Although Indians consume gold more for sentimental reasons, the current unpredictability in equity markets and a phenomenal rise in gold prices have seen investors vying for their share of returns.
Here we take a look at the different options of investing in gold and also when should they be considered:
Traditionally Indians like flaunting jewelleries and that’s one of the reasons why gold is so popular in India. But buying gold in the form of jewellery has its own costs involved. The primary one is the making charges, which can be to the tune of 10%. There are costs associated even when you sell jewelry, especially when it is to a different jeweler. It may be a feasible option if it’s for immediate use or it has to be gifted. If you are looking at holding the asset for a very long term, other options will be more cost effective.
- Bar, Coin or Biscuit
Gold coin is one of the oldest forms of preserving gold. There is less cost involved than buying gold in the form of jewellery. Where you acquire higher charges is the preservation of the physical asset when you have to keep it in a safe custody. Most banks and financial institutions are selling gold coins. Even government also started new gold scheme investment plans. Indian Gold Coin is also one of them where you can buy gold in coin form. Indian Gold Coin is a Government of India initiative. It is available in 5, 10 and 20 grams and 24 karat purity and 999 fineness. In fact, it has become a most lucrative form of gifting during festival or promotions. But the price of buying a gold coin is higher than the market rate so that the institution selling it can earn profit.
- Gold ETF
Exchange Traded Funds (ETF) have been gaining slow acceptance in India and gold ETF has emerged as one of the favorite investments. This is primarily due to a few reasons. Firstly, these are traded on a stock exchange providing high liquidity to investors. Secondly, investors do not have to bear high cost unlike physical gold and the underline gold held by institution is also of high purity. Thirdly, the gains are treated as long term after one year and there is no wealth tax like in physical gold.