Given that this has a lower correlation factor and is a hedge in the times of inflation, the gold is often looked upon as a safer investment option. Indians do not just look at gold as an investment option but often buy them to keep with their traditional beliefs. Given the value and importance the metal has both in the investment sector and in the traditional sector, it is inevitable to invest in this venue. But the bigger question is on how. You need to realize that it is not required that you carry gold physically for investing in it. Below are some options to consider for gold investment.
ETFs – Every unit of these funds are equivalent to 1 gm of Gold with 99.5% purity. These funds are traded in the stock exchange similar to other shares.
There are many other advantages to investing in gold ETFs which makes them a more viable option. To start with, it gives you a fantastic way to keep accumulating gold over a longer period without physically holding them. And there is no hidden charges like making or wastage as in physical gold and can be easily sold anywhere in the country. And there is no need to worry about any kind of taxation like VAT or sales or wealth tax when you invest in them.
E-gold –JB Commodity has come up with this new investment method wherein investors can get gold in small units and in electronic form. They can be converted into physical gold as well when required.
Mutual funds – Like every other mutual fund, this will be FoF (Fund of Funds) where you will be investing with a financial institution which will in turn invest the money through multiple ETFs or gold funds in the market. You can also make use of the SIP option when you are investing in this fund. While this might be easy, this is slightly expensive as the investor incurs management charges every year on the underlying gold fund.
Jewelry – As per the studies it is found that nearly 16000 tonnes of this yellow metal is found in the form of jewelry in India. This is a conventional and an old technique for gold investment but could incur extra charges like wastage, making charges, etc. making it an expensive venture.
Equity based funds – These are investing in companies which are into the making of gold, from mining to marketing. The downside is that there aren’t many gold production companies in public sector, limiting your options. Another drawback is that these funds are not affected by the rise in the gold price but rather upon the performance of the company. So if you have an appetite for higher risk, then you could take a chance through these gold funds.