Gold has transitioned from a purely defensive hedge into a strategic necessity for modern portfolios. With central banks establishing a new demand floor and global debt levels rising, the metal is now a primary engine for capital preservation.
This blog covers how Indian investors can access the best gold ETFs globally for superior liquidity and cost efficiency.
Table of contents
Why are investors looking at gold exposure?
Investors are re-evaluating Gold because the thesis has shifted from "Safety" to "Strategic Necessity."
1. Recent Market Performance
- The Data: In 2025, gold recorded an annual return of 74%, bringing the price per ounce to the $4,600 level.
- Asset Class Shift: Historically viewed as a defensive hedge, Gold's correlation has shifted. Last year, its returns exceeded those of major equity indices (like the S&P 500), leading institutional investors to treat it as a primary component of portfolio growth.
2. Structural Demand from Central Banks
- Official Sector Buying: Central banks have become a dominant source of demand, contributing 23% to total annual gold demand in 2022-2025, double the average share recorded during the 2010s.
- The Floor: Major purchases by central banks in China, India, and Turkey indicate a strategic move to diversify reserves. This institutional buying provides a consistent demand floor, independent of retail investment sentiment.
3. Macroeconomic Factors and Debt
- Counterparty Risk: With global debt levels reaching $346 Trillion, investors are increasing allocations to assets that carry no counterparty liability.
- Monetary Debasement: As governments manage high debt loads, the purchasing power of fiat currencies remains a concern. Gold is the only asset that cannot be printed.
How can Indian investors buy gold?
Indian investors essentially have three paths for adding gold to their portfolio:
- Sovereign Gold Bonds (SGBs): Government-backed bonds that pay interest.
- Digital Gold: Buying fractional gold via UPI apps.
- Global Markets: Buying institutional-grade Gold ETFs on international exchanges (LSE/NYSE).
The SGB Availability Constraint
Sovereign Gold Bonds are an excellent instrument for long-term holders due to the 2.5% annual interest. However, for new investors in 2026, there is a significant hurdle: Availability.
- Primary Market: The RBI issues these bonds in specific "tranches." If a window is not currently open, you cannot buy them directly from the government.
- Secondary Market Liquidity: Buying SGBs on the secondary market (stock exchange) is often inefficient. You may have to pay a premium over the fair gold price to find a seller, or struggle to buy large quantities without moving the price.
The Cost of Digital Gold
While convenient, buying gold via payment apps is often the most expensive route.
- The Spread: These platforms typically charge a spread of 3-6% between the buy and sell price. You start your investment with an immediate loss.
Why global markets are the best option for gold exposure
Global Gold ETFs offer a solution to both the availability issue of SGBs and the cost issue of Digital Gold.
- True Liquidity: Markets like the London Stock Exchange (LSE) are some of the deepest in the world. You can execute large trades instantly at the live market price.
- Lower Cost: Global ETFs have expense ratios as low as 0.12%, significantly cheaper than the spreads on digital gold or the expense ratios of domestic Indian Gold ETFs (often 0.50% - 1.0%).
- Currency Hedge: You own the asset in USD or GBP. If the Rupee depreciates against these currencies, your gold investment gains value in INR terms automatically.
Types of global funds that provide gold exposure
Here is a breakdown of the gold investment options available on global markets:
1. Physical Gold Funds
These are funds designed to track the spot price of gold perfectly.
- Mechanism: The fund holds actual, numbered gold bars in secure vaults (typically in London or Zurich).
- Security: These are "Allocated" funds, meaning the gold legally belongs to the fund shareholders, not the bank.
- Best For: Investors who want pure wealth preservation and a hedge against inflation.
2. Gold Mining Stocks
Instead of buying the metal, you buy shares in the companies that mine it (e.g., Newmont, Barrick).
- Operational Leverage: Miners have fixed operating costs. Once the gold price passes their cost of production (e.g., $1,400/oz), every dollar increase in the gold price flows directly to their bottom line. With gold at $4,600, margins are at record highs.
- Dividends: Unlike the metal itself, profitable mining companies pay dividends.
