Should I buy physical gold or opt for funds?

THE love for gold in India is legendary. Besides bank fixed deposits (FD), it has historically been one of the most preferred ways to invest money. This is especially true of the rural areas, where even the penetration of banks is low. So, there's always been a good demand for gold in India.These factors have generated a lot of interest in gold amongst investors, worldwide:

• The volatility in the equity markets worldwide
• Concerns of the United States recession
• Inflationary pressures due to high oil, commodities and food prices
• Weakening dollar have generated a lot of interest in gold amongst the investors worldwide.

More options

Traditionally, your only option when it comes to buying gold was in the physical form. But with the launch of Gold Mutual Funds (Gold Exchange Traded Funds or ETF), you can, now, buy gold in the demat form. Ask two questions before you go shopping:
Should I invest in gold?
If yes, then which is better -- physical gold or gold ETF?