What is Paper Gold?
The easiest way to store gold is to buy it on paper. Buy paper from exchange traded funds (ETFs) offered by companies such as Benchmark, Reliance, Kotak, and UTI that will buy physical gold on your behalf in the spot market. You can buy and sell this paper quite conveniently.
What is GOLD ETF?
Gold ETF invests in physical gold. Each unit of gold ETF represents one gram of gold, with the exception of Quantum Gold ETF where each unit stands for half a gram of gold.
You need a demat account to invest in a gold ETF and you have to transact on your own. Fund houses do not offer tools such as systematic investment plan (SIP) and systematic transfer plans (STP) for investing in gold ETFs.
What is Gold Fund of Funds?
Gold fund of funds is a solution meant for investors who wish to invest in gold but do not have a demat account.
The minimum investment is Rs. 5,000 for onetime investors. There is an option to enroll for SIP and STP with a minimum commitment of six instalments of Rs. 1,000 each.
You are also not forced to buy one or half gram of gold. You can own fractions .
Expenses for investor on ‘GOLD ETF’ and ‘Gold Fund of Funds’?
The fund of fund scheme will have some expenses over and above the expenses of underlying gold ETF in which the scheme invests. This leads to added costs for investor.
The added cost here may be in the range of 0.5-0 .75% and it will bring down the returns to that extent.
Which one should I buy ‘GOLD ETF’ and ‘Gold Fund of Funds’?
You cannot be an opportunist with a gold fund of fund the way you can with a gold ETF," points out a fund analyst with a wealth management firm. Consider a situation. On a particular day, due to some temporary factors such as excess selling, the price of gold ETF may fall much below the NAV or the one gram price of gold for a few minutes.
If you can spot such an aberration, you may buy that gold ETF at that moment and make a killing as the price corrects . This may not be possible in case of gold fund of fund as it works on the concept of NAV based on the closing prices. While investing in a gold fund of fund, investors must be very clear about the holding period. "If you decide to sell your gold fund of fund in less than six months, you may end up paying exit loads to the tune of 2%
For the small investor the gold fund of funds is a better option provided he is an investor with a 'buy and hold' investment philosophy. But if you can negotiate with your broker for better brokerage rates and have large corpus to invest, gold ETFs can work in your favour.
What is GOLDEX?
GOLDEX is the code to buy a Demat Gold (Gold ETF) on the ICICIDirect.com website. Even though it is a Gold Mutual Fund, you can buy it from the stock exchanges as shares. Each unit of Gold ETF represent 1 gram of gold price.
Here are the popular codes for some Gold ETFs -
1. Benchmark Gold ETF – GOLDEX
2. Reliance Gold ETF – RELGOL
3. Kotak Gold ETF – KOTGOL
4. UTI Gold ETF – GOLDSHARE

Source – economictimes.com