Know the differences between physical and non-physical gold

2 MinsApr 07, 2023

Gold as an asset class offers a hedge against market volatility and economic instability. It can act as a haven during times of high inflation. Earlier, investment in gold was largely in gold jewellery, coins or bars. But today you have a choice of options to invest in gold digitally. Read on to know the difference between physical and non-physical gold.

Know the differences between physical and non-physical gold

Non-physical goldPhysical Gold
Customer need not worry about security since it is stored electronicallyHas to be stored in a secured place such as a bank locker
Easy to buy and sell and offers accurate price realisation based on prevailing gold priceBuying and selling can be cumbersome and gains may be impacted on account of making charges, etc (in the case of gold jewellery)
Preferred as an investment for the long-termPreferred for gifting on special occasions

Non-physical Gold

Non-physical gold is where you invest in financial instruments benchmarked to the price of gold. The value of the financial instrument changes with the change in the price of the underlying gold investment.

Features of non-physical Gold

  • The different types of non-physical gold include Digital Gold, Gold Exchange Traded Funds (ETFs), Gold Index Funds, Sovereign Gold Bonds
  • All these instruments offer the opportunity for capital appreciation linked to gold prices
  • You can invest in these instruments online through your net banking account or mobile banking app. For Gold ETFs, you would need a demat account.
  • When you buy Digital Gold from the bank, you can buy small amounts of physical gold online at a time. This is suitable for those who are on a budget.
  • Sovereign Gold Bond offers interest income, in addition to likely capital appreciation. But it is available for investment only when the Reserve Bank of India announces a new tranche.
  • There is transparency in pricing. You can check the value of your Gold Fund/ETF or Digital Gold on a real-time basis by logging into your internet bank account or mobile app.
  • The gold underlying your investment is insured and stored safely by the fund house or custodian, which are regulated entities. Hence, you don’t have to worry about the safety or purity of your gold investment.

Also Read: [Digital Gold – a smart way to buy Gold]

Physical Gold

Physical gold includes gold that can be held in your hand. This includes gold coins, bars or jewellery. Additionally, physical gold can serve as a tangible asset that can be held outside the traditional financial system. This can be a desirable feature for some investors.

Features of physical gold

  • Tangibility: Physical gold can be held and touched, providing a sense of ownership and possession
  • Recognised globally: Physical gold has been used as a store of value for thousands of years globally.
  • Difficult to store: It is essential to keep physical gold securely stored to protect against theft or loss. Most people store their gold in bank lockers, which leads to additional charges on your investment.
  • Buying and selling take time: When you sell your gold jewellery or coins, you would need to visit a jewellery store and get your asset valued by an expert to determine the value. Additionally, the buyer may deduct making charges (in the case of jewellery), when you sell it.


Investing in digital gold offers more convenience, flexibility and security in terms of the amount of gold you can buy. You can invest in digital gold through Axis Bank's digital gold offering, which allows you to buy and sell gold online securely.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.