Top gold funds you can invest in
Here are the top gold funds you can invest in, segmented by the type of exposure they offer.
1. Physical Gold Funds
- European Fund (Recommended): iShares Physical Gold ETC
- Ticker: IGLN (USD) or SGLN (GBP)
- Exchange: London Stock Exchange (LSE)
- Expense Ratio: 0.12% (One of the cheapest in the world).
- Why: Huge liquidity, allocated bars.
- US Fund (The Giant): SPDR Gold Shares
- Ticker: GLD
- Exchange: NYSE Arca
- Expense Ratio: 0.40%
- Note: The most liquid gold ETF in the world, but carries US Tax risk and higher fees.
- Cheaper US Alternative: iShares Gold Trust Micro
- Ticker: IAUM
- Exchange: NYSE Arca
- Expense Ratio: 0.09% (Lowest cost US option).
2. Gold Mining Stocks
- The Global Leader: Newmont Corp (NEM)
- Exchange: NYSE
- Profile: The world's largest gold miner and the only gold stock in the S&P 500.
- You can invest in this stock using Paasa
- The Value Play: Barrick Gold (GOLD)
- Exchange: NYSE
- Profile: Holds massive reserves and focuses on Tier 1 assets.
- You can invest in this stock using Paasa
- The ETF Play: VanEck Gold Miners ETF (GDX)
- Exchange: NYSE Arca
- Profile: Holds a diversified basket of the top global miners.
- You can invest in this fund using Paasa
Which route is right for you?
| Physical Gold ETFs | Gold Mining Stocks | Domestic SGBs |
Primary Goal | Wealth preservation & Inflation hedge. | Aggressive growth via profit leverage. | Tax-free returns (if held 8 years). |
Dividend Income | None. | Yes (Record levels in 2026). | 2.5% Interest. |
Key Risk | Price Risk: Gold price drops. | Operational: Fuel costs/Strikes. | Availability: Hard to buy on-demand. |
Liquidity | Instant (Global exchanges). | Instant (Global exchanges). | Variable (Secondary market). |
Best For | Core portfolio foundation. | Aggressive growth seekers. | "Buy & Hold" passive savers. |
Why Indian investors should choose non-US gold funds
For Indians investing globally, where a fund is located should be an important consideration, as US-domiciled funds and stocks come with a significant taxation risk.
The United States enforces a strict Estate Tax on non-residents. If you hold US-domiciled assets (such as the GLD or IAUM ETFs) and pass away, the US government levies a 40% tax on the value of those assets above $60,000.
This means that in the event of an untoward incident, your heirs could lose nearly half of your US-based portfolio to the IRS before the money is even repatriated to India.
For more information on how the Estate tax can affect your investments, read How the US Estate Tax Works for Indians and NRIs.
The Solution: Non-US Funds
Funds not domiciled in the US, like those listed on the London Stock Exchange (LSE) do not carry this risk.
By choosing the iShares Physical Gold ETC (IGLN) on the LSE, you get the exact same gold exposure as the US funds, often at a lower cost (0.12%), but completely eliminate the risk of a 40% tax wipeout.
For Indian investors focused on long-term wealth preservation, this structural safety makes London-listed funds the superior choice.
Invest in gold ETFs with Paasa
Paasa is a truly global platform designed for the modern Indian investor. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US funds; you can buy tax-efficient Gold ETCs listed in London from a single interface.
The Compliance Advantage
Paasa makes global investing easy and removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: We generate the exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Get access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: We provide guidance on FEMA regulations and LRS limits to ensure compliance.
Whether you are buying gold miners in New York or physical gold in London, Paasa provides the global access you need with the India-specific compliance you require.
What other commodities can I invest in with Paasa?
Paasa provides access to all commodities and stocks listed on global stock exchanges across US, Europe and Asia.
Disclaimer
This article is intended for information only and does not constitute investment, tax, or legal advice. The material is based on public sources and our interpretation of current regulations, which may change. Investing in global markets entails risks, including currency risk, political risk, and market volatility. Past performance does not predict future outcomes. Please seek advice from qualified financial, tax, and legal professionals before acting.
