price of gold in India.^[1]

• Example: ₹10,000 invested at the price of gold in India in March 2007 was worth ₹1,55,970 on 30 September 2026.^[1]
• In the ETF, the same amount was worth ₹1,28,356: the ETF keeps a small part in cash, and its fees reduce the gold in a unit every year.^[1]
• The last 5 years have been strong: 26.36% a year for the price of gold in India, as of 30 September 2026.^[1]
• You can follow the ETF price on Yahoo Finance, under the code GOLDBEES.NS.^[9]

The price of gold goes up and down like the price of a share. A unit of the Nippon India ETF Gold BeES was worth about ₹121 on 30 September 2026, and about ₹112 on 13 November 2026.^{[1] [8]}

• The calculation: ₹112 ÷ ₹121 ≈ 0.92, a fall of about 8% in six weeks.
• Example: ₹25,000 invested in this ETF on 30 September 2026 was worth about ₹23,000 on 13 November 2026.
• Gold pays nothing while you wait: if its price does not rise, your physical gold or your ETF earns you nothing.
• Nippon India Mutual Fund rates its gold ETF as high risk on its risk scale.^[1]

In India, you can buy gold in physical form, as a gold ETF or as SGBs. All three follow the price of gold, but their costs and their tax differ.

• Physical gold (jewellery, coins, bars): you keep it at home or at the bank, with a risk of theft. According to Nippon India Mutual Fund, the margin paid to the seller generally costs more than an ETF's fees.^[1]
• The gold ETF, for example the Nippon India ETF Gold BeES: this one holds bars of 99.5% pure gold and is bought on the NSE like a share.^[1] You need a demat account, the account where your securities are held, and a broker.^[1] One unit is worth about 0.01 gram of gold: you can start with a single unit.^[1]
• SGBs: the Indian government pays you 2.50% interest a year on your initial investment, in two payments a year, on top of the change in the price of gold.^[2] The RBI issues them; the last series listed on its page dates from February 2024.^[5]

An SGB bought in November 2018 was repaid at about 4.4 times its investment in November 2026, not counting interest.^{[3] [4]} Here is the calculation for 10 grams of the 2018-19 Series III.

The gain on physical gold held for more than 24 months is taxed at 12.5%.^{[6] [7]} Held for less time, this gain is added to your income and taxed at your usual rate.^[6]

• Simplified example: you buy physical gold for ₹1,00,000 and sell it for ₹1,50,000 three years later. Your gain of ₹50,000 is taxed at 12.5%, or ₹6,250.
• SGBs, the interest: your 2.50% a year is added to your taxable income.^[2]

A gold ETF like the Nippon India ETF Gold BeES does not try to beat gold: it follows it, minus its fees.^[1] A few funds tracked by Donnie have done better than gold (Indian gold price) over 7 years. These are funds that invest in emerging markets, among other places.

• Invesco India Small Cap Fund Direct Growth returned +24.9% a year over 7 years, against +19% for gold (Indian gold price).
• Example: ₹25,000 invested 7 years ago would be worth ₹1,18,625 in Invesco India Small Cap Fund Direct Growth, against ₹84,565 in gold.
• Bank of India Manufacturing & Infra Direct Plan Growth returned +24.2% a year: compare its curve in the tool.
• Quant ELSS Tax Saver Payout of Income Distribution cum capital withdrawal option Option Direct Plan returned +23.7% a year: compare its curve in the tool.
• What Donnie adds: you see the shares these funds hold, line by line, and an alert tells you when their managers buy or sell.