Gifting or buying Gold has been a household tradition in India for ages, especially during festive times like Diwali. 

This year, this tradition evokes mixed feelings: the joy of seeing our Gold holdings shoot up in value and the dilemma of gifting the yellow metal at such high prices.

“Gold gifting is a timeless Diwali tradition, but festive purchases today should blend tradition with wise investment. While coins and jewellery hold emotional value as physical gifts, gold ETFs offer a modern alternative — combining sentiment with long-term wealth creation. They carry no making charges, provide easy liquidity, and directly track gold prices, "said Aditya Agarwal, Co-Founder of Wealthy.in, a wealth tech platform.

Adding to the confusion about the best way to gift, which helps the receiver while maintaining the charm of a physical gift.  Since last Diwali, gold has grown by more than 60% in value, from around ₹80,000 last year to almost ₹1.3 lakh today. 

Globally, there is a massive demand for both Gold and Silver, with Silver ETFs trading at a huge premium to the actual price.

So, what should an individual do - what could be the best way to gift Gold this Diwali? Let us understand each investment and then decide which one suits best.

Gold ETFs: Traded on the exchange, they are clearly the best bet from a cost perspective, as they don't have the headache of custody and markup charges, says Vivek Banka, Founder, GoalTeller.

Gold mutual funds: These are essentially gold ETFs and are an extension of the ETFs with the ease of buying ( as ETFs have to be bought from the stock market and the order has to be placed at the right price, while the fund can be bought through any online platform). "Gold ETFs are taxed at long-term post 12 months, while Gold Funds become long-term post 24 months, giving them a small edge over ETFs," said Banka.

Digital gold: These are usually more expensive than the funds / ETFs, with the added benefit of being able to take delivery; however, the costs supersede these benefits. Moreover, digital gold is not directly regulated by the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI). It operates in a regulatory grey area, distinguishing it from regulated gold products like Gold Exchange Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs).

Physical gold: Finally, physical gold has markups over the spot, has potential issues of safekeeping, but retains the charm of being able to be gifted physically.

Banka says, "Gold ETF's that can be gifted from a cost and handling perspective seem to be the best bet for individuals wanting to gift gold - the physical charm can potentially be achieved with taking a printout and gifting that, however if the gift is to someone who doesn't have a demat account or isn't financially savvy the good old way of buying and gifting coins could be the best alternate."

 "Either way, this Diwali is undoubtedly a boon and provides many reasons for all gold receivers and holders to rejoice in the rising price of their holdings, as the outlook for Gold prices remains very positive, especially from a medium-term perspective," he adds.