In accordance with being used as an antique metal, gold, which holds a prominent role in every family in India, also serves as a means to solve financial struggles. Since the emergence of the coronavirus epidemic, the yellow metal that has been heralded as the best method of investment has seen an increase in its rates. As of the beginning of the current COVID year, consumption for the precious metal has been increasing. Therefore, for decades, the purchase of gold has historically been a financial assistance tool. The yellow metal can be purchased in two ways i.e. physical form or paper form.
Gold can be purchased physically in the element of jewellery, coins, bars. Sovereign Gold Bonds (SGBs) and Gold Exchange Traded Funds (ETFs) can be purchased via paper form. Apart from this, there are also gold mutual funds, which are kinds of mutual funds that invest directly or indirectly in gold assets. Investments on stocks of gold mining firms, gold refining and supplying trade unions are done here.
Physical Gold In The Form of Jewellery
India is a nation that embraces gold, and so we have occupied second place internationally when it comes to physical gold usage. Gold jewellery form can be bought from jewellery stores spread throughout the country. But buying and preserving gold in physical form will have its issues be it security, price, evolving layouts etc. Most jewellers can charge fees which are irrecoverable on decorative metal ranging from 5% to 40% (in the case of special design options) everywhere.
Gold Saving Schemes
Some jewellery stores run the gold saving schemes, varying from small ones to major named outlets. This structures of gold saving come in two ways. For a specified tenure, the consumer will deposit a set pre-decided sum each month. The customer can buy gold from the jeweller at the overall cumulative value at the end of the term, which is equal to the total amount deposited during the defined tenure, which often includes additional bonus value. Here, the conversion is performed on maturity at the existing gold rates. In another way, the consumer would pay a fixed deposit for a certain period, and at the time of closing the jeweller will apply a month’s instalment in the form of cash reward or jeweller might also provide a gift product.
Also, from jewellers or banks or e-commerce web platforms or non-banking financial institutions, consumers can buy gold coins. In denominations including 5 grams, 10 grams, 20 grams, these gold coins are affordable and available in 24 karat. All of India’s gold coins will be labelled to the BIS norms.
Sovereign Gold Bonds
A type of paper gold is the sovereign gold bonds or SGBs. They are authorized by the Indian government and are revalued in several grams of gold. The selling of these SGBs happens once in every two to three months and the period stays available for around a week. It can be bought by buyers who are able to buy SGBs until the period is active. SGBs are alternatives for physical gold holdings. If an investor wants to buy bonds than the approved SEBI broker will have to compensate for the bond price in cash. On redemption, the cash will be transferred into the approved bank account of the buyer or investor.
Gold Exchange Traded Funds
A Gold ETF is a mutual fund centered on assets that invest in gold. These ETFs serve as individual stocks and are exchanged in stock markets similarly to other stocks. ETFs depict wealth, in both paper and dematerialized nature. Instead of the tangible type of metal, an individual will invest in stocks and once exchanged, they will be compensated with the value of the unit in cash instead of physical gold. Both the Bombay Stock Exchange and the National Stock Exchange trade the Gold ETFs and the gold is considered as an intangible for the traders. Investing in gold in the form of an ETF is beneficial as customers do not need to pay extra money on purchasing, gold wasting and market transparency is also another excellent feature. Investors can make an investment in ETFs through a stockbroker and Demat account.
Digital transformation has created an inclination for consumers to buy gold digitally in the nature of coins, bars, and jewellery. ‘Digital Gold’ is sold by India’s most loved payment apps such as PhonePe and Paytm. Apart from this the digital gold also come in a form named as GoldRush which is provided by Stock Holding Corporation of India. Digital Gold allows consumers to buy, sell and retain gold breaches. In cooperation with Augmont, MMTC-PAMP, digital gold is provided across India.