Gold is traded in two ways; it can be either in metal form or in paper form. When gold is sold in paper form, one usually buys a proxy for gold, which means a pledge to deliver actual gold or its monetary equivalent. The value of paper gold can have a dramatic influence on the value of real gold. For example, if the value of paper gold decreases, the value of actual gold will also decrease, though paper gold has no effect on the amount of gold being produced. Purchasing Gold EFTs comes with additional expenses Buying Gold EFTs requires the opening of a Demat account, which means you will incur in some charges. including brokerage commission. If a person makes the decision to exit gold or gold EFTs trading, they will incur in incidental costs as well. In fact, upon exiting, a person pays a fee by the name of Exit Load provided the investment is sold within the set time frame. Gold EFTs is a liquid investment How gold is invested does not matter when it comes to its liquidity. The majority of gold funds that are currently in the market are open-ended and have no lock period. This means that they can be sold quickly. Even commercial banks readily give loans as long a person has some gold to pledge or to use as collateral. Gold EFTs guarantees no regular income to the investor Unlike many other forms of investments, Gold EFTs provide no regular income. It is therefore not a good investment for those seeking income generating investments and it is mainly used for hedging against inflation. Gold EFTs are subject to tax Tax rules that govern other forms of exchange traded funds may also apply to gold exchange traded funds.