↑ Gold Investment Guide a section from the guide
Physical Gold vs Gold Fund: Pros & Cons Compared
Buying physical gold is not the only way to invest in gold. Gold ETFs traded on Borsa İstanbul (e.g. GLDTR), participation funds and bank gold accounts are also instruments for gaining gold exposure. Each has a different cost and risk profile.
Cost Comparison
When buying physical gold the jeweller premium (0.5–10%) is a one-off cost; thereafter it is free. Gold ETFs carry a trading commission (~0.1%) plus an annual management fee (~0.5–1%).
Over the long run (5+ years) physical gold is generally cheaper in terms of total cost. For short-term positions or small amounts an ETF may be more efficient.
Liquidity
ETFs are instantly liquid during exchange hours; one-click sale, T+2 cash. For physical gold you must go to a jeweller and accept the jeweller's buy-sell spread. If liquidity is not urgent, physical is better; for instant needs, the ETF is superior.
Counterparty Risk
Physical gold is in your hands — no counterparty risk (only storage/theft). A bank gold account carries risk if the bank fails; deposit insurance does not cover gold accounts. ETFs hold physical gold in the portfolio; the gold assets are protected even if the management company fails — a low but non-zero operational risk.
Which One When?
For long-term savings with zero operational dependency: physical gram gold. For an active portfolio with liquidity and no storage hassle: a BIST gold ETF. For those buying regularly with small amounts (500–2,000 TRY/month), a gold fund / bank gold account is practical.
Frequently Asked Questions
- Do gold ETFs provide inflation protection like physical gold?
- Yes, the price tracks the gold spot price. The annual fund management fee should be taken into account.
- Can I take physical delivery of the gold in my bank gold account?
- Banks usually offer physical delivery for 100 grams and above; below that it is converted to cash. Check your bank's policy.