Have wanted to understand for a while now, which is the best way to have an exposure to the gold market?

Is it
1) Physical Gold
2) Gold ETFs (*Quantum , Reliance etc)
3) Gold Jewelery Manufacture (*Ganesh etc)
4) Gold Retail Company (*Tanishq)
5) Gold Collateralized Lending (*Mannapuram)

While my gut suggests the first due to the liquidity and lack of hidden charges, I wanted to understand the experience of other persons in Gold ETFs specifically. Any idea on how to select a good ETF?

Pros:
- Easy Accessibility - Can be easily bought / sold
- Minimum investment for a GETF is one unit
- No need to hold physical gold (not sure my wife will agree)

Cons:
- Hidden Cost of Ownership
- Transaction Costs
- Inability to convert to jewelery


Edited by iaditya - 20/Jun/2010 at 11:51pm

Nirmal Bang has come out with a research report on commodities. The broking firm is expecting the gold to trade positive for the day.

The report says, "Gold has breached the major resistance of 18850 level and likely to trade further up in the short term. We are expecting the counter to trade positive for the day. We should buy only above 18850 for 18950-19K levels in the short term."

 

According to me Govt. should consider selling gold brought 2 years ago from IMF. Selling gold won't impact our economy as Indian people hold 25% gold reserves of the world. I think MMS saved our economy by selling gold during 1990. If people reduce their gold holdings and start investing in stocks than we can reduce our dependency on FII money. The problem is many people in India have sentimental attachment towards gold and are not willing to sell gold even if they face financial crises.

@S.Varghese
You are right. Investment in gold is not a problem. But most people won't sell gold when they face financial problems and when price is up. But they will loss land and gold due to their inability to repay debts.