ETF or Mutual Fund – What is the smartest way to own precious metals in 2026?

When it comes to investing in precious metals in 2026, Indian investors are not just considering whether to invest in gold or silver, but also how to invest in them. If you are considering purchasing physical metal, digital gold or the financial route through a gold ETF, silver ETF, or gold and silver mutual funds, which option is best? Each precious metals investment option has its pros and cons.

But for the majority of investors who are seeking liquidity, transparency, and cost efficiency, exchange-traded funds (ETFs) and mutual funds present the best option for gaining exposure to these precious metals without the storage, purity testing, and making charges issues. Here, we will discuss the difference between precious metals ETFs and precious metal mutual funds.

Why own precious metals in 2026?

Precious metals, particularly gold and silver, play three important roles in an investor’s portfolio:

• Inflation hedge: As fiat currencies lose purchasing power, precious metals tend to hold or increase their real value.
• Safe-haven asset: During geopolitical tensions, market stress, or currency volatility, investors shift their investments to precious metals for capital preservation.
• Portfolio diversifier: Precious metals’ performance is not correlated with equities and bonds’ performance, which helps to diversify a portfolio.

​With India’s retail inflation rising to 4.82% in August 2026, central banks continuing to buy gold and industrial demand for silver on the rise, especially in solar PV and EVs, precious metals continue to be a strategic investment for Indian investors, leading to their increased demand in 2026.

Why invest in precious metals ETFs and mutual funds?

While physical gold and silver have cultural and emotional appeal in India, their purchase has hidden drawbacks, such as making charges (8-15% on jewellery), storage risk, purity doubts, and low liquidity when selling. Digital gold addresses some of these issues, but SEBI does not regulate it, which adds counterparty and operational risks.​

On the other hand, gold ETFs, silver ETFs, and gold and silver mutual funds are SEBI-regulated, exchange-listed or AMC-managed products that track domestic metal prices (usually MCX) and offer the following benefits over buying physical metals:

• Purity assurance: Backed by physical metal of 99.9% purity held in secure vaults.
• Liquidity: ETFs can be sold on NSE/BSE like stocks, whereas mutual funds can be redeemed at NAV.
• Low cost: Expense ratios are usually in the range of 0.3–1.0% p.a., which is much lower than the hidden costs of buying physical gold.

Precious metal ETF vs precious metal mutual fund

Let’s take a look at a detailed comparison between the two:

Which should you choose?

​Here are some tips to help you choose between gold and silver mutual funds/ ETFs:

Choose a mutual Fund if:

• You don’t have a demat account and are not interested in opening one.
• You want to invest on a monthly basis through SIP investments.
• You are a new investor looking for simpler onboarding.
• Your holding period extends beyond 24 months.
• You are investing in small ticket sizes.

Choose an ETF if:

• You already have a demat account.
• You want a low expense ratio with no exit load.
• You have a holding period between 12-24 months.
• You prefer intraday pricing flexibility and real-time liquidity.
• You are investing a large sum of money instead of small amounts on a regular basis.

How to invest in gold/silver ETFs or mutual funds

Getting started with precious metals ETFs or mutual funds is a simple process and can be completed entirely online through any SEBI-registered broker. Below is a step-by-step process to invest in gold/silver ETFs or mutual funds through your broker:

Step 1: Open a Demat Account

Choose a SEBI-registered broker and register your demat account with your mobile number and email ID. Add your personal and bank details.

Step 2: Complete your KYC

Complete your KYC application. Most platforms nowadays allow instant e-KYC verification.

Step 3: Choose your investment option

Choose your investment vehicle from a gold ETF, silver ETF, gold mutual fund, or silver mutual fund based on your investment goals, time frame, and risk tolerance.

Step 4: Place your order

You can buy ETFs by placing your buy order during market hours for the desired units (minimum one unit). The buy order will be executed at the prevailing market price. For mutual fund investments, you can select between SIP/lumpsum, input the amount and place your order. The investment will be executed at the applicable NAV.

Step 5: Check and review your holdings

Review and rebalance your holdings periodically against your investment objectives and portfolio allocation.

Conclusion

In 2026, investing in precious metals like gold or silver doesn’t mean buying physical bullion/jewellery, locking it in a locker, or paying storage costs. For Indian investors, gold ETFs, silver ETFs, and gold and silver mutual funds can provide convenient exposure to precious metals without the storage and security considerations associated with physical bullion.

The more appropriate investment option depends on the investor’s preferred way of investing, holding period, costs, tax treatment and need for exchange-based trading or systematic investing.

Note to the Reader: This article is part of Mint’s promotional consumer connect initiative and is independently created by the brand. Mint assumes no editorial responsibility for the content.