In India multiple options are available for investments in gold. Gold investment options include
1) buying physical gold.
3) Investments in Gold Mutual funds.
4) Buying stocks of gold mining companies (a proxy investment option)
5) Gold harvest schemes offered by many jewelers
Each of the gold investment options mentioned above have their advantages and disadvantages. Investment choice depends on individuals’s needs and requirements. From investment perspective Gold ETF’s and Gold Mutual Fund investments score better. Purchasing physical gold fulfills emotional needs and in cases a symbol of social status.
Gold investment options available in India:
Investment in physical gold is most sought after investment by Indians. The main disadvantages of this form of investments are high wastage charges, making charges, low liquidity, fear of theft and impurities in gold. It is not a good option for investment purpose. Gold coins are little better as they attract small making charges. Usually it is charged as a premium to market price of gold.
Investments in Gold ETF are good for investment purpose. One need to open a demat account and trading account from any recognized stock broker. Units of Gold ETF are available on stock exchanges just like ordinary shares. They are traded in denomination of units. Each unit represents 1 gram in most ETF’s. Quantum Mutual Fund offers Gold ETF in 0.5 grams. Disadvantage is minimum investment equal to 1 gram of gold is required. Also demat maintenance charges and brokerage charges need to be paid by investors.
Investments in Gold Mutual Funds are suitable for most investors as they offer flexibility in investment amount. No need of demat or trading accoun. Possibility to invest small amount through systematic investment plans to accumulate gold in long term. Returns will be similar to returns on gold in international market. Fund management and other charges will apply. Redemption is available in the form of cash.
Investments in Gold Harvest Schemes of Jewelers: This is one of the gold investment options available for Indians. Most jewelers including national brands like tanishq offer this facility. Most such schemes require to pay a fixed amount for a certain period of time. When scheme is completed jewelers adds some money to investor’s account. For Example if investor pays Rs 1000 for 11 months, jeweler adds Rs 1000 in 12th month. The catch is one must purchase jewelers physical gold (Excluding coins) from same jeweler. Most of the times investors need to pay excess amount to purchase desired item.
In conclusion, investments in physical gold and gold coins gives emotional fulfillment. Two of the gold investment options namely Gold ETF and Gold Mutual Funds offer better investment value in long term with safety. Gold harvest schemes and Reliance My Gold Plan helps to save small amounts if purchases in gold ornaments are planned in future date.
E-Gold It is traded on National Spot Exchange of India Limited. Minimum trading lot is 1 unit which is equivalent to 1 gram of gold. Like Gold ETF all units will be stored in demat form.