An Overview of Gold Investment

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Gold Investment- An Overview

1. Physical Gold

  1. It is simply making a direct investment in physical gold.
  2. There's no need for a demat account to invest in Gold.There's no investment charge involved but if the gold is bought as jewelry or bullion,  the buyer has to bear the making charges.
  3. The buyer has to borne the risk of theft/burglary associated with carrying around or storing the physical gold.
  4. Best suited to the investors with conventional tastes in investments.

2. Gold ETF’s

  1. It is somewhat similar to making a direct investment in gold, but here the investor buys a                  proportionate ownership in the collective vault instead of buying the physical gold.
  2. The investor needs to have a demat account
  3. Change in the price of gold directly affect the prices of Gold ETFs
  4. The investment in Gold involves the asset management and brokerage charges, so the returns are lesser than the actual increased value of the gold
  5. No SIP option is available
  6. Example Reliance ETF Gold, Bira Sun life ETF Gold, GS Gold ETF
  7.  Best suited for those investors who have a taste for trading intra –day

3. Gold Mutual Fund

  1. The investment is made not in gold but in the companies involved in mining the gold
  2. There's no need for a demat account to invest
  3.  There's a charge involved for the management of the funds. Plus, there are entry and exit charges that make the overall returns smaller than the actual increased value of gold 
  4. Gold MFs gives the investor an option to invest through Systematic Investment Plan that makes the investment more disciplined and  more affordable 
  5. Example: Kotak gold mutual fund

4. Sovereign Gold Bond

  1. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold.
  2. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity
  3. The Bond is issued by Reserve Bank on behalf of Government of India.
  4. SGB is free from issues like making charges and purity in the case of gold in jewelry form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
  5. It is issued in various series like SGB Scheme 17-18 series iv

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